Real Estate Broker Duties

A real estate broker or salesperson working on behalf an owner or buyer has certain duties which derive from agency law.  An agent is anyone that has been given authority to act on behalf of someone else (a principal) and to exercise some degree of discretion while doing so.  A real estate salesman acts as an agent of the real estate broker, and a sub-agent of the principal.  The broker is the agent of the buyer or seller- even if the buyer or seller never meets the broker and only ever meets the salesman.  A real estate salesman is not licensed to conduct business on his or her own, without a broker.  Even so, both the salesman has the same responsibilities of conduct to the principal that the broker does.

A Broker Must Have A Written Agency Contract
An agency relationship between a real estate broker acting as an agent of a buyer or seller of real estate is required to have a written agreement by law.  However, an agency relationship can be created even if there is no written agreement.  Even without the written agreement the agent has the same duties to the buyer or seller.  Without a written agreement the broker is violating the Business & Professions Code and may not enforce a claim for an unpaid sales commission in court.

An Agency Relationship Can Be Created Without A Written Agreement
Even if there is no written agreement giving the real estate agent the authority to act on behalf of the buyer or seller an agency relationship may exist. An agency relationship can be created by an oral agreement or by simply acting on behalf of the seller or buyer with the buyer's knowledge. This is called an implied agency and often results in problems because the degree of authority to act on behalf of the principal is unclear. If the real estate broker does anything that the principal does not approve of the broker can expect the act to be seen as a breach of duty.
Even if a real estate broker or salesagent acted without authority an agency relationship can be estbilished after the fact by "ratification."  This typically only occurs where the broker or salesman solicits a good deal that a person wants to enforce.  For example, a broker, without authority to do so, claims to be acting on behalf of a buyer and makes an offer on a house. If the seller accepts the offer but later refuses the buyer may argue that the deal is enforceable because the broker was their agent. 

Conclusion
Many strange events can occur when one person is acting on behalf of another.  If you are a broker, salesman, or owner, that has been involved in an agency relationship which resulted in misunderstandings and disputes you may want to contact legal counsel to advise you of your rights and responsibilities. 

From Sebastopol, the Law Offices of Graden Tapley represents clients throughout Sonoma County, including Santa Rosa, Cotati, Healdsburg, Petaluma, Rohnert Park, Santa Rosa, and Windsor.