A. A licensee shall not allow a controversy with another licensee to jeopardize, delay, or interfere with the initiation, processing, or finalizing of a transaction on behalf of a client. This prohibition does not obligate a licensee to agree to alter the terms of any employment or compensation agreement or to relinquish the right to maintain an action to resolve a controversy.
B. A real estate salesperson or broker shall not act directly or indirectly in a transaction without informing the other parties in the transaction, in writing and before the parties enter any binding agreement, of a present or prospective interest or conflict in the transaction, including that the:
- Salesperson or broker has a license and is acting as a principal;
- Purchaser or seller is a member of the salesperson’s, broker’s, or designated broker’s immediate family;
- Purchaser or seller is the salesperson’s or broker’s employing broker, or owns or is employed by the salesperson’s or broker’s employing broker; or
- Salesperson or broker, or a member of the salesperson’s or broker’s immediate family, has a financial interest in the transaction other than the salesperson’s or broker’s receipt of compensation for the real estate services.
C. A salesperson or broker shall not accept compensation from or represent more than one party to a transaction without the prior written consent of all parties.
D. A salesperson or broker shall not accept any compensation, including rebate or other consideration, directly or indirectly, for any goods or services provided to a person if the goods or services are related to or result from a real estate transaction, without that person’s prior written acknowledgement of the compensation. This prohibition does not apply to compensation paid to a broker by a broker who represents a party in the transaction.
E. A salesperson or broker shall not:
- Permit or facilitate occupancy in a person’s real property by a third party without prior written authorization from the person.
- Deliver possession prior to closing unless expressly instructed to do so by the owner of the property or property interest being transferred.
How Agency is Created
It is important to understand that agency can and often is created without a formal written agreement and that compensation alone does not establish an agency relationship. Agency may be created through either Express Consent or Implied Consent. In either case, agency can be created without a formal agreement however Keller Williams Realty East Valley requires written consent in all cases.
Express Consent Agency
Express Consent occurs when one party expresses a desire to be represented and another party agrees to be represented. Examples:
- Client lists their home for sale
- Buyer gets in an agent’s car and tours a property
- REGISTER A CLIENT AT A NEW HOME SUBDIVISION
- BUYER BROKER AGREEMENT EXECUTED
- COMPLETION OF THE READE FORM
Implied agency must be based on facts such as to imply an intention to create agency, and the implication must arise from a natural and reasonable, and not from a forced, strained or distorted, construction of them. They must lead to the reasonable conclusion that mutual consent exists, and be such as naturally lead another to believe in and to rely on the agency (Walter v. Moore, Wyo. 1985)
- ANSWER CLIENT SPECIFIC QUESTIONS
- CONTACT ANOTHER PARTY ON SOMEONES BEHALF
- NEGOTIATE FOR SOMEONE
- PROVIDE PROFESSIONAL ADVISE
- ACT IN ANY MANNER THAT SUGGESTS REPRESENTATION
AAR agency forms are designed to assist brokers in defining and disclosing agency relationships. Proper use of the AAR Agency forms will prevent undisclosed Dual Agency. AAR offers two (2) Agency disclosure forms:
- Real Estate Agency Disclosure and Election Form (READE)
- Consent to Limited Representation (Dual Agency)
Termination of Agency
After the termination of an agency relationship, the fiduciary duty is ended. However, confidential information must remain confidential even after the termination.
When is an agency relationship ended?
- CANCELLATION OF CONTRACT AND ESCROW
- CLOSE OF ESCROW
- CANCELLATION FOR MISREPRESENTATION OR FRAUD
Agency Relationship Terminates After Expiration of Listing Agreement
The broker had a listing agreement on Lot A. One year after the expiration of this listing the broker purchased adjoining Lot B. The broker wants to develop Lot B. The owner of Lot A is contending that his consent is required to any development of Lot B by the broker because of the previous agency relationship. Can the broker develop Lot B without the consent of the owner of Lot A?
Yes. The general rule is that the agency relationship terminates when the listing agreement expires. Therefore, unless the broker is using confidential information acquired during the listing of Lot A, the consent of the owner of Lot A is not required for the development of Lot B by the broker. (Arizona REALTOR® Digest April 2002; Reviewed May 2004)