A real estate agent enters into an agency relationship with a buyer or seller of real property.  The rules that are applicable to a particular agency relationship will depend on the jurisdiction in which the agency relationship exists.  Agency rules in every jurisdiction share some common features, but vary in specifics from state to state.

In the State of Florida, the rules of agency once required merely simple disclosure statements to be made by real estate agents regarding who they represented.  More recently, the law in Florida has changed to require further actions by real estate agents to ensure complete information is available to real estate buyers and sellers.

In 1998, the Florida legislature´s new agency laws became effective.  The sum of the laws, known as the "Brokerage Relationship Disclosure Act, includes six major points, as follows:

1.       Real estate agents who are licensed in Florida must operate either as single agents-that is, they must represent the rights of a buyer or a seller of real estate exclusively, but never both simultaneously-or as transaction brokers, who are not agents of an have no fiduciary relationship with either the buyer or the seller in a real estate transaction, but who assists either or both parties during the course of the transaction without representing either one.

2.      A single real estate may not serve both parties in a transaction, even if the parties are willing to consent to such representation.

3.      Disclosed dual agency is expressly revoked, and undisclosed dual agency continues to be prohibited.  In dual agency, a real estate agent or a real estate agency is the representative of both a buyer and a seller or a specific property This creates a potential for serious conflict of interest problems, and is strictly prohibited under Florida law.

4.      Transaction brokers, those who advise and assist both buyers and sellers in the course of a sale and purchase of real property but who are not agents of either party and who do not have a fiduciary relationship with either party, are limited to engaging in "a limited form of non-fiduciary representation to a buyer, a seller, or both."

5.      In residential transactions, Florida real estate agents are required to give to potential clients at "first contact" between the agent and the buyer or seller (that is, the first time they meet and before an agency relationship is created) a document called a "Notice of Non-representation."  A notice of non-representation is a form which must be signed by the potential client, acknowledging the terms contained therein, which specifies that the broker or brokerage firm does not at that point represent the party in any capacity; that the party should not assume representation unless an authorized agency relationship is formed and memorialized by a separate legal contract; and that the party should not disclose any confidential information until a decision is made and legally established regarding representation, because the notice of non-disclosure does not bind the real estate agent in any way and does not obligate him or her to maintain information received from a non-represented party in confidence prior to the establishment of the agency relationship. 

Once a buyer or seller of real property in Florida has received the required notice of non-representation, he or she may choose to enter into an authorized agency relationship.  The relationship may define the agency role of the real estate agent in one of three ways: as a single agent for a property seller, as a single agent for a property buyer, or as a transaction broker.

Rules of agency in Florida require the following of single agents for buyers or sellers:

·          Fair and honest dealing

·          Loyalty to the client, and acting in the best interests of the client in all actions

·          Confidentiality of all matters related to the client´s role in a transaction, including the amount a client is willing to pay for a property when the client is the buyer, or the amount a seller of property is willing to sell for that is less than the official listing price

·          Obedience to the wishes and demands of the client, even if those wishes or demands are not personally desirable to the agent

·          Full disclosure of all information available to the agent that may affect the actions of the client; most notably, disclosure of any material problems with a property that may not be readily observable by the buyer of the property but which have the potential to have an undesirable effect on the value of the property

·          An accurate accounting for all funds, so that the client is aware of what money is being spent on at every stage of a transaction of real property

·          The use of skill, care, and diligence throughout the process and during the course of the property transaction

·          Presentment to the client of all offers and counteroffers in a timely manner and by a method that is agreed to by the client for notification of offers and counteroffers, so that the client can make prompt decisions regarding a real estate transaction

Florida rules of agency require the following for transaction brokers:

·          Fair and honest dealing

·          An accurate accounting of all funds, so that a buyer or seller is aware of what money is being spent on at every stage of a transaction of real property

·          The use of skill, care, and diligence throughout the process and during the course of the property transaction

·          Disclosure to a buyer of all facts known to the broker that are not readily observable by the buyer and which have the potential to materially affect the value of the property

·          Limited confidentiality; confidentiality on the part of a transaction broker is required with respect to such as information as that a seller will accept a price less than the listing price, or that the buyer will pay a price greater than his or her offer; this type of limited confidentiality may be waived by either party in writing

·          Any additional duties that are specified as obligating the transaction broker in the contract that establishes the agency relationship with a buyer or seller

Florida laws of agency also provide requirements for real estate agents licensed in the state when dealing with any buyers or sellers of real estate with whom they do not have a relationship (that is, buyers and sellers of real estate in general, who are not represented by the agent).  These requirements include:

·          Fair and honest dealing

·          Disclosure of all facts regarding a property that are known to the broker, which are not known and not readily observable by the buyer of the property, and which have the potential to materially affect the value of the property in question

·          Accounting of all funds that are entrusted to the licensed real estate agent

Florida agency law overall is very favorable to consumers-buyers and sellers of real property in the state.  Buyers and sellers do not have to face the prospect of dual agency, which is still legal in some states, thus avoiding potentially serious conflict of interest issues.  Notice and disclosure requirements that are imposed upon licensed agents are clear and specific.  In addition, the types of agency relationships that are allowed, single agency or transaction brokerage relationships, are clearly defined, and the duties to consumers imposed upon single agents or transaction brokers are established in detail. GBrey

Note:Contact an attorney on all legal questions or legal issues. A real estate agent is not qualified to give legal advice or tax advice and is not licensed to give legal advice or tax advice.