The real estate agent, agency defined, and client versus customer

Agency means representation

Agency is a relationship in which an agent acts on behalf of a principal, subject to the principal's authority and direction. In real estate, the represented principal is the client. A customer is a person with whom the agent deals but whom that agent does not represent. These labels describe a relationship to a particular agent, not a person's permanent status.

New York Real Property Law § 443 defines an agent as a licensed real estate broker, associate real estate broker, or real estate salesperson acting in a fiduciary capacity. A fiduciary must protect the represented party's interests within the agency relationship. A salesperson works under a sponsoring broker; friendly assistance does not by itself establish whom the brokerage represents.

Client versus customer

Suppose a seller engages a broker to market a home. The seller is that broker's client. An unrepresented buyer who asks the broker to arrange a showing is a customer of that broker. The buyer may instead have a separate buyer's agent, making the buyer a client of that separate agent while remaining unrepresented by the seller's agent. Identify whose interests the particular agent has undertaken to represent. Do not decide by who receives a showing or who pays a fee.

Under New York's agency disclosure law, a seller's agent owes the seller reasonable care, undivided loyalty, confidentiality, full disclosure, obedience, and accounting. The agent does not represent the buyer, but must deal with the buyer honestly, fairly, and in good faith, exercise reasonable skill and care, and disclose known facts materially affecting the property's value or desirability, except as otherwise provided by law. Customer status therefore does not mean an absence of duties. A buyer's agent represents the buyer's interests. In rentals, the same distinction separates a landlord's agent from a tenant's agent.

Disclosure identifies the relationship

New York's agency disclosure form is not a representation contract. Signing its receipt acknowledgment does not, by itself, hire the agent. For covered residential transactions, a listing agent provides it before entering the listing agreement; a seller's agent provides it to a buyer at first substantive contact. A buyer's agent provides it to the buyer before their agency agreement.

New York permits dual agency with both parties' informed written consent. Both parties are represented, but the dual agent cannot provide the full range of fiduciary duties, including undivided loyalty. This differs from representing one client while treating the other party as a customer. For legal or tax advice, consult the appropriate professional.