Types of agency and licensee-client relationships

Two questions organize agency

Ask whom the license holder represents and how much authority the principal granted. A principal, or client, authorizes an agent to act on the principal's behalf. A customer is a party the agent does not represent. Assistance, friendliness, and the source of compensation do not by themselves establish representation. Customers still deserve honest treatment and required disclosures.

Scope of authority

A special agent handles a particular transaction or limited assignment. A broker retained to market a home is a common example; the listing does not itself authorize the broker to sign the owner's sales contract. A general agent handles a continuing range of activities in a business or property operation, such as managing rentals within an agreed scope. A universal agent has exceptionally broad authority over the principal's affairs. A power of attorney grants the authority its text specifies; it is not necessarily universal.

Whose interests are represented?

In single agency, the brokerage represents one side of a transaction: seller, buyer, landlord, or tenant. In subagency, another agent acts for the principal through the original agent. A seller's subagent represents the seller even when working directly with a buyer. Cooperation between brokers does not by itself establish subagency.

Dual agency describes representation of both sides in the same transaction. Designated agency describes a model in which a brokerage assigns different affiliated agents to different clients. A transaction broker, or nonagent facilitator, assists with a transaction without representing either party as a fiduciary agent. These are general classification terms: availability, consent requirements, and duties depend on governing law. Texas uses an intermediary framework for a broker representing both parties, rather than the traditional dual-agency model.

Formation and practical consequences

Express agency rests on an explicit agreement; implied agency is inferred from conduct. These describe how a relationship arises, not how broad the agent's authority is. Conduct cannot substitute for a legally required writing. A brokerage-services disclosure explains relationships; it is not itself an agreement appointing a representative.

The agent's fiduciary obligations to the client include loyalty, confidentiality, accounting, reasonable care, disclosure, and obedience to lawful instructions within the agency. Do not confuse loyalty with permission to deceive a customer. On an exam, identify the client first, then the granted authority, then the duty at issue.