New York Real Estate Salesperson ExaminationLaws of AgencyMedium
A real estate salesperson is working with a potential buyer. The salesperson provides information about several properties, arranges showings, and offers advice on market conditions. However, the buyer has not yet signed an agency agreement. What is the salesperson's relationship to the buyer in this scenario?
- ABuyer's Agent
- BDual Agent
- CCustomer
- DClient
Show answer & explanationAnswer & explanation
Correct answer: C. Customer
Until an agency agreement is signed, the salesperson owes only fairness, honesty, and disclosure of material facts to the buyer, treating them as a customer, not a client. A client relationship implies fiduciary duties, which are established by an agency agreement.
Why the other options are wrong
- A. A buyer's agent relationship requires a formal agreement and fiduciary duties.
- B. Dual agency involves representing both parties, which is not the case here, and also requires an agreement.
- D. A client is a principal in an agency relationship, established by agreement and owed fiduciary duties.
Customer vs. Client
A client is a principal in an agency relationship owed fiduciary duties, while a customer is a party to whom an agent owes only honesty, fairness, and disclosure of material facts, without a fiduciary relationship.
- Client has an agency agreement; customer does not.
- Fiduciary duties owed to clients, not customers.
- All parties in a transaction are customers to agents they don't represent.
Memory trick: CLIENT gets OLD CAR, CUSTOMER gets FAIR.