Agency & Ethics is one of the most heavily tested areas on the NY exam. You need to know who an agent represents, what duties they owe, and when disclosure is required.
An agent owes six fiduciary duties to their client: Obedience, Loyalty, Disclosure, Confidentiality, Accountability, and Reasonable care. Loyalty means putting the client's interests first. Confidentiality continues even after the agency relationship ends.
A seller's agent represents the seller. A buyer's agent represents the buyer. A dual agent represents both parties in the same transaction, which requires written informed consent from both sides. In NY, a transaction broker facilitates the deal without representing either party.
NY law requires agents to provide a disclosure form at the first substantive contact with a buyer or seller. The form explains the types of agency relationships available. Failing to provide it is a license violation.
A broker is legally responsible for the actions of their salespersons. If a salesperson makes a misrepresentation, the broker can be held liable. This is why brokers must supervise their agents.
1. Which fiduciary duty requires the agent to put the principal's interests before all others, including the agent's own financial interests?
The duty of loyalty requires the agent to act in the client's best interest at all times, avoiding self-dealing and conflicts of interest.
2. A seller privately tells their listing agent they will accept $450,000, though they are listed at $480,000. A buyer later asks the agent what the lowest price the seller will accept. The agent should:
The seller's minimum acceptable price is protected confidential information. The agent's duty of confidentiality prohibits disclosure to the buyer. The agent must decline without lying.
3. When must a NY licensee provide the Agency Disclosure Form to a prospective buyer?
NY RPL §443 requires the agency disclosure form at first substantive contact: the moment meaningful information about the buyer's needs or the property's price begins to be exchanged.
Agency Disclosure
The required notification to buyers and sellers explaining who the real estate agent represents in a transaction.
Dual Agency
A situation where a real estate agent or broker represents both the buyer and the seller in the same transaction.
Fiduciary Duty
The highest legal duty of care and loyalty an agent owes to their client in a real estate transaction.
Listing Agreement
A contract between a property owner and a real estate broker authorizing the broker to find a buyer.
Procuring Cause
The broker whose continuous, unbroken efforts directly led to a buyer's decision to purchase.
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