Being a secret agent works well for James Bond: infiltrating the enemy, securing the microchip and getting the woman are all part of the mystique.
The structure of the agent-client relationship or broker-agent relationship should not be a secret. The California Bureau of Real Estate (CalBRE) protects the consumer by upholding and creating laws, searching for unethical brokers and reprimanding appropriately.
The agent has a fiduciary relationship with their client, which is governed by CalBRE and the Civil Code and Business & Professional Code.
Real estate agency
The agency disclosure form that all buyers, sellers, landlords and tenants must sign explains the duties created by an agency relationship.
Don’t confuse this with an “agent” and “broker” as the agency disclosure is a relationship whereas an agent or broker is a licensee who can represent a client in a real estate transaction.
When an agency relationship is created the agent has a fiduciary duty to uphold the interests of his or her client.
The agency disclosure lists the duties created, which is a “duty of utmost care, honesty and loyalty in dealings with the buyer and seller.”
The disclosure also states the agent must “exercise reasonable skill and care in performance of his or her duties, be honest and fair acting in good faith and disclose all known facts which materially affect the value or desirability of the property.”
Agent or broker
Generally speaking, someone selling or leasing real estate or procuring real estate loans is either an agent or a broker. There are instances where an employee could be representing a developer or owner/investor in their portfolio of real estate dealings, but this is an exception.
An agent must pass three college-level real estate courses and the real estate agent exam. After a background check, the license is issued.
The agent cannot perform real estate transactions on their own and must place their license with a broker. In essence, the agent is representing the broker in all dealings. The broker is required to review all contracts and actively supervise all aspects of the agent. The broker’s license is at risk for any misdealings of the agent.
To obtain a broker’s license, an agent must complete eight college-level real estate courses, have two years’ experience as an agent in the last five years and pass the exam. There are other methods of satisfying the requirements.
A broker can act under his or her own license to perform real estate transactions or can be an officer of a corporation acting on behalf of the corporation. A broker can also be affiliated with another broker as a broker-associate, but does not have the requirements placed on her as an agent would.
What is a Realtor?
A Realtor is a licensed agent or broker who is a member of the National Association of Realtors, California Association of Realtors and the local Realtor board office.
The law can be complicated as well as the different structures allowed in the real estate brokerage business. Licensed and unlicensed assistants have their own set of requirements.