In the world of real estate, “agency” refers to when a salesperson enters into a relationship with a client. The salesperson in these relationships owes a fiduciary duty of loyalty and confidentiality to the client. This type of relationship in Florida is referred to as a single agency. While this concept might be easy to understand, this article examines some commonly encountered nuances in agency law.
What Florida Agency Law Encompasses
Law in Florida clarifies how a real estate licensee must work with both buyers and sellers of property. The reason why these laws were created is to make sure that the public is protected when interacting with real estate agents. A licensee in Florida has an ethical and legal duty to the “principal,” which refers to a buyer or a seller in a transaction. The relationships that licensees in Florida are allowed to share with principals fall into one of three categories — no brokerage relationship, transaction brokers, and single agency. There are also a number of situations in which Florida’s agency laws do not apply, which include leasing transactions and non-residential transactions.
The most common type of agency relationship in Florida involves a transaction broker. This relationship exists when residential property is being bought and sold. In transaction broker relationships, an agent works for the transaction rather than for the buyer or seller. As a result, the real estate agent in this relationship remains a neutral party. There are several important duties that a transaction broker must uphold, which include accounting for all funds received from a principal, dealing fairly and honestly, and exercising care throughout the process.
A single agent represents one party in a transaction. Some of the duties that a single agent must uphold include carrying out any legal instructions given by the principal, disclosing everything that is known about a transaction to the principal, and loyalty to the principal. Principals frequently prefer single agency relationships instead of a transaction broker relationship because a transaction broker relationship has less confidentiality.
No Broker Relationship
A licensee in Florida is prohibited from having a broker relationship with one or both parties in a transaction. Even though details about this status must be disclosed to the principal, a licensee who has this relationship must also account for any funds that are received, deal fairly and honestly, and disclose all known facts about a property’s value.
No Dual Agency in Florida
In dual agency relationships, a realtor acts as the agent to both the buyer and seller of a property. Florida prohibits dual agency because it is impossible for a real estate agent to act in the best interests of both a buyer and seller simultaneously. While transaction broker relationships sound a bit like dual agency, a real estate agent in a transaction broker relationship is committed to the deal rather than to the buyer or seller of a property.
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Florida real estate law is complex. If you need the assistance of an experienced property law attorney, contact the Adam Law Group today.