Understanding Agency

    It’s important to understand what legal responsibilities your real estate salesperson (licensee) has to you and to other parties in the transactions. Ask your salesperson to explain what type of agency relationship you have with him or her and with the brokerage company.

    AN EXPLANATION OF TERMS FOR AGENCY IN TENNESSEE

    Facilitator / Transaction Broker (not an agent for either party):
    The licensee is not working as an agent for either party in this consumer’s prospective transaction. A facilitator may advise either or both of the parties to a transaction but cannot be considered a representative or advocate of either party. “Transaction Broker” may be used synonymously with, or in lieu of, “facilitator” as used in any disclosures, forms or agreements. [By law, any licensee or company who has not entered into a written agency agreement with either party in the transaction is considered a Facilitator or Transaction Broker until such time as an agency agreement is established.]

    Agent or Subagent for the Seller:
    The licensee’s company is working as an agent for the property seller and owes primary loyalty to the seller. Even if the licensee is working with a prospective buyer to locate property for sale, rent, or lease, the licensee and his/her company are legally bound to work in the best interests of any property owners whose property is shown to this prospective buyer. An agency relationship of this type cannot, by law, be established without a written consent.

    Agent for the Buyer:
    The licensee’s company is working as an agent for the prospective buyer, owes primary loyalty to the buyer, and will work as an advocate for the best interests of the buyer. An agency relationship of this type cannot, by law, be established without written buyer agency agreement.

    Disclosed Dual Agent (for both parties):
    Refers to a situation in which the licensee has agreements to provide services as an agent to more than one party in a specific transaction and in which the interests of such parties are adverse.

    Designated Agent for the Seller:
    The individual licensee that has been assigned by their Managing Broker and is working as an agent for the seller or property owner in this consumer’s prospective transaction, to the exclusion of all other licensees in his/her company. Even if someone else in the licensee’s company represents a possible buyer for this seller’s property, the Designated Agent for the Seller will continue to work as an advocate for the best interests of the seller or property owner. An agency relationship of this type cannot, by law, be established without written agency agreement.

    Designated Agent for the Buyer:
    The individual licensee that has been assigned by their Managing Broker and is working as an agent for the buyer in this consumer’s prospective transaction, to the exclusion of all other licensees in his/her company. Even if someone else in the licensee’s company represents a seller in whose property the buyer is interested, the Designated Agent for the Buyer will continue to work as an advocate for the best interests of the buyer. An agency relationship of this type cannot, by law, be established without written agency agreement

    Adverse Facts:
    “Adverse Facts” means conditions or occurrences generally recognized by competent licensees that have negative impact on the value of the real estate, significantly reduce the structural integrity of improvements to real property or present a significant health risk to occupants of the property.

    CONFIDENTIALITY:
    By law, every licensee is obligated to protect some information as confidential. This includes any information revealed by a consumer which may be helpful to the other party IF it was revealed by the consumer BEFORE the licensee disclosed an agency relationship with that other party. AFTER the licensee discloses that he/she has an agency relationship with another party, any such information which the consumer THEN reveals must be passed on by the licensee to that other party.