Key Takeaways
- Arizona recognizes seller agency, buyer agency, and limited dual agency (with consent)
- Agency relationships in Arizona are created by written employment agreements
- The broker is the agent; salespersons are subagents of the broker and agents of the client
- Arizona requires disclosure of the agency relationship to all parties in a transaction
- Licensees owe fiduciary duties of loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care
Arizona Agency Relationships
Important: This content covers Arizona-specific agency law. You should complete the National Real Estate Exam Prep first, as general agency concepts are tested on the national portion.
Arizona law governs how real estate licensees represent buyers and sellers in transactions.
Types of Agency Relationships
Arizona recognizes the following agency relationships:
| Relationship | Description |
|---|---|
| Seller Agency | Broker represents the seller's interests |
| Buyer Agency | Broker represents the buyer's interests |
| Limited Dual Agency | Broker represents both parties (with consent) |
The Broker as Agent
In Arizona, the broker is the agent of the client. Salespersons are:
- Subagents of the broker
- Agents of the client through the broker
- Acting on behalf of the broker in transactions
Creating Agency Relationships
Agency relationships are created through written employment agreements:
- Listing Agreement - Creates seller agency
- Buyer Broker Agreement - Creates buyer agency
- Property Management Agreement - Creates landlord agency
Key Point: Without a written agreement, no agency relationship exists. The licensee is not representing the party's interests.
Fiduciary Duties
Arizona licensees owe clients the following fiduciary duties (remembered as OLDCAR):
| Duty | Description |
|---|---|
| Obedience | Follow lawful instructions |
| Loyalty | Put client's interests first |
| Disclosure | Reveal all material facts |
| Confidentiality | Protect private information |
| Accounting | Handle funds properly |
| Reasonable Care | Act competently and diligently |
Duties to Non-Clients (Customers)
Even when not representing a party, Arizona licensees owe:
- Honesty - Cannot make false statements
- Fair dealing - Must treat fairly
- Disclosure of material defects - Must reveal known property issues
- Answer questions honestly - Cannot mislead
Transaction Broker Concept
While Arizona doesn't use "transaction broker" terminology specifically, licensees working with unrepresented parties must:
- Disclose they don't represent that party
- Provide factual information only
- Not advocate for the unrepresented party
Agency Disclosure Requirements
Arizona requires disclosure of agency relationships:
When to Disclose
Agency disclosure should occur:
- At the beginning of the relationship
- Before confidential information is shared
- Before showing property or writing offers
How to Disclose
Disclosure can be:
- Oral initially, but should be confirmed in writing
- Included in the employment agreement
- Documented in transaction records
Compensation vs. Agency
Important: Compensation does not determine agency.
| Situation | Agency |
|---|---|
| Seller pays buyer's agent | Buyer agency still exists |
| Buyer pays listing agent | Seller agency still exists |
| Commission split | Does not create agency |
The written employment agreement, not the source of compensation, determines who the licensee represents.
In Arizona, who is considered the agent of the client?
What creates an agency relationship in Arizona real estate?