Key Takeaways
- Tennessee recognizes three types of agency: single agency (seller or buyer), disclosed dual agency, and designated agency
- Agency disclosure must be made at first contact with the broker and confirmed in writing before contract execution
- The Tennessee Real Estate Broker License Act of 1973 governs agency relationships and duties
- All licensees must disclose "adverse facts" to all parties per T.C.A. Section 62-13-403
- Licensees owe fiduciary duties to clients including loyalty, confidentiality, disclosure, obedience, and accounting
Tennessee Agency Relationships
Tennessee law defines the types of agency relationships that real estate licensees may have with consumers under the Tennessee Real Estate Broker License Act of 1973.
Types of Agency Relationships
Single Agency
A single agent is a licensee who represents only one party in a transaction:
| Single Agent Role | Represents |
|---|---|
| Seller's agent | Seller only |
| Buyer's agent | Buyer only |
| Landlord's agent | Landlord only |
| Tenant's agent | Tenant only |
Single agent fiduciary duties include:
- Undivided loyalty to the client
- Confidentiality of client information
- Full disclosure of material facts to client
- Obedience to lawful instructions
- Accounting for all funds
- Reasonable care and diligence
Disclosed Dual Agency
Disclosed dual agency occurs when a licensee represents both the buyer and seller in the same transaction with the informed consent of both parties.
| Requirement | Description |
|---|---|
| Written consent | Both parties must consent in writing |
| Full disclosure | Complete disclosure of the dual relationship |
| Neutrality | Agent must treat both parties fairly |
| Limited advocacy | Cannot advocate exclusively for either party |
Warning: Dual agency significantly limits what an agent can do for either party. Full written disclosure and consent is essential.
Designated Agency
Designated agency allows the principal broker to designate different affiliate brokers within the same firm to represent different parties in the same transaction.
| Feature | Description |
|---|---|
| Designation | Principal broker designates agents |
| Representation | Each agent represents only their client |
| Confidentiality | Agents maintain client confidentiality |
| Supervision | Principal broker oversees the transaction |
Agency Disclosure Requirements
When to Disclose
Tennessee requires agency disclosure at specific times:
| Timing | Requirement |
|---|---|
| First contact | Disclosure must be made to the broker |
| Before contract | Written confirmation required before execution of purchase agreement or lease |
The Disclaimer Notice
Tennessee agents use a disclaimer notice to inform consumers about agency relationships:
| Element | Details |
|---|---|
| Who signs | Only your client needs to sign your disclaimer |
| Other party | The other agent is responsible for their client's signature |
| Not required | Disclaimer notice does NOT need to be presented to the other side |
Confirmation of Agency
Written confirmation of agency disclosure must be provided:
- To the seller's/landlord's representative or broker
- Before execution of a purchase agreement or lease
Duties to ALL Parties
Tennessee law imposes certain duties on all licensees to all parties in a real estate transaction, regardless of representation:
Adverse Facts Disclosure (T.C.A. Section 62-13-403)
Under the Tennessee Real Estate Broker License Act, a real estate agent is required to:
"Disclose to each party to the transaction any 'adverse facts' of which the licensee has actual notice or knowledge."
What are Adverse Facts?
| Definition | Description |
|---|---|
| Conditions | Conditions or occurrences generally recognized by competent agents |
| Impact | Significantly reduce structural integrity of improvements |
| Health risk | Present a significant health risk to occupants |
Examples of Adverse Facts
| Must Disclose | Description |
|---|---|
| Structural issues | Foundation problems, roof damage |
| Environmental hazards | Mold, flooding history |
| Health risks | Lead paint (pre-1978), contamination |
| Known defects | Systems not functioning |
Under Tennessee law, when must agency disclosure be made?
What type of agency allows a principal broker to designate different affiliate brokers to represent different parties in the same transaction?
Under T.C.A. Section 62-13-403, what must licensees disclose to ALL parties in a transaction?