2.1 Arkansas Agency Law

Arkansas is an agency-based state: the law focuses on disclosing which party you represent, not on a non-agency facilitator role. The controlling statute is Ark. Code Ann. § 17-42-108 ("Disclosure requirement"), which directs each licensee to clearly disclose to all parties which party or parties the licensee represents, with the timing and method set by AREC regulation.

When and How to Disclose

Disclosure must be made at the earliest practicable juncture and, critically, before any party signs a contract (such as a listing, buyer-agency, or purchase agreement). AREC regulations specify the form and confirmation of disclosure.

Exam Tip: The defining moment is substantive contact — when the conversation moves from pleasantries to confidential or transaction-specific matters. Disclose your representation before that point and certainly before any signature.

Recognized Agency Relationships in Arkansas

Dual Agency

A single licensee (or a firm) may represent both the buyer and the seller only if the licensee provides written disclosure to both parties and obtains the written consent of both before proceeding. A dual agent must remain neutral and may not disclose one party's confidential information (such as the lowest price a seller will accept or the highest a buyer will pay) to the other.

Designated Agency

Within a brokerage, the principal broker may designate one agent to represent the buyer and a different agent to represent the seller in the same transaction. Each designated agent owes full fiduciary duties to their own client, while the principal broker supervises and stays neutral. This is Arkansas's mechanism for keeping fuller representation when both sides happen to be served by the same firm.

Correction / Common Trap: Arkansas does NOT have a statutory non-agency "transaction broker" (limited-representation facilitator) category like Florida or Colorado. That language appears only on third-party blogs. Arkansas law is agency-based — you must disclose whom you represent. If an exam option says "Arkansas transaction broker owes no agency," treat it as incorrect for Arkansas.

Fiduciary Duties to Clients (OLD CAR)

When you represent a client, Arkansas common-law agency imposes the classic fiduciary duties, easily recalled as OLD CAR:

Duties Owed to ALL Parties (Including Customers)

Even toward a party you do not represent, every Arkansas licensee owes baseline duties:

Key Point: The split is the heart of agency questions. Loyalty, obedience, confidentiality are owed only to clients. Honesty, fair dealing, disclosure of known material defects, and presenting offers are owed to everyone. A customer is treated honestly but is not represented.

How Agency Is Created and Terminated

Agency arises when a principal authorizes the licensee to act on their behalf. In Arkansas practice it is normally created expressly in a written listing or buyer-representation agreement, but it can also arise by implication from conduct (which is risky and why disclosure timing matters). Ostensible (apparent) agency can be created when a licensee's conduct leads a consumer to reasonably believe they are represented — a trap for agents who give advice to an unrepresented customer.

Agency relationships terminate the same ways other agency does: by completion of the purpose, expiration, mutual agreement, revocation/renunciation, or the death or incapacity of either party.

Vicarious Liability and Supervision

A principal broker is responsible for supervising affiliated salespersons and can face vicarious liability and AREC discipline for an affiliate's License Law violations the broker knew or should have known about. This is why brokers set office policies on disclosure, advertising, and trust funds.

Exam Tip: An unrepresented customer can mistakenly believe an agent "works for them" if the agent gives advisory help. Disclose the agency relationship early and clearly so no ostensible agency is implied — and so the customer understands you owe them honesty but not loyalty.