2.1 Maryland Agency Relationships

How Maryland Agency Is Tested

Maryland agency is governed by the Maryland Real Estate Brokers Act (Title 17, Business Occupations and Professions Article) and Maryland Real Estate Commission (MREC) regulations at COMAR 09.11.08. The statute defines four representation roles and one key disclosure form.

Key Definitions (Memorize)

Creating a Client Relationship

In Maryland a written brokerage agreement creates a client. To be valid it must:

• Be in writing and signed by the broker (or affiliate) and the client
• State the type of representation (seller, buyer, landlord, tenant)
• Describe the licensee's duties and obligations
• State the compensation terms
• Include a definite expiration date (no automatic perpetual renewal)

Trap: A verbal promise, a handshake, or merely "working with" an agent does NOT create a client. The bright line is the signed brokerage agreement.

The First-Scheduled-Face-to-Face Trigger

The "Understanding Whom Real Estate Agents Represent" form (an MREC/DLLR form) must be presented at the first scheduled face-to-face meeting held to discuss a specific property or the buyer's needs. This is the single most-tested disclosure timing fact in the chapter.

A "first scheduled face-to-face meeting" requires ALL of:

1. A prearranged meeting (not a chance encounter)
2. Held to discuss a specific property or buyer's needs
3. Conducted in person (some virtual meetings qualify)

What Does NOT Trigger the Form

Open House Disclosure

At an open house the agent posts the MREC Open House disclosure so visitors know the agent works for the seller. Best practice keeps it on Commission letterhead, unaltered, and clearly visible; visitors who later schedule a private showing then get the "Understanding Whom Real Estate Agents Represent" form.

Fiduciary Duties to Clients (OLD CAR)

A seller's or buyer's agent owes full fiduciary duties, often recalled as OLD CAR:

Duties Owed to EVERYONE

Even to a customer, every Maryland licensee must: deal honestly (no fraud or misrepresentation), disclose known material defects in the property, present all written offers promptly, and treat all parties fairly. Confidentiality and loyalty are NOT owed to a customer.

Disclosure Form Mechanics and Worked Scenarios

The "Understanding Whom Real Estate Agents Represent" form is informational, not a contract: it tells the consumer that an agent may work as a seller's agent, a buyer's agent, or a dual agent, and that without a written agreement a person is a customer. Getting the consumer's signature acknowledges receipt of the disclosure—it does not by itself create agency. Agency is created only by a signed brokerage agreement.

Scenario 1 — Listing Agent at a Private Showing

A listing agent schedules a private tour for a buyer who has no agent. At that first scheduled face-to-face meeting, the agent must present the form, explaining she represents the seller, not the buyer. If the buyer later wants representation, the buyer signs a separate buyer-broker agreement (possibly triggering dual agency if the same company holds the listing).

Scenario 2 — Buyer's Agent Meets an Unrepresented Seller

A buyer's agent shows up to write an offer on a for-sale-by-owner home. At the first prearranged meeting with that seller, the agent hands the seller the form and discloses he represents the buyer. The unrepresented seller remains a customer owed honesty and material-defect disclosure.

Scenario 3 — Open-House Browser

A visitor wanders an open house and chats casually—no form is due yet because there is no prearranged meeting about a specific property. The Open House disclosure handles that setting. The instant the visitor books a private showing, the first-scheduled-face-to-face rule kicks in.

Common Exam Traps in Agency

Bottom line: On exam day, anchor on three facts—a signed brokerage agreement makes a client, the Understanding form is due at the first scheduled face-to-face meeting, and OLD CAR duties belong only to clients while honesty and defect disclosure belong to everyone.