2.1 Oregon Agency Relationships

The Statutory Framework

Real estate agency in Oregon is governed by Oregon Revised Statutes (ORS) Chapter 696 and the Oregon Administrative Rules (OAR) Chapter 863, administered by the Oregon Real Estate Agency (OREA) under the Real Estate Commissioner. Oregon does NOT use the common-law fiduciary system most states inherited; instead it codifies the exact duties licensees owe, so memorize them from the statute, not from general principles.

The single most tested distinction is client versus customer. A client is a party the licensee represents and to whom the licensee owes full fiduciary duties. A customer (also called an unrepresented party) is someone the licensee deals with but does not represent, and who receives only the limited duties owed to all parties.

The Three Agency Relationships

Oregon recognizes exactly three relationships under ORS 696.810 to 696.815:

Fiduciary Duties Owed to Clients

Oregon law spells out six affirmative duties a licensee owes a client, in addition to the duties owed to all parties:

• Loyalty — act in the client's best interest above the licensee's own
• Obedience — follow the client's lawful instructions
• Confidentiality — protect the client's negotiating position and personal information, even after the relationship ends, unless disclosure is required by law
• Disclosure — reveal all material facts the licensee knows that could affect the client's decisions
• Accounting — promptly account for all money and property (e.g., earnest money)
• Reasonable care and diligence — exercise professional skill

Worked scenario

A buyer's agent learns her client is willing to pay $400,000 but the home is listed at $375,000. Loyalty and confidentiality forbid her from revealing the buyer's ceiling to the seller. If she instead represented the seller, the same fact would have to be guarded for the seller's benefit. Whose secret is protected depends entirely on who the client is — a classic exam trap.

Duties Owed to All Parties (Even Customers)

Every licensee, whether or not an agency relationship exists, owes a baseline set of duties to all parties in the transaction. These are the only duties a customer ever receives, and they cannot be waived:

The exam loves to test which duties are universal versus fiduciary. Remember: honesty, material-fact disclosure, and reasonable care are owed to everyone, but loyalty, obedience, and confidentiality of negotiating strategy are owed only to clients. A customer can be dealt with honestly while the licensee simultaneously works hard against that customer's price position on behalf of the client — that is lawful, because no loyalty is owed to a customer.

Practical example

A seller's agent shows the listing to an unrepresented buyer (a customer). The agent must honestly answer that the furnace is original to the 1995 build if asked, because that is a known material fact owed to all parties. But the agent owes the customer no duty to negotiate a lower price or to keep the seller's bottom line secret on the customer's behalf — those protections belong only to the seller, who is the client.

Disclosed Limited Agency in Depth

Disclosed limited agency exists when one licensee represents both parties, or when a single brokerage represents both through different licensees, in the same transaction. The word limited is the point: a licensee in this role cannot give undivided loyalty to either side and cannot disclose one party's confidential information to the other. For example, the agent may not tell the seller how high the buyer will go, nor tell the buyer the lowest the seller will accept.

Assigned (designated) agency within a brokerage

Oregon allows a principal broker to assign one associated licensee to the buyer and a different one to the seller in the same in-house transaction. Each assigned licensee may then fully represent his or her own client, while the principal broker remains a disclosed limited agent for both. This is how a large brokerage avoids gutting representation when its own listings sell to its own buyers.

How Agency Is Created, and How It Ends

Best practice and exam point: Oregon requires the agency relationship to be confirmed in writing. The Initial Agency Disclosure Pamphlet (Section 2.2) is informational only and does NOT itself create an agency relationship — a frequent distractor.

Agency terminates by: completion (the transaction closes), expiration of the agreed term, mutual agreement, revocation by the principal, renunciation by the agent, or the death/incapacity/bankruptcy of either party. Two duties outlive termination: confidentiality of information already learned, and the duty not to misrepresent known material facts. A trap question will suggest that confidentiality ends at closing — it does not.