2.1 Virginia Agency Relationships

How Virginia Differs from Common-Law Agency

Virginia does not use traditional common-law agency for residential brokerage. The General Assembly codified statutory brokerage relationships in Virginia Code Sections 54.1-2130 through 54.1-2144. These statutes define exactly which duties a licensee owes, and they explicitly displace the older common-law fiduciary rules for residential and most commercial transactions. The Virginia Real Estate Board (REB), housed in the Department of Professional and Occupational Regulation (DPOR), enforces these statutes plus its own regulations at 18VAC135-20.

A brokerage relationship is the contractual relationship between a client and a licensee. Under Section 54.1-2137, every brokerage relationship with a client must be set out in a written brokerage agreement before the licensee owes the statutory duties of representation. No verbal listing or handshake creates a client relationship in Virginia.

Key Definitions

Exam trap: "Independent contractor" describes how a salesperson is engaged by the broker for tax purposes. It is never an answer to a question about how the licensee represents a buyer or seller.

Client vs. Customer Duties

The single most-tested concept in this chapter is what is owed to a client versus a customer.

Client (signed brokerage agreement)

A licensee owes a client the statutory duties under Section 54.1-2131 (seller agent) or 54.1-2132 (buyer agent):

1. Perform the terms of the brokerage agreement
2. Promote the client's interests with reasonable care (loyalty)
3. Maintain confidentiality of client information indefinitely, even after the relationship ends
4. Account promptly for money and property received
5. Disclose material facts the licensee knows and the client does not
6. Comply with all applicable laws and the brokerage agreement

Customer (no agreement)

Under Section 54.1-2134, a licensee dealing with a customer must:

• Treat all parties honestly
• Not knowingly give false information
• Disclose material adverse facts about the physical condition of the property that the licensee actually knows
• Provide ministerial acts

Ministerial acts (defined in Section 54.1-2130) are routine acts that do not create representation, such as showing property, providing factual information, completing pre-printed forms, and presenting written offers. Performing a ministerial act for a customer does not make that person a client.

Worked Scenario

Licensee Dana has a signed listing (a brokerage agreement) with the Ortiz family, the sellers. A walk-in buyer, Pat, asks Dana to write up an offer on the Ortiz home. Dana writes the offer and presents it. Pat assumes Dana is "his agent." Pat is a customer, not a client, because Pat never signed a brokerage agreement. Dana owes Pat honesty, no false statements, and disclosure of known material defects — but Dana still owes loyalty and confidentiality to the Ortiz sellers. If Pat blurts out "I'll go up to 410,000 if I have to," Dana may pass that to the sellers, because Pat is not a client and that information is not protected.

Common Traps

• Confidentiality survives termination of the brokerage relationship; it is not time-limited like record retention.
• A licensee may move from customer-only ministerial acts to client representation only by getting a written agreement signed.
• Disclosing material adverse physical defects is owed to everyone, client or customer — it is never waived.

Standard Agent vs. Limited Service Agent

Virginia recognizes two flavors of client representation. A standard agent owes the full statutory duties listed above. A limited service agent (Section 54.1-2138.1) is a licensee who, by written agreement, will not perform one or more of the duties that a standard agent ordinarily performs.

The limited service brokerage agreement must contain a conspicuous statement that the seller or buyer will not receive certain services, must list which services will and will not be provided, and must include statutorily required language so the client knows exactly what is excluded. A limited service agreement is common with discount or flat-fee "list it on the MLS only" brokerages.

What a limited service agreement cannot waive:

• Disclosure of material adverse physical facts the licensee knows
• Honest dealing and the prohibition on false statements
• The licensee's basic licensing-law obligations

How a Relationship Ends

A brokerage relationship terminates when the agreement's term ends, the transaction closes, the parties mutually agree to end it, or one party terminates per the contract. Two duties survive termination: accounting for any money/property the licensee holds, and confidentiality of information the client revealed — which continues indefinitely. An exam item that says "the agent's duty of confidentiality ended at closing" is false.