New Jersey Real Estate Salesperson · General Principles of Agency
Agency Relationships
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In 30 seconds
Every transaction has a principal, the person represented, and an agent, the licensee working for that principal, and everyone else is a customer. The distinction most often tested is client versus customer: a client receives full fiduciary duties, while a customer receives only honesty and disclosure of known material facts.
Why this matters
Exam questions hide the answer in who the licensee actually represents, so a licensee who confuses a customer with a client will pick the wrong duties every time.
The college version
In normal terms
- The seller's agent represents the seller; the buyer's agent represents the buyer; a subagent helps the seller's agent and owes duties to the seller; a dual agent represents both sides with consent.
- A designated agent is one licensee in a firm appointed to represent one party even though the firm represents both; a transaction broker or facilitator represents neither party.
- Both a client and a customer are owed honesty and material-fact disclosure, but only a client is owed loyalty, confidentiality, and the other fiduciary duties.
Concepts in this outline
- Seller’s agent / listing agent — the licensee, through the broker, who represents the seller under a listing agreement and owes the seller full fiduciary duties.
- Buyer’s agent — the licensee who represents the buyer, usually under a buyer-representation agreement, and owes the buyer full fiduciary duties.
- Subagent — a licensee, often from a cooperating firm, who assists in selling a listing but owes duties to the seller, not to the buyer being shown the home.
- Designated agent, where permitted — a licensee within a firm appointed to represent one party exclusively when the firm represents both parties in the same transaction.
- Dual agent — a licensee or firm representing both buyer and seller in one transaction, permitted only with the informed consent of both parties.
- Transaction broker or facilitator concepts — a licensee who assists both parties with the transaction but represents neither, owing honesty and fair dealing rather than fiduciary loyalty.
- Customer versus client — a client is the represented principal owed full fiduciary duties; a customer is an unrepresented party owed only honesty and material-fact disclosure.
- Principal versus agent — the principal is the person who authorizes and is represented; the agent is the person authorized to act on the principal's behalf.
Eli explains
The same idea, in plain words
Explain it like I’m 10
Picture a home sale as a game with two teams. The person a licensee plays for is the principal, also called the client. The licensee playing for that person is the agent. Anyone on the other side not represented by that licensee is a customer: the licensee must be honest with a customer and disclose known material facts, but does not work for the customer.
A seller's agent, also called a listing agent, represents the seller. A buyer's agent represents the buyer. A subagent is a licensee from another firm who helps sell a listing but owes duties to the seller, not the buyer.
A dual agent represents both sides in the same deal, allowed only with informed consent from both (see Topic 05). Where permitted, a firm representing both parties may name a designated agent for each side, so each party has one loyal licensee. A transaction broker or facilitator represents neither party and simply helps the deal move along fairly. New Jersey uses its own relationship labels and a required Consumer Information Statement (see Topic 14).
Worked example
Rosa lists her Cherry Hill colonial with licensee Marcus, so Marcus is the seller's agent and Rosa is his client. A couple, Dev and Anita, call Marcus after seeing the sign; they have no agreement with anyone, so they are customers. Marcus must tell them about the cracked foundation wall he knows about, but he cannot tell them Rosa would accept less than list price. Dev and Anita then hire licensee Chen from another firm as their buyer's agent, and now they are Chen's clients and Rosa is Chen's customer. Two licensees, two principals, and each licensee keeps loyalty for one side while staying honest with the other.
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