Agency Law

AGENCY LAW for Loudoun County, Virginia and How it Affects You

Real estate brokers and salespeople are licensed professionals who have extensive training that allow them to help consumers buy and sell property. The business relationship between these highly skilled professionals and consumers are called brokerage relationships.

Only a licensed real estate broker can be paid to help consumers buy & sell property in Loudoun County. Most brokers have licensed real estate salespersons. These real estate agents, work for the broker by buying & selling properties for consumers. Sometimes, real estate agents are the employees of the broker. However most are independent contractors who work under the name of the broker. Some estate brokers incorporate themselves while others set themselves up as Limited Liability Company (LLC) or partnerships. In Loudoun County the law requires each real estate brokerage firms to have one principal broker. In most transactions, the home buyer deals directly with his or her real estate agent and not the real estate broker. In these transactions the real estate broker works behind the scenes to solve any and every problem. The broker is also there for support, to assist, and to support their real estate agents.

In a broker-client relationship, the client is being represented by the real estate broker who is acting as his or her legal representative in buying & selling property. In Virginia, a broker-client relationship can only be formed by both parties voluntarily entering into a written agreement. The agreement must explain, among other things, how the broker will be paid, the duty of the broker to keep client confidences, and the types of client or agency relationships offered by the broker.

The different types of brokerage relationships within each of these categories are discussed below:

Seller Agency - This type of brokerage relationship is created by the seller and the broker entering into a written contract known as a listing agreement. The listing agreement gives the broker the right to market the property for sale at a specific price and for a defined period of time. If the broker is successful in finding a financially prepared, willing, and able buyer for the property, the broker would be paid a commission at the closing of the transaction. This commission is often shared with other real estate brokers by way of cooperative brokerage agreements, if they or their agents find the buyer.

Designated Agency - In some real estate transactions, the real estate agent representing the buyer and the real estate agent representing the seller both work for the same broker. In a transaction like this, the broker allows each agent to separately represent their clients.

In a transaction with a designated agency situation, each designated agent is prohibited from disclosing confidential information to anyone other than the broker unless the information is otherwise required to be disclosed by law. The broker is also prohibited from revealing any confidential information he or she has received from one designated agent to the other designated agent, unless the information is otherwise required to be disclosed by law. Confidential information is defined as any information that could harm the client’s negotiating position.

Dual Agency - Virginia law allows both parties to agree to have one agent or broker represent them in a real estate transaction at the same time. The agent or broker has a client relationship with all parties to the transaction without acting in a designated agency capacity. In these situations, neither party is exclusively represented by a designated real estate agent. This type of brokerage relationship is called dual agency. Virginia law allows real estate brokers to act as dual agents if they first get the voluntarily written consent of both parties. A dual agent must disclose all adverse material facts regarding the transaction known to the dual agent to all parties to the transaction except for information that is made confidential by request of another client and that is not allowed or required by law to be disclosed.

Subagency – Subagency occurs when one real estate broker is appointed by another real estate broker as a subagent to assist the broker in performing its duties. In a subagency transaction, a listing broker practicing subagency might appoint the broker working with the buyer as his or her subagent. The broker acting as the subagent would work with the buyer but would represent the seller. Subagency relationships do not occur very often in Loudoun County.

If you think that the topic of Agency Law and how it applies to you and your Loudoun County townhouse real estate transaction is confusing, don’t worry you are not alone. Being properly represented is a very complicated procedure. With the proper guidance this difficult topic can be explained very easily. If you want to find out how to be represented, contact us at AgencyLaw@VirginiaIsForTownhomes.com and we would be happy to answer any and all questions for you.