Key Takeaways
- Kentucky recognizes four types of agency: seller's agent, buyer's agent, dual agent, and transaction broker (facilitator)
- The Agency Disclosure Form must be presented to all parties at first substantial contact
- Kentucky uses the OLD CAR fiduciary duties: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable Care
- A license holder cannot represent both buyer and seller as a dual agent without written consent from both parties
- Transaction brokers (facilitators) do not represent either party and owe limited duties to both
Kentucky Agency Relationships
Agency law in Kentucky is governed by KRS Chapter 324 and administrative regulations. Understanding agency relationships is critical for the Kentucky state exam.
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Types of Agency Relationships
Kentucky recognizes four types of agency relationships:
| Type | Description |
|---|---|
| Seller's Agent | Represents the seller's interests exclusively |
| Buyer's Agent | Represents the buyer's interests exclusively |
| Dual Agent | Represents both parties with limitations |
| Transaction Broker | Facilitator - represents neither party |
Single Agency
In single agency, the license holder represents only one party:
- Seller's Agent - Owes fiduciary duties to seller
- Buyer's Agent - Owes fiduciary duties to buyer
Dual Agency
Dual agency occurs when one broker or licensee represents both buyer and seller:
- Requires written consent from both parties
- Cannot advocate for one party over the other
- Must remain neutral and impartial
- Cannot disclose confidential information of either party
Transaction Broker (Facilitator)
A transaction broker (also called a facilitator):
- Represents neither party in the transaction
- Owes limited duties to both parties
- Facilitates the transaction without advocacy
- Must still treat both parties honestly and fairly
Fiduciary Duties (OLD CAR)
Kentucky agents owe six fiduciary duties to their clients, remembered by the acronym OLD CAR:
| Duty | Description |
|---|---|
| Obedience | Follow lawful instructions |
| Loyalty | Put client's interests first |
| Disclosure | Reveal all material facts |
| Confidentiality | Protect client's private information |
| Accounting | Account for all money and property |
| Reasonable Care | Use skill and diligence |
Agency Disclosure Requirements
Kentucky Agency Disclosure Form
The Agency Disclosure Form must be presented to all parties to explain agency relationships.
When to Provide Agency Disclosure
| Situation | When to Provide |
|---|---|
| Listing appointment | At or before signing listing agreement |
| Buyer representation | At first substantial contact |
| Showing property | Before substantive discussions |
| Open house | When showing interest in property |
What "First Substantial Contact" Means
| Is Substantial | Is NOT Substantial |
|---|---|
| Discussing property features | Providing general MLS information |
| Negotiating terms | Giving directions to property |
| Making recommendations | Answering factual questions |
| Discussing client's needs | Casual conversation |
Agency Disclosure Form Content
The form explains:
- Types of agency representation available
- Duties owed to clients vs. customers
- How compensation does not determine agency
- Dual agency and transaction broker options
Exam Tip: The Agency Disclosure Form is for information only—it does not create an agency relationship. Agency is created by agreement.
Customer vs. Client
| Term | Definition | Duties Owed |
|---|---|---|
| Client | Person represented by agent | Full fiduciary duties |
| Customer | Person NOT represented | Honesty, fairness only |
Duties to Customers
Even when not representing someone, agents owe:
- Honest dealing
- Fair treatment
- No misrepresentation
- Disclosure of material defects (if known)
When must a Kentucky license holder provide the Agency Disclosure Form?
What does the acronym OLD CAR represent in Kentucky agency law?