Key Takeaways
- Vermont recognizes designated agency and non-designated agency brokerage practices
- In designated agency, specific agents are appointed to represent each party with full fiduciary duties
- In non-designated agency, the duty of loyalty is shared by all agents of the firm
- A firm may not act as agent for both seller and buyer in the same transaction without informed written consent
- All licensees owe duties of honesty and material fact disclosure to ALL parties
Vermont Agency Relationships
Vermont law defines the types of agency relationships that real estate licensees may have with consumers.
Types of Agency Practices
Non-Designated Agency Brokerage
In a non-designated agency firm:
| Feature | Description |
|---|---|
| Loyalty | Duty of loyalty is shared by ALL agents of the firm |
| Representation | No single agent is specifically designated to represent a client |
| Conflict restriction | No member of the firm may represent a buyer or seller whose interests conflict with existing clients |
Key Characteristics:
- The entire firm represents the client
- All agents share the duty of loyalty
- Firm cannot work with conflicting clients
Designated Agency Brokerage
In a designated agency firm:
| Feature | Description |
|---|---|
| Appointment | Particular agent(s) appointed to represent each client |
| Loyalty | Designated agent(s) owe full duty of loyalty to their specific client |
| Confidentiality | Designated agent must keep client's confidences |
| Instructions | Must act according to client's interests and lawful instructions |
Key Characteristics:
- Specific agents assigned to specific clients
- Only designated agent owes loyalty to that client
- Allows firm to represent both sides in same transaction (with different designated agents)
Important: The firm must choose one practice and follow it consistently.
Dual Agency (Limited Agency)
A real estate firm may not act as an agent for both a seller client and buyer client in the same transaction, except:
As a Limited Agent
| Requirement | Description |
|---|---|
| Written consent | Informed, written consent of ALL parties required |
| Disclosure | Full disclosure of the dual relationship |
| Limitations | Agent cannot advocate for either party |
| Neutrality | Must remain impartial |
Warning: Dual agency significantly limits what an agent can do for either party.
Client vs. Customer
Understanding the distinction between clients and customers is essential:
Client
A client has an agency relationship with the licensee or firm:
| Client Receives | Description |
|---|---|
| Fiduciary duties | Loyalty, confidentiality, disclosure, obedience, accounting, care |
| Advocacy | Agent works to advance client's interests |
| Representation | Full representation in negotiations |
Customer
A customer does not have an agency relationship:
| Customer Receives | Description |
|---|---|
| Honesty | Truthful information |
| Material fact disclosure | Known material facts about property |
| Fair treatment | No misrepresentation or fraud |
Fiduciary Duties to Clients
Vermont agents owe these fiduciary duties to their clients:
The Six Fiduciary Duties
| Duty | Description |
|---|---|
| Loyalty | Put client's interests above all others (except the law) |
| Obedience | Follow client's lawful instructions |
| Disclosure | Inform client of all material information |
| Confidentiality | Keep client's information private |
| Accounting | Account for all money and property |
| Care | Exercise reasonable skill and diligence |
Memory Tip: Remember "OLD CAR" (Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable care)
Duties to All Parties (Clients AND Customers)
Regardless of representation, Vermont agents must:
| Duty | Applies To |
|---|---|
| Honesty | All parties |
| Material fact disclosure | All parties |
| Fair treatment | All parties |
| Accurate information | All parties |
| Legal compliance | All parties |
| Account for funds | All parties |
In a designated agency brokerage firm, who owes the duty of loyalty to a specific client?
Under what circumstances can a Vermont brokerage firm act as agent for both the seller and buyer in the same transaction?
In a non-designated agency brokerage firm, how is the duty of loyalty handled?