Quick answer
An agent owes a client obedience to lawful instructions, loyalty, disclosure, confidentiality, accounting, and reasonable care. A nonclient is still owed honest dealing and every material-fact disclosure the law requires. Start every agency question by identifying the principal, the source and scope of authority, and whether the other person is a client or customer.
Fiduciary duties carry more weight on the real estate exam than almost anything else. Agency is 13 percent of the national portion, more than any topic except contracts. It also runs through the Georgia supplement under BRRETA, so the concepts get tested twice with slightly different rules attached. Learning the national frame first makes the Georgia layer much easier.
The duties, and what each one actually forbids
Study guides list the duties as nouns. The exam tests them as prohibitions, so it helps to learn them that way.
Loyalty. Put the client's interest ahead of your own and everyone else's. What it forbids: buying the client's listing yourself without disclosure, steering a client toward the deal that pays you more, or letting your own commission drive the advice.
Obedience. Follow the client's lawful instructions. What it forbids: substituting your judgment for theirs on price or terms. What it does not require: following an unlawful instruction. A seller who tells you not to show the property to a particular group has given an instruction you must refuse.
Confidentiality. Keep what the client tells you in confidence, and keep it after the relationship ends. What it forbids: telling a buyer that the seller will take less. This one survives the closing.
Disclosure. Give the client material information relevant to the agency and transaction. What it forbids: holding back a competing offer, a conflict of interest, or a fact that could affect the client's decision merely because disclosure would make the agent's job harder.
Accounting. Account for all money and documents. What it forbids: everything in the trust account rules.
Reasonable skill and care. Do the job competently. What it forbids: guessing at answers outside your expertise instead of referring the client to someone qualified.
Exam trap
Confidentiality and disclosure look like they conflict, and the exam builds questions in that gap. They do not conflict, because they cover different things. You keep the client's negotiating position confidential. You disclose material facts about the property to everyone. A seller telling you the basement floods is a material fact, not a confidence.
How agency is created
Four routes, and the exam wants you to recognize the accidental ones.
- Express agreement, written or in some states oral. In Georgia a client relationship requires a written brokerage engagement.
- Implied by conduct, where the parties behave like principal and agent even though nobody signed anything.
- Ratification, where a principal accepts the benefit of an act performed without authority and thereby approves it.
- Estoppel, where a principal's own conduct led a third party to reasonably believe an agency existed, and the principal is not allowed to deny it.
The last two exist mainly to catch people. A broker who lets a licensee hold themselves out as representing the firm cannot later say they had no authority.
Terminating it
An agency ends by performance, expiration, mutual agreement, revocation by the principal, renunciation by the agent, or operation of law, which covers death, incapacity, bankruptcy and destruction of the property.
Two points the exam likes:
Revocation is usually possible but is not always free. A principal can fire an agent and still owe damages for breach of the contract that created the agency.
Confidentiality can survive the agency. Accounting, return of client property, record obligations, and rights or liabilities already earned can also continue. Do not use "the other duties all end instantly" as a universal rule.
Material facts and the puffing line
The disclosure duty covers facts that would affect a reasonable person's decision. Physical defects, pending assessments, a failed septic system, a boundary dispute.
Puffing is subjective sales opinion stated as enthusiasm: best view in the county or the most inviting kitchen on the block. It is not the same as a verifiable factual claim. Avoid "perfect for families" language because housing advertising should describe the property, not a preferred household.
The line sits at verifiability. "This is a great neighborhood" is puffing. "This house has never flooded" is a statement of fact, and if it is untrue and you knew, it is misrepresentation. Saying it while not knowing either way is negligent misrepresentation, which is still a problem.
Worth knowing
Fraud requires intent. Negligent misrepresentation does not. An agent who repeats what the seller told them without checking, on a point they should have checked, can be liable even with clean intentions.
Continue through creation and types of agency, representation agreements, non-agency and authority, agent duties, disclosures and conflicts, and termination. The glossary entries for client and customer carry the Georgia wording, and the practice sets by topic mix national agency with BRRETA scenarios.
Check yourself
1. A seller tells their listing agent that they will accept $20,000 below asking price if a full-price offer does not arrive within a month. May the agent share this with a buyer?
Show the answer
Answer: C. The seller's negotiating position is confidential. The duty holds regardless of the buyer's status and it survives the end of the relationship.
2. A listing agent learns from the seller that the roof leaks during heavy rain. The seller asks the agent to keep it quiet. What must the agent do?
Show the answer
Answer: B. Obedience covers lawful instructions. Concealing a known material defect is not lawful, and the duty to disclose material facts runs to everyone.
3. A principal accepts the benefit of a contract negotiated by someone who had no authority to act for them. What has occurred?
Show the answer
Answer: B. Accepting the benefit of an unauthorized act approves it after the fact, which is ratification.
4. Which statement is puffing rather than misrepresentation?
Show the answer
Answer: B. An opinion nobody could reasonably rely on as fact is puffing. The other three are verifiable statements of fact.
FAQ
Who is the principal, the client or the customer?
The client. The principal is the person the agent represents. A customer is someone the agent deals with honestly but does not represent.
Is the buyer's agent an agent of the seller because the seller pays the commission?
No. Compensation does not determine agency. Representation follows the agreement, and a buyer's agent paid from the seller's proceeds still represents the buyer.
Does the duty of confidentiality really last forever?
It survives the end of the relationship, which for exam purposes means treat it as permanent. Most other duties end when the agency does, though accounting for money and property and obligations already earned can continue.
How does this differ in Georgia?
Georgia layers BRRETA on top: a written brokerage engagement creates the client relationship, ministerial acts for a customer do not create agency, and dual agency requires written consent. The Georgia agency guide covers those rules.