Agency Law Clarified
By Jim Palmer Jr.

Since 1996 the State of Washington passed a new statute that defined and clarified agency law for real estate agents.  This Agency Law spells out specific duties owed to buyers or sellers.  A reading of the summary of this law (available at any real estate office) allows consumers to clearly understand an agent’s role and legal responsibilities. New changes to this law have been codified and will go into effect this coming January.

A recent court case challenged this law, stating that an agent had fiduciary duties to their client, but that court decision and new legislation reaffirms and further clarifies that duties of real estate agents in Washington State are statutorily and specifically defined.  In other words, statutory duties of agents are very specifically NOT fiduciary.

The concept of fiduciary duty is more nebulous than statutory duty.  While the term fiduciary is vague and difficult to precisely determine, it is commonly applied to a person who holds a special position of confidence, trust and responsibility towards another.  Fiduciary duties are part of common law and are subject to a different interpretation by the legal system.   The new law eliminated the need for courts to define an agent’s responsibility and liability on a case-by-case basis. 

Even though the duties of a fiduciary are similar to the statutory duties of a real estate agent in terms of loyalty and reasonable care, statutory duties are not subject to interpretation.  Rather, the duties that they owe the general public and their clients are clearly defined by what they have to do to meet that standard and what they are not expected to do, unless they agree to additional duties in writing. 

In a recent North Carolina case, the court ruled that a buyer who signed, but didn’t read a purchase contract and didn’t seek legal advice (that was suggested by the agent and embedded in the contract), could not claim their agent breached their duty.  The buyer said she didn’t read the full contract because her agent said it was a “standard contract”.  She later discovered defects with the property that totaled a whopping $90,000 in repairs, and subsequently sued the seller and also her agent for breach of fiduciary duty and negligence. 

The court ruled in favor of the agent, stating that “If you sign a contract, you are under a duty to ascertain its contents and you are held to have signed with full knowledge and assent as to what is therein contained.”