Table of Contents
Understanding Real Estate License Laws
State law controls how agency relationships are formed, the duties and responsibilities imposed, how long the agency relationship lasts and how it is terminated. In Oregon, the agency duties imposed on real estate licensees are found in statute. These statutes are set out and explained in the Statutory Provisions Involved section of this subject. State statutes are fleshed out and implemented by administrative rules. These rules, promulgated by the Oregon Real Estate Agency, are explained in the Administrative Rules Affecting Agency section.
return to top Statutory Provisions Involved
Oregon Revised Statute 696.800 Agent’s Obligations – Definitions. If you want to know what the critical words of a statute mean, this is the place to look. In Oregon 696.800 you will find, among others, the definition of “agent,” “confidential information,” “disclosed limited agency,” and “real property transaction.” Click HERE for a full explanation of the statute.
Oregon Revised Statute 696.805 Real Estate Licensee as Seller’s Agent; obligations. ORS 696.805 controls the establishment of listing side agency relationships and the duties imposed on an agent who represents only the seller. Click HERE for a full explanation of the statute.
Oregon Revised Statute 696.810 Real Estate Licensee as Buyer’s Agent; obligations. ORS 696.810 controls the establishment of selling side agency relationships and the duties imposed on an agent who represents only the buyer. Click HERE for a full explanation of the statute.
Oregon Revised Statute 696.815 Representation of Both Buyer and Seller; obligations. ORS 696.815 controls the establishment of dual agency relationships and the duties imposed on an agent who represents both buyer and seller. It is in ORS 696.815 that disclosed limited and designated agency relationships are authorized and controlled. Click HERE for a full explanation of the statute.
return to top Explanation of Statutory Provisions
ORS 696.800 defines more than a dozen terms used in the statutory regulation of agency relationships. You should keep ORS 696.800 in mind when reading the substantive provisions of the agency statutes. The definitions found in ORS 696.800 explain and qualify the words used in the substantive statutes. For instance, “real property” is defined in ORS 696.800(10) to not include leasehold. This definition can change a licensee’s obligation if the transaction involves a lease instead of a sale.
Among the most important definitions found in ORS 696.800 is one for “confidential information.” ORS 696.800(3) defines “confidential information” broadly to cover any information communicated to an agent by their client. This includes, but is not limited to price, terms, financial qualifications or motivation to buy or sell. There are two exceptions to this broad definition. Information a client instructs an agent to disclose is not confidential. Neither is information that must be disclosed to avoid a fraudulent misrepresentation.
The statutory definition of “confidential information” applies only to transactions involving “one to four residential units.” This exceedingly odd provision was inserted into the statutory definition at the request of commercial real estate brokers. Evidently, they believed that “confidentiality” in commercial transactions is different from confidentiality in residential transactions. Actually, confidentiality is a common law agency duty that attaches without regard to the object of the agency relationship.
What is and isn’t confidential information under the common law is a matter of circumstance but, generally, the definition is the same as the statutory one. That is, you start with the idea that everything communicated between client and agent is confidential. Under the common law, the only things that aren’t confidential are those the client wants disclosed or that the law otherwise requires disclosed.
ORS 696.805 establishes the statutory obligations of a seller’s agent. According to the statute, “[a] real estate licensee who acts under a listing agreement with a seller acts as the seller’s agent only.” This manner of defining “seller’s agent” links agency to a particular type of service contract called a “listing agreement.” Although signing a listing agreement is by far the most common way of establishing an agency relationship between a broker and a seller, it is certainly not the only way. A broker could, for instance, agree to advise a seller on listing price or offer to negotiate or provide other services without ever “listing” the property itself for sale. In such a case, the broker would certainly be the seller’s agent even though the relationship would be outside the definition of “seller’s agent.”
Whatever the wisdom of defining agency relationships on the listing side in terms of a listing, the main purpose of ORS 696.805 is to set out the duties of the agent when representing the seller. In all, the statute imposes ten (10) separate “obligations” or duties on the seller’s agent. These obligations, as well as the common law fiduciary duties, are discussed in depth in the Understanding Agency Duties section of this topic.
ORS 696.810 establishes the statutory obligations of a buyer’s agent. According to the statute, “a real estate licensee other than the seller’s agent may agree with the buyer to act as the buyer’s agent only.” The statute also makes it clear that the buyer’s agent is not representing the seller even if they receive compensation from the seller. Notice that on the selling side, all that is required is for the agent and buyer to “agree” to the representation. Unlike the listing side, there is no requirement that there be an “agreement.”
In addition to defining the relationship of buyer agent only, ORS 696.810 also sets out the duties of a licensee when representing a buyer only. The duties are identical to the ten obligations of a licensee representing a seller. That makes sense because we are dealing here with single agency. As is the case under the common law, the duties an agent owes their principal are the same whether that principal is a buyer or a seller. These obligations, as well as the common law fiduciary duties, are discussed in depth in the Understanding Agency Duties section of this topic.
ORS 696.815 establishes the statutory obligations of a licensee who represents both the buyer and the seller in a single transaction. According to the statute, a licensee can represent both the buyer and seller in a real estate transaction “under a disclosed limited agency agreement, with full disclosure of the relationship under the agreement.” What this somewhat clumsily worded statute says is that dual representation requires a specific agreement (the disclosed limited agency agreement) and that the agreement must contain a full disclosure of dual agency relationships. Such agreements are discussed in detail in the Disclosed Limited Agency section of this topic.
The duties of a disclosed limited agent are found in ORS 696.815(2)-(5). According to the statute, a disclosed limited agent owes the seller all the duties of a single agent under ORS 696.805 and owes the buyer all the duties of single agent under ORS 696.810. These duties are discussed in detail in the Understanding Agency Duties section of this topic.
In addition to the duties owed each client, a disclosed limited agent also has duties to both buyer and seller under ORS 696.815((2)(c). Additional duties are imposed on the agent and their principal broker under ORS 696.815(5). These special duties are discussed in detail in the Disclosed Limited Agency section of this topic.
In addition to defining disclosed limited agency and setting out the obligations of licensees in such relationships, ORS 696.815 also creates what is called “designated agency.” Designated agency is just the industry name for an agency relationship allowed by law. Nowhere in statute or rule will you find anything called “designated agency.” Under ORS 696.815(4) different agents supervised by the same principal broker can “continue to represent only the party with whom the broker has an agency relationship.”
In designated agency situations, the principal broker is the designated agent. The individual agents representing the buyer and seller continue to represent only the buyer and seller. They are not, however, single agents. That is the case because ORS 696.815(5) imposes additional duties on the designated agents. Under that provision, the agents representing the buyer and seller must disclose any conflict of interest to all parties, take no action adverse or detrimental to either party’s interests and obey the lawful instructions of both parties. These additional designated agency duties are discussed in detail in the Understanding Agency Duties section of this topic.