Chapter 1
Brokerage Operations and Management
Course: Alaska Real Estate Exam Prep
Subject: National Real Estate Broker Exams Prep
Chapter: Agency Relationships And Fiduciary Duties
Creation and Termination of Agency
Agency relationships do not arise accidentally in properly managed brokerage practice. They are created through specific legal actions, conduct, agreements, and circumstances recognized under agency law. Once created, the agency relationship establishes fiduciary duties, legal authority, disclosure obligations, and liability exposure for both the broker and the principal.
The termination of agency is equally important because fiduciary duties, authority, compensation rights, confidentiality obligations, and liability concerns continue to affect the parties after representation ends. Understanding how agency relationships begin, operate, and terminate is essential to lawful brokerage practice and professional risk management.
The Legal Foundation of Agency Creation
Agency is created when one person authorizes another person to act on the person’s behalf and subject to the person’s control. In real estate, the principal authorizes the broker to represent the principal in matters involving property transactions.