Chapter 1
Arkansas Real Estate Law and Commission
Course: Arkansas Real Estate Exam Prep
Subject: Arkansas State Broker Exam Prep
Chapter: Agency Relationships And Law Of Arkansas Real Estate Broker Exam Prep
The Concept of Agency
Agency is a legal relationship in which one person authorizes another person to act on the person's behalf in dealings with third parties. The person granting authority is known as the principal, while the person receiving authority is known as the agent.
Within Arkansas real estate practice, brokers and salespersons frequently act as agents for buyers, sellers, landlords, and tenants. When agency exists, the agent owes fiduciary duties to the principal and must place the principal's interests above the agent's own interests.
The agency relationship creates legal authority allowing the agent to perform actions that affect the principal's legal rights and obligations. Because of this authority, agency law imposes heightened duties of trust, honesty, loyalty, and accountability.