Question 18

A buyer agency agreement establishes a fiduciary relationship.

A buyer agency agreement is designed to create a fiduciary relationship between the buyer and the real estate licensee, where the licensee has a legal obligation to act in the best interests of the buyer.

A) dual agency relationship

A dual agency relationship occurs when a real estate agent represents both the buyer and the seller in the same transaction. This option is incorrect because the buyer agency agreement specifically establishes a relationship solely between the buyer and the agent, not involving the seller.

B) sub-agency relationship

A sub-agency relationship involves a situation where an agent represents another agent's client, typically the seller, rather than the buyer directly. This option is incorrect as it does not pertain to the direct contractual relationship established by a buyer agency agreement.

C) fiduciary relationship

A fiduciary relationship is characterized by trust and confidence, where the agent has a legal duty to act in the best interests of the client. This is the correct answer because the buyer agency agreement explicitly creates this type of relationship between the buyer and the agent.

D) customer relationship

A customer relationship is one where the agent provides services but does not owe fiduciary duties to the client. This option is incorrect because a buyer agency agreement establishes a higher standard of care and loyalty, characteristic of a fiduciary relationship.

Conclusion

The correct answer is C) fiduciary relationship because it accurately reflects the nature of the obligations created by the buyer agency agreement. All other options fail to capture the specific legal responsibilities and trust inherent in the relationship between the buyer and the real estate licensee established through this agreement.