NY Agency Law: Disclosure, Fiduciary Duties, and Dual Agency Explained

Agency law accounts for roughly 10% of the NY Salesperson exam and is one of the most heavily tested topics. The rules are New-York-specific in ways that catch students who studied generic national prep.

What “agency” actually means

In real estate, agency is a fiduciary relationship between a principal (the client) and an agent (the licensee). The licensee acts on the principal’s behalf — and owes them legally enforceable duties.

Under NY law (Article 12-A of the Real Property Law), every relationship between a real estate licensee and a consumer is one of these:

• Seller’s agent — represents the seller (the listing agent)
• Buyer’s agent — represents the buyer (the selling agent)
• Landlord’s agent / Tenant’s agent — same idea, rental context
• Dual agent — represents both, with informed written consent (see below)
• Designated agent — within one brokerage, two different agents represent each side
• Broker’s agent — works with another broker who has the actual agency relationship

Customers (people the agent does not represent) are owed honesty and fair dealing — but not fiduciary duties.

The six fiduciary duties (memorize this)

Agents owe their principal six duties. The exam tests these constantly. The mnemonic OLD-CAR covers them:

• O — Obedience. Follow your principal’s lawful instructions.
• L — Loyalty. Put your principal’s interests above your own and above any third party’s.
• D — Disclosure. Tell your principal everything you know that is material to the transaction.
• C — Confidentiality. Don’t reveal your principal’s confidential information — even after the relationship ends.
• A — Accountability. Account for all funds and documents.
• R — Reasonable care. Exercise the skill and diligence expected of a competent real estate professional.

NY agency disclosure rules — when, to whom, in what form

This is the most heavily tested rule in the agency section. Memorize it word-for-word:

“First substantive contact” is a term of art. It means any discussion that goes beyond pleasantries and gets into the consumer’s motivation, needs, financial qualifications, or a specific property. It is not the moment a buyer representation agreement is signed (that’s much later). It is not at the closing (way too late).

If the consumer refuses to sign the disclosure, the licensee completes the form documenting the refusal — that protects both sides.

Dual agency in New York

Dual agency is when one licensee (or one brokerage) represents both the buyer and the seller in the same transaction. NY allows it, but only with strict requirements:

• Both parties must give informed written consent in advance
• The dual agent cannot disclose either party’s confidential information to the other side
• The dual agent must be “loyal to both” — which in practice means the dual agent loses the ability to fully advocate for either

Designated agent (NY-specific arrangement)

Under NY law, a broker can designate two different agents within the same brokerage to represent the buyer and the seller separately. This is functionally a workaround for dual agency.

• Each designated agent owes full fiduciary duties to their assigned client
• The broker who supervises both is a dual agent for limited purposes
• Both clients must give written informed consent to the designation

How agency relationships end

Agency can end by:

• Performance — the goal is accomplished (the deal closes)
• Expiration — the listing or buyer-rep agreement reaches its end date
• Mutual agreement — both parties agree to terminate
• Revocation by the principal — though this may expose the principal to damages if it’s a breach
• Renunciation by the agent — same exposure
• Operation of law — death or insanity of either party, destruction of the subject property, or bankruptcy

Common NY agency violations

• Undisclosed dual agency — showing your own listing without obtaining informed consent
• Failure to deliver the agency disclosure form at first substantive contact
• Commingling — mixing client escrow funds with the broker’s own money
• Conversion — using client funds for your own purposes (criminal as well as a license violation)
• Misrepresentation — making false statements of material fact
• Failure to present all offers — every offer received must be presented to the seller, no matter how low

Violations can result in license suspension or revocation, civil damages, and in serious cases (conversion, fraud) criminal charges.