Implied agency

Key Takeaways

• Implied agency is created by what the parties do, not by what they sign, so a broker can take on agency duties without meaning to.
• Express agency comes from a stated appointment, while implied agency is inferred from conduct such as advising, negotiating, or touring property together.
• In Washington, RCW 18.86.020(1) makes a broker who performs real estate brokerage services for a buyer that buyer's agent, whether or not a services agreement has been signed yet.
• Paying a broker's compensation does not by itself create an agency relationship under RCW 18.86.080(2).

What It Means

Implied agency describes an agency relationship the law recognizes because of how two people behaved, not because either of them signed an appointment. Nobody says the words I represent you. Instead a broker gives advice, argues for a price, keeps a party's plans quiet, or negotiates on that party's behalf, and a court or a regulator looks at that conduct and concludes an agency relationship existed the whole time.

The contrast is Express Agency, where the appointment is stated in a written or spoken agreement. Implied agency matters because the duties attached to it are the same either way. A broker who slides into representing someone by accident still owes that person loyalty, confidentiality, and disclosure, and can be disciplined or sued for failing to deliver them.

The risk runs the other direction too. A buyer who assumes a friendly broker is on their side, when that broker is appointed to the seller, may hand over a top price or a moving deadline that the seller's team is free to use.

How It Works in Washington

In Washington, chapter 18.86 RCW removes most of the guesswork. RCW 18.86.020(1) says a broker who performs real estate brokerage services for a buyer is that buyer's agent, unless the firm has appointed that broker to the seller or the broker is the seller. Agency attaches to the work itself, so a Washington broker cannot tour homes for three weeks and then argue no relationship ever formed.

Sellers work the other way around. The statutory pamphlet set out in RCW 18.86.120 states that a firm and broker must enter into a written services agreement with a seller to establish an agency relationship. For buyers, the same pamphlet says the relationship is established by performing the services, and RCW 18.86.020(2)(a) still requires the firm to have a Written Services Agreement in place before, or as soon as reasonably practical after, the broker begins.

Two Washington limits are worth memorizing. RCW 18.86.080(2) says an agreement to pay or the payment of compensation does not establish an agency relationship, so the party writing the check is not automatically the party represented. RCW 18.86.110 makes these duties statutory rather than fiduciary and supersedes the common law fiduciary duties an older textbook may describe. RCW 18.86.010(2) then sweeps in the firm's Designated Broker and any supervising managing broker as agents of the same principal.

Example

Maya, a broker at Cascade Realty, meets Tom at a Tacoma open house on March 3. Over the next two weeks she sends him nine listings, tours four homes with him, tells him the $625,000 asking price on one of them sits about $20,000 above recent comparable sales, and drafts an offer at $605,000. Nobody signs a services agreement until March 17.

From March 3 forward, Washington already treats Maya as Tom's agent under RCW 18.86.020(1), because she performed brokerage services for him. Her loyalty and confidentiality duties ran across all fourteen of those days. What the firm lost was the paperwork. RCW 18.86.080(7) lets a firm collect compensation only under a services agreement stating the compensation terms, so Cascade Realty had no enforceable claim to a fee for the work done before March 17. The late signature repairs the firm's right to be paid going forward. It does not turn those fourteen days into a period with no duties.

Common Mistakes and Exam Traps

• Compensation does not decide representation: under RCW 18.86.080(2), the party who pays the fee is not automatically the party the broker represents.
• Washington broker duties are statutory, not fiduciary, because RCW 18.86.110 supersedes the common law fiduciary duties that a national textbook still describes.
• Buyer agency and seller agency begin differently in Washington: buyer agency follows from performing brokerage services, while seller agency requires a signed written services agreement.
• Implied agency is inferred from ongoing conduct, which is not the same as ratification, where a principal approves a specific act after it has already happened.