Browse Proptionary encyclopedia

Build your real estate vocabulary to be able to communicate and invest more effectively and professionally.

Sub-Agent

DEFINITION

Agent that is appointed by the actual agent.

EXPLANATION

An agent has no legal authority to delegate the duties of an agency agreement to a non-agent party. However, the primary agent may appoint another agent to assist in a transaction. This other agent is called a subagent. Civil Code Section 2349 states that an agent may only delegate his or her powers to a subagent when:

the act to be done is purely mechanical

such delegation is specifically authorized by the principal

an action cannot be performed by the agent, but can legally be done so by a subagent

Agency agreements typically include a clause which gives an agent delegating authority. However, as per respondent superior, a primary agent will be held liable for the actions of a subagent.

A Sub-Agent is an agent that is appointed by the actual agent.

If a subagent is involved in a real estate transaction, he or she owes the same duty to the principal as is required by the original agent. Additionally, the subagent owes the agent those duties as well. The agent is responsible to oversee the acts of the subagent. Because principals generally only hire one agent, the principal’s expectation is that the agent will manage the transaction effectively. This includes taking responsibility to prevent subagents from acting to the detriment of the principal. Failure on the part of the agent to oversee the subagent may result in the agent being held liable for acts of the subagent.

Current State of Sub-Agency

The act of appointing a subagent is obsolete in a majority of states due to buyer agencies becoming more popular. A subagents fiduciary duties also fall towards the seller while buyers are left to fend for their own interests within a transaction.

Buyers now have the option of using a buyer’s agent in order to properly represent them. A majority of the states in the United States require that an agent must disclose how the client will be represented in the deal’s execution. Depending on the terms of the contract, the degree of work and obligations that are needed in regards to the client can vary greatly.

Alternative to a Sub-Agent

Florida and Colorado have both outlawed sub-agency as a way to promote buyer brokerage agreements. Beginning in the 90’s, buyer brokerage allowed for a broker to legally represent a buyer. This agreement has the broker just as responsible for the buyer as they are the seller.

[quiz-new]