which of these is an example of a sub-agency relationship?

Understanding agency relationships is vital in real estate and business law. “Which of these is an example of a sub-agency relationship?” is a question that often surfaces for those studying for exams or navigating agency agreements. Let’s break down what a sub-agency relationship is, examine practical examples, and review the pros and cons of this setup.

What is a Sub-Agency Relationship?

A sub-agency relationship occurs when an agent (usually a broker) who represents a principal (typically a seller) authorizes another agent or brokerage to assist in carrying out their duties to the principal. The key element is that the sub-agent does not represent the buyer—they owe their loyalty to the seller, just like the listing agent.

Sub-agency used to be standard in real estate transactions, but is less common today due to the rise of buyer agency arrangements. Still, understanding it is important for anyone working around property sales.

Example of a Sub-Agency Relationship

Let’s look at a direct answer to “which of these is an example of a sub-agency relationship?” Consider this scenario:

A home is listed by Brokerage A on behalf of the seller. An agent from Brokerage B finds a buyer, but has no agreement to represent that buyer. Brokerage A gives permission, and so Brokerage B (and its agent) becomes a sub-agent—assisting the transaction but still working in the seller’s best interests.

Example in brief:

• Seller hires Listing Agent (Brokerage A)
• Another agent (Brokerage B) brings a potential buyer
• Neither buyer nor Brokerage B have a buyer representation agreement
• Brokerage B (the sub-agent) owes duties to the seller, not the buyer

This means the sub-agent must act honestly with the buyer but is obligated to work for the seller.

Why Sub-Agency Still Matters

Even though many offices now use buyer agency agreements, sub-agency is still possible when buyers don’t sign a formal contract with their agent. It’s especially relevant in some states and in commercial sales.

Pros and Cons of Sub-Agency

Pros:

• Can help sellers by exposing the property to more agents and buyers
• Potentially increases chances of sale

Cons:

• Can create confusion—buyers may think the sub-agent is “their” agent, but legally the sub-agent owes loyalty to the seller
• Risk of undisclosed conflicts of interest
• Legal liability issues can arise if the buyer misunderstands representation

Practical Tips and Observations

• If you’re a buyer, clarify in writing whom your agent represents, and consider signing a buyer representation agreement.
• For sellers, sub-agency can still be useful, but work with a brokerage that communicates agency relationships clearly.
• As an agent, always disclose your relationship to all parties. Transparency prevents legal headaches.

Conclusion

To recap, an example of a sub-agency relationship is when an outside agent assists in a real estate transaction without representing the buyer, but with the seller’s (principal’s) knowledge and consent. It remains a useful concept to grasp for buyers, sellers, and agents navigating the complex world of agency law.