An agent has an agency relationship with their customers.

• A. TRUE
• B. FALSE
• C. Sometimes
• D. Not applicable

Answer: (B)

In real estate, the agency relationship is formed between the licensee and the principal who hires them—usually the seller or the buyer. A customer, by contrast, is someone who works with a licensee during a transaction without having signed an agency agreement. Because no agency agreement exists with a customer, the licensee does not owe fiduciary duties or represent the customer as a client. The agent’s duties to a customer are limited to honesty, fair dealing, and basic disclosure, whereas a client (the principal) receives fiduciary duties like loyalty and confidentiality. So, the statement is not true. A buyer or seller becomes a client only after an agency agreement is signed.