Agency & the Consumer Notice: Relationships, Duties & Agreements

This area asks who a licensee works for and what every consumer must be told. Pennsylvania never presumes agency, and most consumers get the Consumer Notice first.

The Consumer Notice and the initial interview

The initial interview is the first contact between a licensee and a consumer where a substantive discussion about real estate needs occurs.

• In person: hand over the Consumer Notice (headed "THIS IS NOT A CONTRACT") at the initial interview.
• Not in person (by phone, for example): read the prescribed oral disclosure verbatim, which warns that nothing the consumer says is confidential until a business relationship exists. Then deliver the written notice by the earlier of the first in-person meeting or the first time a property is shown.
• Records: give the consumer a copy of the entire notice, and keep the signed acknowledgment 6 months if no transaction follows. If the consumer refuses to sign, note the refusal on the acknowledgment.
• Commercial exception: no Consumer Notice is required in a commercial sale or lease unless a party is an individual. Property with fewer than five residential units is not commercial.

The notice describes each relationship, says none is presumed without a signed agreement, lists what is negotiable (duration, fees, scope, cooperation and fee sharing), notes the zoning statement sales agreements need, and explains the Recovery Fund.

Rentals and time shares: a licensee leasing as the owner, the owner's direct employee, or the owner's agent under a property management or exclusive leasing agreement gives the tenant a written capacity statement instead, at the initial interview or at the start of a rental application, and keeps it 6 months. A tenant's licensee uses the regular Consumer Notice. Time-share showings use a similar capacity statement.

Duties every licensee owes every consumer

These apply with or without agency and cannot be waived:

• reasonable professional skill and care; dealing honestly and in good faith;
• presenting all written offers and communications in a timely manner (a seller whose property is under contract may waive further offers, but only in writing);
• complying with the Seller Disclosure Law and accounting for all money received;
• timely disclosure of conflicts of interest; advising the consumer to seek expert advice beyond the licensee's expertise;
• keeping the consumer informed, helping with documents, and advising on legal compliance without giving legal advice;
• disclosing any financial interest (referral fee, commission) in a service such as financing, title, insurance, repair or inspection when the licensee first recommends it or learns the consumer will use it. A licensee may never require a consumer to use such a service.

Unless otherwise agreed, a licensee need not inspect the property or verify consumer statements it reasonably believes. A consumer is not liable for a licensee's acts unless the consumer directed them or made a representation the licensee reasonably relied on.

The agency relationships

• Seller agent: loyalty, confidentiality (but known material defects must be revealed), and a continuous good-faith effort to find a buyer except while the property is under an agreement. Showing other properties is not a breach. With the seller's written agreement, the listing broker may pay subagents, who owe the seller the same duties.
• Buyer agent: represents the buyer even if paid by the seller or listing broker, and must disclose to the listing broker at first contact (or to the seller if there is none) that it represents the buyer.
• Dual agent: only with the written consent of both parties, given after the initial-interview disclosures and stating the compensation terms. A dual agent takes no action adverse to either party and may still show other properties.
• Designated agent: with the principal's written consent, the broker designates one or more licensees to represent the seller and others to represent the buyer. The broker is then automatically a dual agent and must protect confidential information; undesignated licensees in the firm have no agency with either party. A designated agent must tell the principal, before writing or presenting an offer, that the other side is represented by the same broker.
• Transaction licensee: no agency at all. The licensee advises the consumer not to share confidential information and owes limited confidentiality: never reveal that the seller will take less than the asking price, that the buyer will pay more than the written offer, or that either will accept other financing terms. Known material defects must still be disclosed.

Once a broker signs an agreement with a seller or buyer, every licensee in the firm acts as that party's agent unless designated otherwise. A principal's confidential information stays protected during and after the agency, except with consent, to someone acting solely for the principal, under subpoena or court order, to prevent a crime, or to defend the licensee. A broker may not delegate an agency relationship to another broker without the principal's written consent.

Written agreements and compensation

A licensee may work before signing but cannot recover a fee without a signed written agreement stating the services and fee. An open listing or nonexclusive buyer agency may be oral if the consumer gets a written memorandum of the terms. A subagent or transaction licensee cooperating with the listing broker needs no agreement with the seller, but before performing services must give the buyer a written disclosure statement to sign (a refusal is noted and kept 6 months).

Broker agreements state that the commission and duration were negotiated, the services and fees, any possibility of serving both parties, the continuing duty to disclose conflicts, escrow handling, the Recovery Fund, and cooperation policies (a buyer agreement adds that the fee may be a percentage of the price). An exclusive right-to-sell listing must state in bold that the broker earns a commission on a sale during the listing period by whomever made, including the owner. No exclusive listing may run more than 1 year, renew automatically, require a cancellation notice at expiration, let the broker sign the agreement of sale for the owner, give the broker an option to buy, or authorize confession of judgment.

Where this shows up on the exam

Agency and Disclosure is 10 of the 40 scored State items (Pearson VUE outline effective March 16, 2026). Expect scenarios on disclosure timing, 6-month retention, the transaction licensee's three secrets, and when dual or designated agency arises.

Sources

North Carolina law as published by the General Assembly and the Office of Administrative Hearings, checked 2026-11-05:

• 63 P.S. § 455.201
• 63 P.S. § 455.604(a)(12), (c)
• 63 P.S. §§ 455.606–455.606f
• 63 P.S. §§ 455.608–455.608a
• 49 Pa. Code §§ 35.281–35.284, 35.292
• 49 Pa. Code §§ 35.311–35.316
• 49 Pa. Code §§ 35.331–35.332
• 49 Pa. Code §§ 35.336–35.339 (Consumer Notice)
• Pearson VUE PA Real Estate Content Outlines #093901 (03/2026)