There are two types of Agency disclosure forms in New York, one addressing the agent’s fiduciary relationship to the Landlord and Tenant in a rental transaction, and another for their relationship to a Buyer and Seller in sales transactions. Each clearly delineates whose interest the agent serves and, though not binding, defines the terms of the relationship during the real estate transaction. For the purposes of this article, we’re going to focus on the Disclosure Form for Landlord and Tenant.
If you’ve never seen this form (and you already live in New York), your real estate agent may not have been doing their job—they are required by state law to provide you with an Agency disclosure form at first substantive contact, with the sole purpose of disclosing their interest as it relates to the transaction. Below are the agency relationships specified by a New York State Disclosure Form for Landlord and Tenant.
A Tenant’s Agent represents the Tenant’s interests solely by negotiating a lease at a price and on terms acceptable to the Tenant. A Tenant’s Agent has, without limitation, the following fiduciary duties to the Tenant: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience, and duty to account.
A Landlord's Agent is engaged by a Landlord to represent their interests only, and does this by securing a Tenant for the Landlord’s property at a price and on terms acceptable to the Landlord. Similar to a Tenant’s Agent’s relationship to the Tenant, a Landlord’s Agent has, without limitation, the following fiduciary duties to the Landlord: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience, and duty to account.
A Broker’s Agent cooperates with or is engaged by a Tenant’s Agent or Landlord’s Agent to assist in leasing property, but they do not work for the same firm as the Landlord’s Agent or Tenant’s Agent. The Tenant and Landlord therefore do not have a direct relationship with the Broker’s Agent, and cannot provide instructions nor direction (except through their own Agent). This prevents the Tenant and Landlord from bearing liability for any acts of the Broker’s Agent.
A Dual Agent may represent both the Tenant and Landlord if both parties grant their informed written consent. However, in such a dual agency situation, the Broker is unable to provide the full range of fiduciary duties to the Tenant and Landlord due to conflict of interest. By consenting to the dual agency relationship, both Tenant and Landlord waive their right to undivided loyalty.
Dual Agent with Designated Sales Agent
This relationship builds on the terms of a Dual Agent, but ultimately does not alter the fact that the acting agents cannot provide the full range of fiduciary duties to the Tenant and Landlord. With a Designed Sales Agent, for the purposes of negotiation, the Broker representing both parties may designate an additional Agent to represent the Tenant, and another to represent the Landlord. Still, the Designated Sales Agents must explain that, like the Broker under whose supervision they function, they cannot provide undivided loyalty.
The New York State Disclosure Forms are not binding contracts, so please remember: when presented by an agent, you can refuse to sign. However, it is important to acknowledge receipt of the form and understand whose interest the agent represents when negotiating.
If you are considering leasing property in New York, contact Byson to be connected with a knowledgeable agent ready to work for your best interests.