Oregon 30-Hour Real Estate Law Practice Test

Which situation best demonstrates an example of sub-agency?

1. Kyle helps a client sell their home

2. Michelle assists a buyer but owes fiduciary duties to the seller

3. Eric represents both buyer and seller

4. Jenna consults on negotiations for the buyer

The correct answer is: Michelle assists a buyer but owes fiduciary duties to the seller

The situation that best demonstrates sub-agency is one where an agent assists a buyer while owing fiduciary duties to the seller. In the realm of real estate, sub-agency occurs when a broker or agent represents the interests of the seller but someone else is working with a buyer. This means that while one agent is the primary representative for the seller, another agent (in this case, Michelle) is assisting the buyer in navigating the transaction. Michelle is acting with fiduciary duties to the seller, which means she must prioritize the seller's interests in the transaction while possibly still aiding the buyer. This relationship is inherently tied to the concept of sub-agency, where the agent providing assistance (to the buyer) is still responsible for acting in the seller's best interest because they are working under a listing agent who has retained the seller's fiduciary duties. The other scenarios do not illustrate sub-agency because they either involve direct representation without conflicting fiduciary duties, such as Kyle selling a home and Eric representing both parties, or they imply a consulting role without a fiduciary obligation, as with Jenna who is only negotiating for the buyer. Thus, the essence of sub-agency lies in the balance of duties to multiple parties within the context of a real