Key Takeaways

  • Subagents act under the authority of a primary agent but may owe duties directly to the principal in certain contexts.
  • They are commonly seen in real estate transactions, typically working for listing brokers while assisting buyers.
  • Real estate subagency can involve dual agency risks and declining use due to legal liability and fiduciary conflicts.
  • Liability depends on the source of authority and whether the principal authorized the appointment.
  • Differences exist between subagents and co-agents, buyer’s agents, or brokers acting under different representation models.

SUB-AGENT

A person appointed by an agent to perform some duty, or the whole of the business relating to his agency. Sub-agents may be considered in two points of view.

  1. With regard to their rights and duties or obligations, towards their immediate employers.
  2. As to their rights and obligations towards their superior or real principals.

A sub-agent is generally invested with the same rights, and incurs the same liabilities in regard to his immediate employers, as if he were the sole and real principal. To this general rule there are some exceptions for example, where by the general usage of trade or the agreement of the parties, sub-agents are ordinarily or necessarily employed, to accomplish the ends of the agency, there, if the agency is avowed, and the credit is exclusively given to the principal, the intermediate agent may be entirely exempted from all liability to the sub-agent.

Subagents vs. Co-Agents and Buyer’s Agents

It’s important to distinguish subagents from other types of agents in real estate and agency law.

  • Co-agents are agents who work directly for the same principal alongside one another, each with direct authority.
  • Buyer’s agents work exclusively on behalf of the buyer and owe fiduciary duties to them, unlike subagents, who owe duties to the seller.
  • Subagents, by contrast, are appointed by the original agent and may have indirect authority depending on the principal’s consent.

Understanding these distinctions helps clarify who each party in a transaction is responsible to—and reduces the likelihood of miscommunication or legal disputes​.

Subagents in Real Estate Transactions

In real estate, a subagent is typically a licensee working on behalf of a listing agent to help sell a property, but without representing the buyer. These subagents owe fiduciary duties—including loyalty and disclosure—not to the buyer they assist, but to the seller, who is the principal in the transaction.

The subagent’s role is often misunderstood because they interact directly with the buyer while their legal obligations are to the seller. This can create potential for conflict if the buyer assumes they are being represented.

Key characteristics of real estate subagents:

  • Work under the listing agent's authority, not directly under the seller.
  • Owe fiduciary duties to the seller, including confidentiality, obedience, and full disclosure.
  • Do not form a contractual relationship with the buyer, unlike buyer's agents.
  • May be subject to local disclosure laws, requiring written acknowledgment of their role.

Due to these fiduciary complexities and the potential for dual agency issues, the use of subagency in real estate has declined in many states in favor of exclusive buyer or seller representation models​​​.

Liability

The agent, however, will be liable to the sub-agent, unless such exclusive credit has been given, although the real principal or superior may also be liable. When the agent employs a sub-agent to do the whole, or any part of the business of the agency, without the knowledge or consent of his principal, either express or implied, the latter will only be entitled to recover from his immediate employer, and his sole responsibility is also to him. In this case the superior or real principal is not responsible to the sub-agent, because there is no privity between them.

Where by an express or implied agreement of the parties, or by the usages of trade, a sub-agent is to be employed, a privity exists between the principal and the sub-agent, and the latter may justly maintain his claim for compensation, both against the principal and his immediate employer, unless exclusive credit is given to one of them; and, in that case, his remedy is limited to that party.

How Subagents Are Appointed

Subagents may be appointed in one of three ways:

  1. Express authorization by the principal—direct permission for the agent to appoint another agent.
  2. Implied authority—when it's customary in the industry (e.g., real estate) to use subagents to complete a transaction.
  3. By necessity—in urgent circumstances where appointing a subagent is reasonably required to fulfill the agent’s duties.

However, if the agent appoints a subagent without the principal’s knowledge or consent and such authority is not implied, the subagent may not be able to enforce any claims against the principal. This is why written agreements and clear communication are critical in establishing valid subagency relationships​.

Real Estate Subagent Risks and Legal Limitations

The liability of subagents in real estate is often shaped by state law and brokerage practices. If a subagent misrepresents a property to a buyer, the seller may still be liable under vicarious liability doctrines. Conversely, if a subagent acts outside the scope of their authority, they could be held personally liable.

Key legal considerations include:

  • Disclosure requirements: Many states mandate subagents disclose their relationship to the seller, especially in writing.
  • Consent of the principal: If the principal did not authorize the subagent, the subagent may not be able to claim compensation or legal protection.
  • Potential conflicts of interest: Because subagents may show properties to multiple buyers, loyalty to the seller can become strained.

This legal ambiguity has led many brokerages to avoid subagency and instead use buyer’s agency contracts to establish clearer lines of fiduciary duty​​.

Frequently Asked Questions

  1. What is a subagent in legal terms?
    A subagent is a person appointed by an agent to assist in carrying out duties on behalf of the principal. Their role depends on the scope of authority and consent from the principal.
  2. How do subagents differ from agents and co-agents?
    Agents have a direct relationship with the principal. Subagents act under the original agent, while co-agents are directly appointed by the principal and work collaboratively.
  3. Are subagents still used in real estate?
    While still legally valid, subagency has become less common due to fiduciary concerns and risks of dual representation. Many brokerages prefer exclusive buyer or seller agents.
  4. Who is liable for a subagent’s actions?
    Liability depends on whether the subagent was properly authorized. The principal may be liable if the subagent acts within authorized duties, but not if appointed without consent.
  5. Can a buyer rely on a subagent for representation?
    No. Subagents in real estate owe duties to the seller, not the buyer. Buyers should seek their own agent for representation to avoid conflicts of interest.

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