Brokerage agreement
A brokerage agreement is the written agreement that creates a brokerage relationship between a client and a real estate licensee. In Virginia it is what makes a seller or a buyer a client rather than a customer, and it must state whether the licensee represents the client as an agent or as an independent contractor.
Written, creating, client: the definition taken one word at a time
Va. Code 54.1-2130 defines the term in one sentence, and three of its words do nearly all the work: written, creating and client.
"Brokerage agreement" means the written agreement creating a brokerage relationship between a client and a licensee.
Va. Code 54.1-2130
Written
Va. Code 54.1-2137 says brokerage agreements shall be in writing. The paper also outlasts the sale. Under the Real Estate Board's regulation 18VAC135-20-185 C 1, each brokerage agreement must be retained for three years from the date of execution, and the duty to keep it sits with the principal or supervising broker of the firm.
Creating
The definition's verb is creating: the agreement is the instrument of the relationship, not a note about it afterward. Except as the brokerage article otherwise provides, a licensee must enter into a brokerage agreement with a prospective client before providing brokerage services, and the Code describes those services as including activities requiring the exercise of a licensee's professional judgment, discretion, advice or counsel. The paper comes first and the representation follows. On the buyer's side the statute adds a timing rule of its own, tied to showings, which is covered under buyer agency.
Client
The Code draws a hard line between a client and a customer. A client is a person who has entered into a brokerage relationship with a licensee. A customer has not, and is a person for whom a licensee performs ministerial acts, meaning routine acts that involve no discretion or exercise of the licensee's own judgment. Unless a licensee enters into a brokerage relationship with a person, the law presumes that person is a customer rather than a client.
That presumption is worth knowing before the first phone call about a tract. A buyer who rings the listing agent to ask about getting onto a property, and has signed nothing with that licensee, is presumed to be a customer rather than a client. Who can actually grant permission to go look at the ground is a separate matter, answered in who can give you permission to walk land before an offer.
Agent or independent contractor, named on the face of the paper
The definition says a relationship is created. The same statute goes on to say that the kind of relationship has to be spelled out.
The brokerage agreement shall state whether the real estate licensee will represent the client as an agent or an independent contractor.
Va. Code 54.1-2130
The distinction runs through the rest of Virginia's brokerage vocabulary. Where one licensee holds brokerage relationships with both seller and buyer in the same transaction, the Code calls that licensee a dual agent when the relationships are agency relationships and a dual representative when they are independent contractor relationships. So the line on the agreement that names agent or independent contractor is not boilerplate.
When the client is a seller, the trade usually calls the same paper a listing agreement, though the Code's word stays the same. What the agreement must contain beyond the relationship line, including its end date and its fee terms, is set out in what a Virginia brokerage agreement has to include.
An owner who lives far from the property, or has never seen it, still comes to the relationship through this same written paper, and the questions distance raises are answered on their own pages: working with owners who live out of state, and selling land you have never visited.
Wondering what the written agreement to list with this office would say?
A listing here starts from a written brokerage agreement, relationship line included. Describe the property and ask what that paper would say before you commit to anything. No cost, no obligation.
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We'll be in touch shortly with an honest read.
Questions about this term
Does talking with a listing agent make me that agent's client?
No. Virginia law presumes a person is a licensee's customer rather than a client unless the licensee enters into a brokerage relationship with that person, and that relationship is created by a written brokerage agreement. Without one, the licensee may still perform ministerial acts for you, the routine acts that involve no discretion or exercise of the licensee's own judgment.
How long does a real estate firm keep a brokerage agreement after it is signed?
Three years. The Real Estate Board's regulation 18VAC135-20-185 C 1 says each brokerage agreement must be retained for three years from the date of execution, and the same period applies to each disclosure and consent to dual or designated agency or representation. Keeping those records is the duty of the firm's principal or supervising broker.
Where this page's facts come from
Every rule, office and figure above traces to one of these. Rules change; check the office before you act on one.
- Va. Code 54.1-2130, Definitions Code of Virginia
- Va. Code 54.1-2137, Commencement and termination of brokerage relationships; brokerage agreements required Code of Virginia
- 18VAC135-20-185 C 1, Maintenance and management of records (Regulations of the Real Estate Board, Chapter 20) Virginia Real Estate Board