Understanding Agency Relationships in Real Estate Transactions in Minnesota

Buying or selling a home can be a complex and emotional process. Whether you're a first-time homebuyer or a seasoned real estate investor, understanding the agency relationships involved in the transaction is crucial. In the state of Minnesota, like in many other states, real estate professionals are bound by law to disclose their agency relationships to ensure transparency and protect the interests of all parties involved in the real estate transaction.

In this blog post, we will delve into the importance of understanding agency relationships in real estate transactions.

View the Agency Relationships in Real Estate Transactions Disclosure.


1. Defining Agency Relationships

2. Disclosure Requirements

3. Importance of Disclosure

4. Navigating Dual Agency


1. Defining Agency Relationships

In the context of real estate, an agency relationship refers to the legal arrangement between a real estate agent or broker and their clients. The agent is tasked with representing the client's interests in a real estate transaction. There are four primary types of agency relationships in Minnesota:

  1. Seller's/Landlord's Broker: This type of agent represents the seller in a real estate transaction. Their primary duty is to promote the seller's interests, find potential buyers, and negotiate on the seller's behalf. While working with a seller's agent, buyers should be cautious about sharing sensitive information, as the agent's loyalty lies with the seller.
  2. Buyer's/Tenant's Broker: A buyer's agent works exclusively on behalf of the buyer. They assist buyers in finding suitable properties, providing market analysis, and negotiating the best terms for the buyer. This type of agency relationship ensures that the buyer's interests are the top priority.
  3. Dual Agent: In some cases, a real estate agent may represent both the buyer and the seller in a single transaction. This is known as dual agency. However, dual agency is highly regulated and requires written consent from both parties. Even with consent, the agent must maintain neutrality and cannot provide undivided loyalty to either party.
  4. Facilitator: A facilitator can help both parties in executing a legal real estate contract, however, this type of agent does not represent either party in a fiduciary capacity.

2. Disclosure Requirements

Minnesota law mandates that real estate professionals disclose their agency relationships to all parties involved in a real estate transaction. This disclosure must happen early in the relationship and can take several forms:

  • Agency Disclosure Form: Agents are required to present an Agency Disclosure Form to potential clients at the earliest substantial contact. This form clearly explains the different agency relationships and the agent's role in the transaction. Clients must acknowledge receipt of this form in writing.
  • Written Representation Agreement: After initial disclosure, if the client chooses to work with a specific agent, a written representation agreement is established. This agreement outlines the terms of the agency relationship, including the agent's duties, obligations, and compensation.

3. Importance of Disclosure

  • Transparency: Disclosure ensures that all parties involved are aware of the agent's role and responsibilities. This transparency helps prevent misunderstandings and conflicts of interest.
  • Informed Decision-Making: Buyers and sellers can make informed decisions about their involvement in a transaction when they understand the agency relationships at play. They can better assess the advice and information provided by the agent.
  • Conflict Mitigation: Clear disclosure reduces the likelihood of conflicts arising due to misconceptions or misinterpretations of the agent's role. Clients know what to expect and can address any concerns upfront.
  • Ethical Standards: Agents must adhere to strict ethical standards in their dealings with clients. Proper disclosure is a fundamental ethical obligation that promotes fairness and professionalism.

Dual agency can be particularly intricate and requires careful navigation to ensure compliance with the law. Agents acting as dual agents must maintain strict neutrality and cannot advocate for either party's interests. While dual agency is legal with consent, some real estate professionals choose to avoid it altogether to prevent potential conflicts.


In the dynamic world of real estate, understanding agency relationships and their disclosure is essential for a successful and ethical transaction. As a buyer or seller in Minnesota, it's crucial to be aware of the different agency roles and the responsibilities that come with them.

By embracing transparency and aligning expectations through proper disclosure, all parties can move forward with confidence, knowing that their interests are being represented accurately and ethically.

If you're ever unsure about the agency relationships in a real estate transaction, don't hesitate to seek legal counsel or clarification from a qualified real estate professional.


Contact us today to start working with an experienced Twin Cities real estate agent.