In the Wyoming case Fowler v. Westair Enterprises, Inc., the court considered whether an implied agency relationship existed. A sales associate affiliated with Westair Enterprises ("Westair"), showed a home to Charles Fowler. The sales associate, who was also the listing agent, told Fowler that he represented the sellers.
When Fowler questioned some possible defects, the sales associate suggested that he have an inspection done, and Fowler asked the sales associate to make the arrangements, which he did. After the inspection, the inspector sent a letter addressed to the sales associate, stating that the house was structurally sound. Fowler, however, later discovered many defects and sued the property owners, Westair, and the inspector. The lower court ruled in favor of Fowler in his claims against the inspector, but against him in his claims against the owners and Westair.
On appeal, Fowler argued that the sales associate had acted as his agent by obtaining the inspection, but acknowledged that he had understood that the sales associate represented the sellers. While Fowler and the sales associate hadn’t entered into an express agency agreement, the court evaluated whether an implied agency relationship had existed.
An implied agency relationship is established by the words and/or actions of the agent or the principal, rather than by written agreement. Based on the fact that the sales associate had explained that he represented the sellers and Fowler had understood that, the court decided that there was not an implied agency relationship.
Note: While the court didn’t find an implied agency relationship in Fowler, real estate practitioneers must be very careful that their actions don’t create implied agency relationships (sometimes referred to as "accidental agency"). If a court finds such a relationship existed, then the real estate licensee will have owed the consumer all of the duties of an agent. In most states these are all of the traditional fiduciary duties (loyalty, obedience, disclosure, confidentiality, reasonable care, and diligence and accounting.) It’s important to understand that a licensee and his/her conduct can create an implied agency relationship even if customers have signed a form denying that an agency relationship exists. Practitioneers need to be careful not to act in ways that might cause customers to think they are clients and that the real estate practitioneer is representing them.
Fowler v. Westair Enterprises, Inc. 906 P.2d 1053 (Wyo. 1995).