Indiana Agency Law: Complete Guide for the Real Estate Exam
Master Indiana agency relationships, disclosure requirements, and dual agency rules for the state portion of the PSI real estate exam.
Agency law is one of the highest-tested areas on the Indiana state real estate exam. Understanding who the agent represents, what duties they owe, and when disclosures must happen is essential for passing the state section.
The Three Agency Relationships in Indiana
Seller's Agency (Listing Agent) The listing agent represents the seller. Duties owed to the seller include loyalty, confidentiality, obedience, disclosure of material facts, accounting, and reasonable care (LCODAR).
Buyer's Agency A buyer's agent represents the buyer exclusively. They owe the buyer full fiduciary duties, including the duty to disclose anything that might affect the buyer's position.
Dual Agency When one agent or brokerage represents both buyer and seller in the same transaction, dual agency exists. In Indiana, dual agency requires written informed consent from both parties. The agent cannot reveal one client's confidential information to the other.
Disclosed Dual Agency vs. Designated Agency
Indiana law permits designated agency, where two different agents within the same brokerage represent buyer and seller respectively, with the managing broker acting as the dual agent. This allows both clients to receive full representation while only the managing broker holds dual agent status.
Non-Agent / Transaction Broker
Indiana also recognizes a non-agent or transaction broker role, where the licensee facilitates the transaction without representing either party as a fiduciary. The licensee still owes honesty and disclosure of known material defects, but not full fiduciary duties.
Agency Disclosure Requirements
Indiana law requires agents to disclose their agency relationship at first substantive contact with a consumer. The agency disclosure must be:
- In writing
- Provided before any confidential information is exchanged
- Acknowledged by the consumer
Failing to disclose agency status is a violation of IREC rules and can result in disciplinary action.
Duties Summary
| Duty | Seller's Agent | Buyer's Agent | Transaction Broker | |------|---------------|---------------|-------------------| | Loyalty | To seller | To buyer | Neither | | Confidentiality | Seller's info | Buyer's info | Limited | | Disclosure of material facts | Yes | Yes | Yes | | Full fiduciary | Yes | Yes | No |
What Gets Tested
The Indiana state exam frequently tests:
- When agency disclosure must occur ("first substantive contact")
- What constitutes dual agency and the consent requirement
- Designated agency mechanics
- The difference between a licensee's duties to a client vs. a customer
Common Wrong Answers
Candidates often confuse: - Client (full fiduciary duties) vs. customer (honest dealing only) - Disclosed dual agency (one agent, both parties consent) vs. undisclosed dual agency (illegal) - Subagency (representing seller through cooperative agreement) vs. buyer's agency
For Indiana-specific agency practice questions visit [CARealestate.com/states/indiana](https://carealestate.com/states/indiana).
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