Direct answer
What does Agency mean?
A relationship in which an agent is authorized to act for a principal and owes duties within that relationship.
Exam cue: First identify whom the licensee represents, then apply the duty owed to that person.
What does it look like in a question?
New York example
A seller signs a listing agreement authorizing a broker to market and negotiate the sale.
Common exam trap
What should you not confuse it with?
Providing service to a customer does not by itself create an agency relationship.
Related agency terms
AccountingThe fiduciary duty to safeguard and properly account for money, documents and property entrusted to the agent.Broker's agentAn agent who cooperates with or is engaged by another agent without becoming a subagent of that agent's principal.ClientA principal who is represented by a real estate agent.CustomerA person who receives services from a licensee but is not represented by that licensee as an agent.Designated sales agentA sales agent appointed within a disclosed dual agency arrangement to advocate for one principal in negotiations.Dual agencyRepresentation of both sides in the same transaction by the same broker, with the required informed consent.
Sources used3 references with section locators
The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.
- Real Estate Salesperson 77-Hour CurriculumNew York State Department of StateSupports: Exam scopeSection: Subject 2, Law of Agency
- Real Property Law section 443New York State SenateSupports: New York ruleSection: Definitions, disclosure timing and statutory disclosure forms
- Real Estate License Law, March 2026New York State Department of StateSupports: DefinitionSection: Department of State reference glossary entry for Agency
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