BIC TIP #1112: The Duration of the Agency Agreement Matters
The length of an agency agreement is not just a formality. It directly affects a broker’s legal authority to provide brokerage services.
If a buyer agency or listing agreement expires before closing, the broker technically no longer has written authority to act on behalf of the client. While the North Carolina Real Estate Commission takes a pragmatic approach and generally allows a broker to “wrap up” a transaction that is substantially complete, relying on that grace is not a best practice.
From a risk-management and compliance standpoint, the safest course of action is to ensure the agency agreement extends through the anticipated closing date. This protects the broker, clarifies expectations, and avoids unnecessary questions about authority at a critical stage of the transaction.
At the same time, overly long agency terms can also create problems. A broker may find themselves contractually bound to a client they no longer wish to represent or service. The goal is balance: long enough to cover the full transaction, but not so long that it creates unintended obligations.
Best practice: Set realistic expiration dates and extend agency agreements when needed so they clearly run through closing.
