Designated agency was created to replace subagency to better clarify who is being represented in the transaction & who is not. It happens by creating a contract between the broker & client where one or more licensees is appointed as the agent of the client & is named by a broker as the agent of the client.

• A. Replaces the need for disclosure in dual agency.
• B. Replaces subagency by appointing a licensee as the client's agent through a contract.
• C. Means the broker represents only the seller, not the buyer.
• D. Is identical to traditional subagency.

Answer: (B)

Designated agency centers on the broker appointing one or more licensees to represent a specific client through a contract, so the client’s chosen agent is clearly identified and no one is left guessing who is being represented. This setup replaces subagency by making the representation explicit: the broker names the agent who will advocate for the client’s interests, while other licensees interact with the transaction under their designated roles. That’s why the statement describing an appointment of the client’s agent via a broker–client contract is the best match. It’s important to note that disclosures still apply in designated agency; this arrangement does not remove the need to disclose who represents whom. It also doesn’t imply the broker represents only the seller or only the buyer. And it isn’t identical to traditional subagency, which involved different agents representing the seller’s interests to the buyer; designated agency redefines representation by contract and designation rather than through subagents.