Which statement about designated agency is true?

• A. It eliminates the need for disclosure in any scenario.
• B. It ensures the broker represents both sides as a single client.
• C. It creates a contract where the broker appoints the other party's agent.
• D. It creates a contract where one or more licensees are appointed as the client's agent by the broker.

Answer: (D)

Designated agency means the broker appoints one or more licensees to act as the client’s agent. This creates a clear client-agent relationship within the same brokerage, with the designated licensee loyal to and bound to the client, handling disclosures and fiduciary duties for that client. Meanwhile, other licensees in the same brokerage can represent the opposing party without diminishing the designated agent’s duties to the client. It’s not about the broker representing both sides as one client, nor does it eliminate disclosures. It simply establishes that the broker designates specific licensees to represent the client.

That’s why the statement describing an appointment by the broker of one or more licensees to act as the client’s agent best fits designated agency.