For a valid agency relationship, what must the commission agreement be?

For a valid agency relationship in real estate transactions, the commission agreement must be in writing. This requirement is crucial because it provides clear evidence of the terms agreed upon between the parties involved. Having a written agreement helps to prevent misunderstandings and disputes regarding the obligations and rights of each party, including the amount of commission to be paid, the scope of services to be provided, and the duration of the agency relationship.

Written agreements also enhance accountability and can facilitate enforcement of the terms when necessary. In many jurisdictions, including North Carolina, the law often mandates that exclusive agency agreements be documented to protect all parties involved and ensure transparency.

An oral agreement, while possibly valid in some contexts, is generally less secure and more prone to misunderstandings, making it less desirable for establishing a formal agency relationship. Similarly, notarization or approval by a broker are not requisite legal requirements for the formation of a valid agency agreement; the primary stipulation is that the agreement is documented in writing.