Reversal was required where the agency and the juvenile court ignored the statutory mandate to consider relatives in determining placement. The minor was born testing positive for drugs to parents with a history of drug abuse, domestic violence, and a failure to reunify with another son. Over the parents’ objection the minor was placed with a non-related extended family member, Victoria. Two paternal aunts requested custody of the minor, but were never considered by the Department. The parents were denied services, and a section 366.26 hearing was set. Without waiting for completion of the relatives’ home studies, the court ordered a permanent placement with Victoria. The paternal aunts’ home inspections were completed when the minor was three months old. The Department refused to consider moving the minor. One aunt and her husband moved for a modification of the placement which was not ruled on until the minor was 14-months old, when it denied the motion. The parents also pursued efforts to relinquish their parental rights and designate the aunt and uncle as the adoptive parents. The Department refused to accept the relinquishment unless it designated Victoria as the adoptive parent. The court terminated parental rights. Held: Reversed. The agency and the court failed to apply the statutory preference for placing a dependent child with a relative. The court further erred by denying the aunt and uncle’s modification motion. It further abused its discretion in failing to accept parental relinquishment of the dependent child for adoption by designated relatives. Remand was required in order for the agency and the court to consider and apply the correct standards. The agency was ordered to redetermine whether to accept the parents’ offer to relinquish the minor for adoption.