7.6.1 Dual Agency: Introduction

A written dual agency agreement must be provided and consented by all parties involved in a transaction and must be provided at the time the first offer to buy or sell is made.

A written dual agency agreement must be provided and consented by all parties involved in a transaction and must be provided at the time the first offer to buy or sell is made.

Agent's responsibilities: An agent's duties may be limited and amended in accordance with the Commission's Rules and Laws to reduce the risk of being a dual agent. In terms of dual agency or designated agency, a broker who is representing or designated to represent the interests of either only the buyer or only the seller, must not disclose (unless required to by a particular law or statute): Any conditions of saleThe seller's motivation for engaging in that transactionOther personal and confidential information derived from the other party in a transaction

Agent's responsibilities: An agent's duties may be limited and amended in accordance with the Commission's Rules and Laws to reduce the risk of being a dual agent. In terms of dual agency or designated agency, a broker who is representing or designated to represent the interests of either only the buyer or only the seller, must not disclose (unless required to by a particular law or statute): Any conditions of saleThe seller's motivation for engaging in that transactionOther personal and confidential information derived from the other party in a transaction

An agent in a dual agency must not represent more than one party in a transaction without the knowledge and consent of the other parties involved in that transaction.

An agent in a dual agency must not represent more than one party in a transaction without the knowledge and consent of the other parties involved in that transaction.

Why is designated agency considered an approach to minimize the problems associated with dual agency? Because it is not a form of dual agency Because the designated agents can perform all their duties without any hindrances Because the agent's duties are limited but not as much as a regular dual agent Because it is easier for the parties to communicate with each other and the agent involved

Because the designated agents can perform all their duties without any hindrances With designated agency, each agent performs their duties in the same way as they would in a 'single' agency relationship.

Bob is a senior agent at a firm that functions as a dual agency. He is approached by a buyer and initiates a buyer agent relationship. He tells the buyer about their designated agency option to which the buyer agrees. He offers to appoint a provisional broker Steve to be the designated agent for the seller as Steve works under him and would make exchanging client information and other necessary communications easier. Which of the following answers would be considered an ideal situation? Bob should not have offered to appoint Steve as the designated agent and Steve should not undertake to serve as a designated agent Bob can offer to appoint Steve and Steve can decide if he wants to function as a designated agent to that client Bob can appoint Steve and Steve can begin representing the designated client

Bob should not have offered to appoint Steve as the designated agent and Steve should not undertake to serve as a designated agent Since Bob is a broker in charge, he can not have a provisional broker who works under him representing the other party in the transaction. Steve himself should also refrain from undertaking to serve as the designated agent in this scenario.

Determine if the following statement is correct or incorrect: An agent does not have to disclose the motivation of the seller for selling a property unless required by statutes. Correct Incorrect

Correct The Commission Rule 21 NCAC 58A.0104(k) prohibits the agent from disclosing the motivation of the seller unless required to do so by statutes or rules.

Special features of designated dual agency

Designated agency is a form of dual agency and does not change the status of the firm as a dual agent even though designated brokers are representing the interests of the buyer and seller respectively. Designated agency should only be used for in-house dual agency situations. It is not dual agency when an agent is showing properties listed by their firm as a seller subagent. Multiple agents can be designated to serve the interests of one party in a transaction. Designated agency should be authorized at the time of presentation of the first offer to buy or sell has been made.

What is 'designated agency'?

Designated agency is an optional approach where the firm acting as a dual agent for a seller and buyer can appoint an individual agent to fully represent the interests of only the seller and only the buyer respectively. Usually one agent is designated to fully represent one party. While these agents deal with the buyer and seller, they act as though they represent different firms representing different principals even though they actually represent the same firm and represent both principals.

Designated agency: Designated agency is a form of dual agency even though designated agents are treated as individually representing agents to the parties involved. The firm must specify the name of the agent in charge of authorization and appointing the designated agents.

Designated agency: Designated agency is a form of dual agency even though designated agents are treated as individually representing agents to the parties involved. The firm must specify the name of the agent in charge of authorization and appointing the designated agents.

What is the benefit of 'designated agency'?

Designated dual agency allows the agent working a firm in a dual agency relationship to represent solely the interest of their client in a manner that they would represent in a 'single' agency relationship.

Anika is acting as a dual agent for Sophia Seller and Bernard Buyer. Which of these facts would Anika be required to disclose to Bernard? Bernard particularly wants Sophia's property because it is located close to his son's primary residence.

Disclosure prohibited

Anika is acting as a dual agent for Sophia Seller and Bernard Buyer. Which of these facts would Anika be required to disclose to Bernard? Sophia needs to close the sale quickly as she has been threatened with foreclosure.

Disclosure prohibited

Anika is acting as a dual agent for Sophia Seller and Bernard Buyer. Which of these facts would Anika be required to disclose to Bernard? Bernard needs to close the sale urgently and might be willing to pay more than the asking price.

Disclosure required

Authorizing Dual Agency in Listing and Buyer Agency Contracts

For authorizing dual agency in listing and buyer agency contracts, there are three possible scenarios: If the buyer and listing agent have already consented to dual agency in each of their contracts, they can provide an oral agreement if a dual agency situation arises and no not need to provide any further expression of consent If only one of the parties involved in a transaction has consented to dual agency, the agent must obtain the consent of the other parties in writing before they proceed with the transaction. The agency contract in which the dual agency agreement was formerly rejected can be amended or a separate dual agency agreement can be executed In case neither of the parties have consented to a dual agency agreement, both the buyer and seller must agree to the dual agency in writing. Here, too, amendments can be made to the initial contract or a new agreement can be signed

A firm should not consider designated agency in the following situations:

If a broker who has been assigned to represent an individual party in a dual agency relationship receives confidential information regarding the other party in the transaction, that broker should NOT undertake to represent the interests of the other party in the transaction. A broker-in-charge should not act as a designated broker for a party in a transaction if he or she has a provisional broker working under their supervision as a designated broker for the competing party.

If an existing agency relationship does not exist, the dual agency agreement must explain all the duties of the agent under buyer agency contract and the consequences of dual agency along with any modifications of the agent's duties under the contract.

If an existing agency relationship does not exist, the dual agency agreement must explain all the duties of the agent under buyer agency contract and the consequences of dual agency along with any modifications of the agent's duties under the contract.

If an oral agreement is made, a written agreement must be signed when the first offer to buy or sell is made. Both parties should consent to the dual agency, else the firm can not proceed.

If an oral agreement is made, a written agreement must be signed when the first offer to buy or sell is made. Both parties should consent to the dual agency, else the firm can not proceed.

Requirements for brokers in a Dual Agency Situation

In dual agency, there could be a conflict of interest between principals. The North Carolina Real Estate License Law in General Statute §93A-6(a)(4) states disallows a broker to act for more than one party in a transaction without the knowledge of all the parties involved in that transaction. This essentially means that disclosure of dual agency to all parties is required by law before the agent enters as a dual agent for multiple parties. This applies for all real estate transactions and not just for sales transactions. Real Estate Commission Rule 58A.0104(d) states that a broker representing one party in a transaction cannot represent another party in that transaction without written authority from each party.

Determine if the following statement is correct or incorrect: A broker's supervisor can act as a designated agent for the other party in a transaction. Correct Incorrect

Incorrect A broker in charge can only act as a designated agent if there is no provisional broker or any broker under him representing any other party in the transaction.

Determine if the following statement is correct or incorrect: North Carolina has adopted statutes to permit real estate license holders to act as a middleman in a designated agency relationship. Correct Incorrect

Incorrect North Carolina does not have any legislation authorizing the concept of a middleman, facilitator, limited agent or transaction agent.

The North Carolina Association of REALTORS® and the North Carolina Real Estate Commission have developed the following approaches to limit the problems associated with dual agency:

Limiting the dual agent's duties on contract Practicing Designated Agency Limiting a dual agent's disclosure duties to an individual agent's duties

An agent, Tom, is assigned to a buyer in a designated agency situation. Can his immediate supervisor, Leslie, be assigned to represent the interests of the seller? Yes No

No Rule 58A.0104(j) specifically prohibits a broker in charge to act as a designated agent in a transaction, where a provisional broker working under their supervision is assigned to the other party in that transaction. In this case, Tom's supervisor Leslie has a mandatory obligation to supervise all the work of the provisional agents and would have access to Tom's files and oversee his representation of his client. Due to this Leslie can not represent the other party as it would defeat the necessary separation required between designated agents.

O'Connell Inc. is a firm that acts as a dual agent. Nina approaches them for help with selling her home. Nina meets with Robin, a broker, and informs him that she needs to sell her property urgently, as her sister has sustained debilitating injuries in an accident and needs full-time care. Robin suggests that Nina opt for a designated agency relationship and recommends Keito to act as designated agent. Within a week, Robin meets with a prospective buyer and realizes that Nina's property would be ideal for them. Can Robin act as the buyer's agent for the sale? Yes No

No In this case, Robin is aware of a personal fact that is important to Nina, which can be considered confidential information. Robin cannot serve as the buyer agent due to this confidential knowledge.

Megan wishes to purchase some property and approaches a real estate firm for assistance. She has not initiated any buyer agency relation with the firm but wishes to view some of the firms listed property. The firm offers her a dual agency option directly and explains how the agent will work and explains its benefits to her. Megan accepts the contract and continues with the transaction. Did the firm act ethically in this scenario? No, the firm should not have offered a dual agency agreement as there was no existing agency relationship with Megan. No, the firm should have explained the consequences of dual agency as well as Megan could lead a court to conclude that there was no informed consent. Yes, the firm acted ethically, and no problem should arise.

No, the firm should have explained the consequences of dual agency as well as Megan could lead a court to conclude that there was no informed consent. Since there was no existing agency relationship between the client and the firm, the firm acted in the right way and offered Megan the option of dual agency. But the firm did fail to explain the consequences of the dual agency and hence Megan could win her argument in a court of law.

Limiting a dual agent's duties by contract

The North Carolina Association of REALTORS® has provided comprehensive dual agency provisions on the contract forms for listing and buyer agents. It permits the buyer and seller to authorize or reject the dual agency at the start of the relationship. The form allows the contract to be modified to limit the duties of the dual agent to the principal.

When must the written authority be granted by both parties in a transaction?

The authorization must be given in writing at the time of the formation of the dual agency relationship. The only exception is when a broker is working with a buyer under an oral buyer agent agreement, he or she may work with the buyer and seller under dual agency agreements until the written agreement is given, which should not be later than when an offer is made by either party.

TAKE NOTE

The broker-in-charge can act as a designated broker if the broker representing the other party in the transaction is not a provisional broker as their mandatory supervision duties would not interfere with that broker.

What are the designated agent's duties?

The designated agent is expected to solely represent the interests of his or her designated client. The Commission rule prohibits the designated agent from disclosing confidential information about the client to any other party involved in the transaction.

dual agency: An agent in a dual agency must not represent more than one party in a transaction without the knowledge and consent of the other parties involved in that transaction. A written dual agency agreement must be provided and consented by all parties involved in a transaction and must be provided at the time the first offer to buy or sell is made. If an existing agency relationship does not exist, the dual agency agreement must explain all the duties of the agent under buyer agency contract and the consequences of dual agency along with any modifications of the agent's duties under the contract.

dual agency: An agent in a dual agency must not represent more than one party in a transaction without the knowledge and consent of the other parties involved in that transaction. A written dual agency agreement must be provided and consented by all parties involved in a transaction and must be provided at the time the first offer to buy or sell is made. If an existing agency relationship does not exist, the dual agency agreement must explain all the duties of the agent under buyer agency contract and the consequences of dual agency along with any modifications of the agent's duties under the contract.