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Dual Agency? What is it? Lets look it in depth. Acting for both Competing clients. It is always a fundamental premise of both agency law and professional ethics that all professionals must avoid acting for two clients whose interests are in conflict. A real estate professional's role is to provide impartial expert advice. It is difficult to give impartial advice one client if another client is likely to be adversely affected. If a professional is placed in a position of conflict between the interest of two clients, they should resolve the matter by declining to act for one, or in extreme cases both, of the clients. Real estate brokers are particularly susceptible to this type of conflict because of the peculiar nature of the listing and selling process involved in most real estate transactions. A prospective purchaser of a property will often look to a representative for expert advice and may request disclosure of information about a property that a representative, as the agent of a vendor, is not in a position to disclose. An example of undisclosable information would be information relating to selling price: a purchaser of a property may be keenly interested to know a vendor's financial status and any details which might reveal the lowest price at which a vendor would be wiling to sell. Such details would undoubtedly be disclosed to the representative in confidence by a client, and could not be disclosed without first obtaining the client's consent. Agency Laws Prior to 1994 in British Columbia real estate agents worked as sub agents of the seller. This was called "assumed seller sub-agency" and made it confusing for the typical buyer. They thought the the buying agent helping them was working for them but in fact they where working for the seller. In 1994 British Columbia changed this to "assumed buyer agency". Now if the licensee (real estate agent) is working with the buyer it is assumed he is working for the buyer only (this is why we have Exclusive buyer agency agreements). This is the case unless the agent has consent from both the buyer and seller to work for both of them. In the Province of British Columbia we have the: Limited Dual Agency Agreement When the British Columbia real estate industry adopted assumed buyer agency, the industry foresaw situations where the listing agency might also represent the buyer. For example: - Where two different licensees in the listing brokerage work with the seller and buyer respectively.
In law, the seller lists with the real estate brokerage, not with an individual listing licensee. The listing contract is between the seller and the brokerage. In a large office, one licensee may have signed up the listing while another licensee in the same office has been working with a buyer who wishes to present an offer. Although both licensees work for the listing brokerage, the licensee working with the buyer is presumed to represent the purchaser, given assumed buyer agency. This is clearly a conflict. - Where the listing licensee is the same licensee who brings the buyer to the transaction (i.e.,a "double-ender")
Licensees typically split the sales commission between the listing and selling ends of the transaction. The listing end involves the work of the listing licensee. The selling end reflects the work done by the licensee who introduces the buyer to the property. If two separate licensees are involved at the listing and selling ends respectively (as in the example immediately above), the licensees split the commission. However, if the same licensee performs both the listing and selling ends, he or she receives all the commission. This is what happens where the listing licensee finds the buyer, and it is called a "double-ender" in the industry. On the face of it, a double ender is a clear conflict because the listing licensee representing the seller is also assumed to act for the buyer. In either of these circumstances, the listing brokerage (any agent that works for the same agent even if it's not there listing) is attempting to serve, both, the seller and the buyer at the same time. To make the arrangement workable, the listing brokerage needs the seller and buyer to permit the brokerage to modify its relationship with both clients. For example, rather than requiring the brokerage to fully disclose all matters to both sides, the seller and the buyer may allow the brokerage to limit its responsibilities in this area. In these cases, the listing brokerage will intentionally ask the seller and the buyer for permission to represent both on a limited basis. The listing brokerage uses a form of written agreement called a Limited Dual Agency agreement. Under this form of agreement the seller and the buyer agree that the brokerage shall represent both of them. Although the brokerage and its licensee(s) are still required to deal impartially with both clients, the duty of full disclosure is modified to allow the licensee to keep information confidential from one side against the other in three areas: - The price a client is willing to accept or pay;
- The motivation of either client; and,
- Either client's personal information.
This means that the licensee must still disclose all known defects to a buyer. If either client refuses to enter a Limited Dual Agency agreement, the listing brokerage must withdraw from representing the buyer. In that case, the listing brokerage will typically refer the buyer to another brokerage for separate representation, or the buyer will act for him or herself without any agency representation. I have tried to present this matter in whole using quotes from the University of British Columbia text book "Real estate Trading Services Licensing Course Manual" but UBC would not give me permission to use any quotes on the subjects. So I have re written it in my own words without any prejudice. Cheers Scott Simmons |