Understanding a Real Estate Agent’s Fiduciary Duties – Dual Agency Part 2

Today, we continue our series on real estate professionals’ fiduciary duties. Attorney, Carl Block, continues his examination of dual agency in the real estate transaction. Dual agency is allowed by law but it comes with risks for the agent. Some of which may be known and many that may not be known but the agent should be aware of as they navigate their fiduciary obligations to their clients.

As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing managing shareholder Keith Dunnagan at kbdunnagan@bpelaw.com.

Also, remember that we do legal presentations for business and community organizations. If your group would like to schedule a presentation, please contact me to setup a date and time.


Understanding a Real Estate Agent’s Fiduciary Duties:
Dual Agency – Part 2
By: Carl Block, Esq.

In part one of our look at dual agency, we examined what dual agency is. In this second article, we cover some of the dangers and challenges of dual agency.

The law defines dual agency as when a broker for one party to a transaction accepts or assumes duties for another party to the transaction. You should remember that dual agency is defined at the brokerage level, not at the real estate agent level. Thus, a broker can get into a dual agency situation if they have two agents who work for the broker work on the same transaction, where one agent represents the seller and another agent represents the buyer.

California Civil Code 2079.17 requires the broker to disclose when they are acting as a dual agent representing both the buyer and the seller and to obtain written consent from the buyer and the seller. What happens if you fail to disclose and obtain consent? As far back as 1917, in the case of Glenn v. Rice, the California Supreme Court held that undisclosed dual agency is grounds for rescission of the contract, even if the broker acted in good faith and there was no injury to either party. The broker can also lose commissions if there is a failure to disclose. In a 1991 case, Culver v. Jaoudi, the dual-agency situation was not disclosed to the seller. The Court held that the broker was not entitled to a commission, even though the seller benefited from the broker’s efforts. Additionally, failure to disclose a dual agency relationship is cause for revocation or suspension of a real estate license under the Business and Professions Code § 10176(d).

That’s bad. But let’s say you make the required disclosures and obtain consent. Are you home free? No.

There are many pitfalls to dual agency. Be extra careful about fulfilling the fiduciary duty of loyalty and confidentiality to the buyer and seller. The fiduciary duty of loyalty and confidentiality in terms of pricing is especially challenging in a dual-agency situation. When a dual agent represents both a buyer and a seller, the broker cannot disclose to the seller that the buyer is willing to pay more than the buyer’s written offer. Additionally, the dual agent cannot disclose to the buyer that the seller is willing to take less, without written consent of the party authorizing the disclosure. Either of these actions is a violation of Civil Code 2079.21.

The key point to remember is that dual agency has many pitfalls and dangers. A broker could be sued, lose their commission, have the contract rescinded, and even lose their real estate license. If you go down the route of dual agency, ensure you strictly comply with all legal procedures and disclosures, document everything, and be extra cautious. Compliance is imperative in protecting yourself in the dual agency transaction.

Fiduciary duties create the special relationship between the fiduciary and client and must be safeguarded at all times.

If an allegation is raised, seek immediate assistance from competent legal counsel that can help you navigate the pitfalls and defenses to such a claim. The impacts of a breach of fiduciary duty can be far reaching and it is usually best to get out in front of a claim and protect your interests. The attorneys at BPE Law Group have significant experience in representing agents and brokers and in some situations consumers when there have been breaches of the fiduciary duty.

Stay tuned — in our next installment on fiduciary duties, we will examine the duty of loyalty and impacts of self-dealing.


The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in business and real estate matters and have represented and advised brokers on their professional obligations as well as consumers on their rights. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.