Understanding a Real Estate Agent’s Fiduciary Duties: Dual Agency

Today, we continue our series on real estate professionals’ fiduciary duties. Attorney, Carl Block, addresses the topic of dual agency in the real estate transaction. Dual agency is allowed by law but it comes with risks for the agent. Some 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.

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

In our first article of the fiduciary duty series, we examined the overview of the fiduciary obligation. That is, that real estate professionals serve as fiduciaries to their clients. Today, we begin a two-part look at and understanding of acting as a dual agent. A real estate agent has an obligation to avoid conflicts of interest. But how does that work in the context of dual agency and the fiduciary obligations involved when acting in the capacity of a dual agent?

Dual agency will be covered in two articles: This first article will discuss the concept of dual agency generally. The second part will cover the challenges of dual agency.

In general, a broker is the agent of the party who first employs the broker. What this means is that as an agent the broker/salesperson acts for the benefit of the principal (their client). When the broker is the agent for only one party, the broker owes fiduciary duties to the party who first employed the broker. Fiduciary duties include a duty of utmost care, integrity, honesty and loyalty in dealings. In most cases, this occurs when a seller contacts a broker to list the property and sell the property. This makes sense, because the seller has employed the broker to sell the house, so the broker owes a fiduciary duty to the seller.

A dual-agency situation is different. Dual agency occurs when a broker for one party to a transaction accepts or assumes duties for another party to the transaction. Dual agency is legal by statute in California, provided that the dual-agency situation is disclosed to both the buyer and the seller, and both the buyer and seller consent to dual-agency.

The most obvious example of dual-agency is when the same agent represents both the seller and the buyer. Unfortunately, it is not always that obvious. There are situations where one can stumble into dual agency without realizing it, unless you are careful. A 2016 California Supreme Court case, Horiike v. Coldwell Banker Residential Brokerage Co., held that dual-agency is at the brokerage level, not the sales agent level. This means that two real estate agents who work for the same broker, even though they are in separate offices, where one agent represents the buyer and another agent represents the seller, still puts the broker into a dual agency situation.

Although dual agency is legal in California, it has many pitfalls and dangers. Dual agency is a frequently litigated complaint. Brokers can lose commissions, lose their license, or have a contract rescinded. To help avoid the dangers, you need to realize that two real estate agents who work for the same broker can inadvertently put the broker in a dual agency situation if one agent represents the buyer and another represents the seller. Stay tuned for our next blog on dual agency, where we will go over the many dangers.


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.