What is a Dual Agent?

A real estate broker acts on behalf of a real estate firm to perform real estate brokerage services under the supervision of a designated broker or managing broker. RCW 18.85.011(2); Erwin v. Cotter Health Centers, Inc., 161 Wn.2d 676, 688, 167 P.3d 1112 (2007).

A dual agent means a broker who has entered into an agency relationship with both the buyer and seller in the same transaction. A broker may act as a dual agent only with the written consent of both parties to the transaction after the dual agent has complied with RCW 18.86.030(1)(f), which requires to broker to provide the Agency Law Pamphlet to the parties. The written consent must include the terms of the broker’s compensation. RCW 18.86.060(1).

While a dual agent is supposed to be neutral and work in the interest of both parties, this is difficult in practice and can quickly lead to potential issues or conflicts. In limited circumstances, using a dual agent may work to your advantage. For example, if you and a homeowner have already agreed to a deal, a dual agent may agree to reduce their commission. Additionally, working with one agent can speed up the transaction process as you only have one agent to communicate with both parties. While this practice is illegal in several states, it is still legal in Washington State. However, there are several risks involved and as a result, you should be cautious of a dual agency as buying or selling a home is a large financial transaction.

As outlined below, specific duties are owed depending on whether the agent represents the seller, buyer, or both the seller and buyer.

Duties of a Broker:

Regardless of whether a broker is an agent, and among other things, the broker must comply with the following duties:

  1. To exercise reasonable skill and care;
  2. To deal honestly and in good faith;
  3. To present all written offers, notices and communications from either party;
  4. To disclose all existing material facts known to broker and not apparent or readily ascertainable to a party;
  5. To account in a timely manner for all money and property received from either party;
  6. To provide a pamphlet on the law of real estate agency to all parties;
  7. To disclose in writing to all parties whether the broker represents the buyer, seller, both parties, or neither in an agency disclosure before the party signs an offer in a real estate transaction handled by the broker.

Duties of a Seller’s Agent:

Note that a listing broker is the seller’s agent and “not only is it common for a listing broker to have no contact with a buyer, such contact is generally a breach of the Realtor’s Code of Ethic.”
Wash. Prof’l Real Estate, LLC v. Young, 163 Wn. App. 800, 815, 260 P.3d 991, 998 (2011). Pursuant to RCW 18.86.040, in addition to the duties of a broker described above, a broker acting as a seller’s agent must comply with the following duties:

  1. To be loyal to the seller and not take any action that is adverse or detrimental to the seller’s interest in the transaction;
  2. To timely disclose to the seller any conflicts of interest;
  3. To advise the seller to seek expert advice on matters relating to the transaction that are beyond the agent’s expertise;
  4. To not disclose the seller’s confidential information, except under subpoena or court order; and
  5. Unless otherwise agreed, to make a good faith and continuous effort to find a buyer for the property.

 

Duties of a Buyer’s Agent:

Pursuant to RCW 18.86.050, in addition to the duties of a broker described above, a broker acting as a buyer’s agent must comply with the following duties:

  1. To be loyal to the buyer and not take any action that is adverse or detrimental to the buyer’s interest in the transaction;
  2. To timely disclose to the buyer any conflicts of interest;
  3. To advise the buyer to seek expert advice on matters relating to the transaction that are beyond the agent’s expertise;
  4. To not disclose the buyer’s confidential information, except under subpoena or court order; and
  5. Unless otherwise agreed, to make a good faith and continuous effort to find a property for the buyer.

Duties of a Dual Agent:

As mentioned above, a broker may act as a dual agent only with the written consent of both parties to the transaction after the dual agent has complied with RCW 18.86.030(1)(f), which requires to broker to provide the Agency Law Pamphlet to the parties. The consent must include the terms of compensation. RCW 18.86.060(1). The following are an overview of additional duties of a dual agent:

  1. To take no action that is adverse or detrimental to either party’s interest in a transaction;
  2. To timely disclose to both parties any conflicts of interest;
  3. To advise both parties to seek expert advice on matters relating to the transaction that are beyond the dual agent’s expertise;
  4. Not to disclose any confidential information from or about either party (except under subpoena or court order);
  5. To make good faith and continuous effort to find a buyer for the property; and
  6. Unless otherwise agreed, to make a good faith and continuous effort to find a property for the buyer.

Issues Relating to Your Agent’s Representation and a Possible Breach of Duty:

Especially in this market where there has been a substantial increase in transactions, parties often have issues or concerns with their broker’s representation of them. This can result in disagreements regarding whether the broker was ever representing them as a buyer’s agent, seller’s agent, dual agent, or at all and ultimately, this can result in a lawsuit depending on if certain duties have been breached.

MDK Law recently had a case where the buyers were working with a broker who showed them numerous properties and communicated on their behalf with the seller of a home they wished to purchase. The buyers were reasonable in believing the broker was acting as their real estate agent. As a buyers’ agent, the broker had a duty “to be loyal to the buyer by taking no action that is adverse or detrimental to the buyer’s interest in a transaction.” RCW § 18.86.050(1)(a). Despite this, when the buyers needed additional time to close, the broker failed to inform the sellers of this and it ultimately turned out that the sellers, too, needed additional time to close. The broker convinced the buyers to assign the Purchase and Sale Agreement to his LLC and informed the buyers that he would sell it back to them once they obtained financing. The relationship became unclear as the broker was initially acting as the buyers’ agent but was later representing his own LLC as well as the buyers. When the buyers went to purchase the property from his LLC, the broker increased the selling price by $40,000.00 above the agreed upon sale price and was acting in a manner that could be construed as adverse to the buyers. The buyers brought claims against the broker for breach of duty, fraudulent inducement, and violation of the consumer protection act.

“A common law tort cause of action is the vehicle through which a real estate purchaser may recover against an agent or broker for the breach of a duty set forth in the real estate brokerage relationships statute, chapter 18.86 RCW.” Jackowski v. Borchelt, 174 Wn.2d 720, 724, 278 P.3d 1100 (2012). Typically, a claim for a breach of a broker’s professional duties is not a contract action even when there is a contract for services. G.W. Constr. Corp. v. Prof’l Serv. Indus., 70 Wn. App. 360, 364, 853 P.2d 484, 486 (1993).

To prevail in a claim for breach of duty, the buyers must prove “(1) the existence of a duty owed, (2) breach of that duty, (3) resulting injury, and (4) that the claimed breach proximately caused the injury.” Micro Enhancement Intern, Inc. v. Coopers & Lybrand, LLP, 110 Wn. App. 412, 433-34, 40 P.3d 1206 (2002).

If you have questions or concerns about your broker’s representation of you, as a seller or buyer, or would like to have your purchase and sale agreement reviewed, please contact our office.

This blog contains general information and is not intended to provide specific legal advice or establish an attorney client relationship. This blog should not be used as a substitute for legal advice from a licensed attorney in your state.

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