Dual Agency Disadvantages Still Hidden
I’ve written many times about how Dual Agency isn’t good for you. I’ve also commented on how the Arizona Association of Realtors, the Realtor Code of Ethics, and the Arizona Department of Real Estate doesn’t prohibit this anti-consumer practice.
Dual agency is where the agent acts for both of the principals/clients (buyer and seller) at the same time in the same transaction. In other words, the agent represents both the buyer and seller at the same time.
The AAR has created a form entitled “Consent to Limited Dual Representation,” to be used by agents to get you to agree to Dual Agency. Here is how that form explains the disadvantages of dual agency:
“There will be conflicts in the duties of loyalty, obedience, disclosure and confidentiality [by your agent].”
That brief statement fails to completely and adequately explain to the buyer or seller that they are about to do something not in their best interest. But the ADRE doesn’t require more. All it mandates are signatures on the Form – “informed” consent isn’t required. Without the requirement of informed consent, the disadvantages of dual agency do not have to be explained to the parties.
However, in a recent Court of Appeals case, Lerner v. DMB Realty, LLC (1 CA-CV 11-0039)* the court held that when obtaining consent to dual agency, “the broker must deal fairly and in good faith with each of them, and ‘disclose all material facts that the [broker] knows, has reason to know, or should know would reasonably affect the principal’s judgment’,” unless the principal knows the facts or doesn’t want to know them.
This appears to require a discussion of the disadvantages much more comprehensive than that contained in the Consent to Limited Dual Agency form, and that some measure of informed consent to dual agency be obtained from the buyer and seller.
However the bad news is that Lerner hasn’t caused any changes. The Form still reads the same, and the AAR and ADRE have not required that agents give any explanation before getting the signatures on it.
The lesson is that you have to protect yourself. Don’t sell yourself short – do not agree to dual agency or sign the Consent to Limited Dual Agency form. If you would like to know more, read my series on Dual Agency at www.simplysoldaz.com/blog, or contact me at 480 675-0112 or firstname.lastname@example.org.
Mr. Kramoltz, JD, GRI, CIPS is the Designated Broker for SimplySOLD Arizona, a boutique real estate brokerage that specializes in the global marketplace. Mr. Kramoltz writes articles that provide valuable and unique information on local and international real estate issues from his perspective as a real estate attorney, an Arizona Department of Real Estate certified instructor, and an active licensee. Check SimplySOLD’s Facebook page regularly, follow him on twitter @azpropexpert, and visit www.simplysoldaz.com for prior blogs, properties for sale, and more on Arizona real estate.
N. Mark Kramoltz © 2014, All Rights Reserved.