Neighbor News
Dual agency case worthy of note to consumers, brokers
So, have you heard about dual agency or "double ending?"
By Nicole Solari | December 03, 2016
So, have you heard about dual agency or “double ending?”
Personally, at the agent level, it’s a big “no-no” for me. I will never represent the buyer on one of my own listings. However, fiduciary duty is held at the broker level, not the agent level, and recently the California Supreme Court has upheld the appeal in the case Horiike vs. Coldwell Banker Residential Brokerage Company.
The court’s decision will likely cause some ripples for real estate companies that practice dual agency in either a residential or commercial capacity. The case has received national attention with regard to the practice of dual agency and whether a single brokerage company can actually represent the interests of two competing parties in a fiduciary capacity.
The court’s decision outlined that the brokerage company did have a duty to both learn and disclose any material facts that may have an impact on the value of the property.
To shed some light on the story of what happened: A Hong Kong multimillionaire bought a Tuscan-style Malibu mansion overlooking the Pacific Ocean for $12.25 million in cash in 2007.
The listing agent gave the buyer a flier that said the home had 15,000 square feet of living space as well as an MLS listing that did not specify the square footage. A building permit indicated there was a total of 11,050 square feet, including a guesthouse and a garage, while the tax assessor’s records showed it was less than 9,500 square feet.
The question of square footage is complicated because Malibu uses a different metric than elsewhere, extending the measurements to garages and other spaces beyond the primary residence. The buyer, who signed an advisory saying the broker was not responsible for verifying square footage, bought the property without further investigating its size, court records say. A couple of years later, seeking a permit to remodel a room, the buyer found out the house wasn’t as large as he thought.
So what does all this mean?
The California Supreme Court affirmed a lower court’s ruling that listing agents owe fiduciary duty to buyers when both buyers and sellers are represented by the same brokerage. From Coldwell Banker’s lawyers in their opening and closing briefs, some of the consequences they cite are:
Consumers could “lose” the exclusive representation they thought they were getting “midstream” because the agent on the other side happens to be from the same brokerage.
Agents would be forced to disclose sensitive information to the other side because they owe a fiduciary duty to both the buyer and the seller. For example, the listing agent would have to tell the buyer (and the buyer’s agent) that the seller is desperate to sell, or the buyer agent disclosing to the seller that the buyer has completely fallen in love with that property and doesn’t want any other.
Agents would be forced into dual agency just because the agent on the other side happens to work for the same brokerage, and face the possibility of getting sued no matter what.
Let’s expel the point about buyers and sellers becoming more limited in their market choices and market.
Approximately 85 percent of participating brokerages in any given MLS is a five-agents or fewer “mom-and-pop” shop. It isn’t like buyers and sellers are going to have any trouble finding or selling homes. However, the impact on big brokerages would be . . . catastrophic.
Nicole Solari, GRI, SRS, CPRES, is a Realtor with The Solari Team at RE/MAX Gold, Bureau of Real Estate License No. 01952567. You can reach her at 486-5400, nicole@solariteam.com or www.viewhomesinsolanocounty.com. source