Dual Agency / Agency Law and Ethics

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dual agencyDual Agency

Dual Agency is just what it says. One or two agents from the same brokerage representing the buyer and seller in the same transaction. Agents are the hands and feet of the broker they are employed by and where they have their license. A broker can hire or fire agents depending on the agent’s production and knowledge or lack of knowledge and skill.

Dual agency is created when the listing agent brings a buyer for that listing and represents both the seller and the buyer. It could also happen that the buyer wants to purchase a for sale by owner property and the property owner wants the buyer’s agent to also represent them also in the sale transaction. Dual agency occurs when the listing agent and the buyer agent work for the same brokerage.

What must happen prior to writing a contract before the agent can represent both sides? The seller and the buyer must agree in writing that dual agency or limited representation is agreed upon prior to writing up a contract. The AAR Consent to Limited Representation form should be used and gone over with both the seller and buyer so that they understand the limits that the agent has for both.

As you can see from the cartoon above that it may be very hard to represent your client when you are in a dual agency situation.

Quick Quiz

Fill in the Blank:
Dual agency occurs when the agent and the agent work for the same brokerage.  

So you would not be able to tell the buyer what repairs or improvements that a seller is willing to make or that the buyer is willing to forego or the confidential motivating factors of either party.

The READE or Real Estate Disclosure and Election form should always be explained with your clients before showing them properties or taking a listing.

In the seller and buyer election boxes lines 33-44, let’s take a look at lines 36 and 42. They are both fairly close but the buyer and seller are changed.  It reads: show Buyer properties listed with Broker’s firm and Buyer agrees that Broker shall act as agent for both Buyer and Seller provided that the seller consents to limited representation. In the event of purchase, Buyer’s and Seller’s informed consent should be acknowledged in a separate writing other than the purchase contract.

THIS IS HOW YOU SHOULD FILL IT OUT IF IT IS AN UNREPRESENTED BUYER. In the buyer election box the buyer is being told that you, the agent is only representing the seller.




THIS IS HOW YOU SHOULD FILL IT OUT IF YOU ARE WORKING WITH A BUYER ONLY. You would them explain line 36 and how dual agency would occur. Then you would have them sign the Consent to Limited Representation or Dual Agency prior to writing an the Consent to Limited Representation “Consent”.


This form explains to both parties that the broker or the broker’s licensee(s) can not represent the interests of one party to the exclusion or detriment of the other party.

Unless written authorization is given, price or terms other than stated in the contract or listing agreement may not be discussed. So you would not be able to let the seller know how much the buyer would come up in price or how low the seller would go down in price or any other terms of the contract.

There will be conflicts in the duties of obedience, loyalty, disclosure and even confidentiality.  Of course, the licensee shall be obligated at all times to deal honestly with all parties.

If the seller and buyer fail to write a contract or the contract is canceled or terminates, the parties shall have no further rights or obligations pursuant to the Limited Representation.

State law says that you are able to represent both parties. However, the Real Estate Department’s position on the matter is that they do not recommend it.

Arizona Administrative Code R4-28-1101F states that: salesperson or broker shall not accept compensation from or represent more than one party to a transaction without the prior written consent of all parties.

32-2153 A 2. Grounds for denial, suspension or revocation of licenses; letters of concern; provisional license; retention of jurisdiction by commissioner; definitions

A. The commissioner may suspend or revoke a license, deny the issuance of a license, issue a letter of concern to a licensee, issue a provisional license or deny the renewal or the right of renewal of a license issued under this chapter if it appears that the holder or applicant, within five years immediately preceding, in the performance of or attempt to perform any acts authorized by the license or by this chapter, has:

2. Acted for more than one party in a transaction without the knowledge or consent of all parties to the transaction.

So, if you are an agent who is thinking about representing both parties in the same transaction prior to the seller and buyers written agreement to consent to limited representation you may be sanctioned by the commissioner or your broker and you could be severed by your broker or even lose your license for your actions.

Quick Quiz

Fill in the Blank:
There will be in the of obedience, loyalty, disclosure and even confidentiality.  Of course, the licensee shall be obligated at all times to deal honestly with all parties.

Customer vs. Client

The Code of Ethics is our road map on many issues. When it comes to clients and others, we do not formally represent we must adhere to our CODE Of Ethics that Realtors® took an oath or abide by.

Duties to Clients and Customers Code of Ethics Article 1

When representing a buyer, seller, landlord, tenant, or other clients as an agent, Realtor’s® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve  Realtor’s® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other parties in a non-agency capacity, Realtor’s® remain obligated to treat all parties honestly. (Amended 1/01)




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