Real Estate professionals along the Jersey Shore are keeping a close eye on this new court ruling. Real Estate agents must act in the interests of both buyers and sellers when one brokerage is handling a single transaction, the California Supreme Court said on November 21.
In a decision that could turn dual agency on its head, the California Supreme Court published an opinion stating that even if an agent was hired by the seller, that agent owes a duty to the buyer if the buyer’s agent works within the same brokerage.
It is undisputed that Coldwell Banker owed such a duty to the buyer. We now conclude that the associate licensee, who functioned on Coldwell Banker’s behalf in the real property transaction, owed to the buyer an ‘equivalent’ duty of disclosure.
In this case, the plaintiff Hiroshi Horiike contended that since the brokerage, Coldwell Banker Residential Brokerage Company, owed him a fiduciary duty due to his relationship with his buyer’s agent licensed with that brokerage, the seller’s agent also owed him the same duties. At issue was a discrepancy of the square footage of the home purchased. While the court agreed that consumers lose undivided loyalty by requiring that different agents both owe a fiduciary duty to both parties, the Court stated, “These are significant concerns, but they are also concerns inherent in dual agency, whether at the salesperson or the broker level.”
For now, this only affects real estate in California. But this ‘Dual Agency’ case could set a legal precedent in New Jersey too.
“This case clearly illustrates how confusion is created and mistakes can happen when a real estate brokerage tries to represent both the buyer and the seller in the same transaction. Real estate agents should be cautious when working an in-house transaction, and consumers should be aware that they need to look out for their own interests unless they are working with an Exclusive Buyer Agent.”
Adds NAEBA Executive Director Kimberly Kahl, “We are pleased at the Supreme Court’s decision.”
Dual agency has long been problematic for consumers, leaving them without full representation in what is one of the largest monetary transactions of their lives.
The National Association of Exclusive Buyer Agents (NAEBA), created in 1995, is an organization of companies dedicated to representing only buyers of real estate. NAEBA member brokerages do not list homes for sale and never represent sellers. This restriction to one side of the real estate transaction avoids conflicts and ensures that the interest of the homebuyer is protected at all times from house-hunting and negotiation to inspection, financing and closing.
Most Real Estate brokers and agents in towns like Margate, Ventnor, Brigantine and Atlantic City engage in the controversial practice known as “dual agency.”
The practice is legal in some states, as long as the dual agency is disclosed, the buyers and sellers are cool with it consent, and the broker of record maintains a fiduciary duty to both parties.
Dual Agency is often called “double-ended” deal, according to Margate, Ventnor and Atlantic City Real Estate professionals.
Read more in OC Register
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