I work at a small office with one managing broker and one representative. Under the rules effective June 15, 2018, can my office, through designated agency, act for a buyer and seller in a single transaction?
A brokerage must, at a minimum, have a managing broker and at least two other licensees in order to represent both a buyer and seller in a transaction through designated agency.
Any brokerage practicing designated agency, regardless of its size, must also have policies and processes to ensure that client information is appropriately isolated and protected.
I am licensed as a representative and work in a small office. My managing broker is my mother, and the other representative working in my office is my husband. Under the rules effective June 15, 2018, can my husband and I, through designated agency, act for a buyer and seller in a transaction?
It depends. It may be acceptable if you have the informed consent of both clients, and as long as you ensure that:
- The confidential information of each client is protected; and
- You and your husband each exercise independent professional judgment, and act in the best interests of your clients.
If you are the designated agent for the seller, and a close relative of yours is the designated agent for the buyer, you and the other designated agent are both in a conflict of interest. Each of you must disclose this conflict to your respective clients so they can decide whether they wish to seek different representation.
Even if your respective clients consent to you and your husband acting as their designated agents in the transaction, doing so will expose you, your husband, and your brokerage to significant risk. You and your husband should carefully document all aspects of the transaction, and be prepared to have your conduct in the transaction scrutinized at a later date.
No. You cannot act as a designated agent for the buyer while also acting as your licensee’s managing broker for the transaction.
It would not be appropriate for you to act as designated agent for the buyer while also supervising your licensee (the designated agent for the seller.) To do so would create a conflict between your duty as managing broker to treat the interests of all clients of the brokerage in an impartial and even-handed manner, and your duty as a designated agent to put your client’s interests ahead of all others.
Instead, you can either:
- With the buyer’s consent, designate another licensee of the brokerage to represent the buyer; or
- Act as designated agent for the buyer, but delegate your duties as managing broker in respect of the transaction to another licensee of the brokerage. For a more detailed explanation of how this may be done, see the Brokerage Standards Manual.
I am a licensee at a brokerage in a small town. There are two licensees at my brokerage: myself and my managing broker. Will I qualify for the exemption to the rule prohibiting dual agency effective June 15, 2018?
Unless you and your managing broker can make a strong argument that all three conditions for the exemption to the rule prohibiting dual agency are satisfied, you should not consider providing limited dual agency.
You need to ask yourself the following questions:
- Is my town remote?
- Is it also underserved by licensees?
- Would it be impracticable (i.e. impossible) for another licensee to represent the buyer? For example, is there no other licensee in my town, or in another community, who could provide independent representation to the buyer?
Unless you and your managing broker can make a strong argument that all three conditions are satisfied, you should not consider providing limited dual agency. RECBC will be examining any disclosures of limited dual agency very closely, to make sure that consumers are protected.
Published on May 04, 2018