Dual agency, informed consent, and designated sales agents

Dual agency in New York

Dual agency means acting for both buyer and seller, or both tenant and landlord, in the same transaction. New York permits it with both parties' informed consent in writing. Representation determines agency; the source of compensation alone does not. Showing a seller's listing to an unrepresented buyer does not itself establish buyer representation.

What informed consent requires

The dual agent must carefully explain representation of the other party and the possible effects. Clients surrender the right to undivided loyalty, and the agent cannot provide the full range of fiduciary duties. Acknowledging receipt of the agency disclosure form does not itself mean consenting to dual agency. The disclosure form is not a representation contract.

For example, a broker represents a seller and a buyer who wants that seller's home. Before representing both in this transaction, the broker needs informed written consent from both. One party's consent or two oral approvals will not do. If either refuses, the broker cannot proceed as their dual agent.

Designated sales agents

With both parties' informed written consent, separate designated sales agents may advocate for their assigned clients in negotiations under the supervising dual broker. A designated sales agent is a licensed real estate salesperson or associate broker assigned to a client when that broker represents a different client in the same transaction. The designated agents must explain that they also cannot provide undivided loyalty or the full range of fiduciary duties. This applies to sales and rentals.

Advance consent and compensation

The disclosure form permits advance informed consent to dual agency and, separately, dual agency with designated sales agents. Advance consent is written and signed for residential property subject to a listing agreement. Advance consent with designated sales agents identifies the agent appointed for the consenting client.

New York requires a broker to make clear which party the broker acts for. Compensation from multiple parties requires full knowledge and consent of all parties. Payment consent does not replace informed written consent to dual representation. Consult an attorney for legal advice about a particular arrangement.

On the exam, ask: Who is represented? Did both parties give informed written consent? Does the broker remain a dual agent despite separate designated agents?