Key Takeaways
- Dual agency occurs when one broker represents both buyer and seller in the same transaction
- North Carolina permits dual agency only with informed written consent from both parties
- Designated agency allows a firm to assign different brokers to represent each party with full fiduciary duties
- In dual agency, the broker becomes a neutral facilitator and cannot advocate for either party
- The broker-in-charge cannot be a designated agent since they supervise all affiliated brokers
Dual Agency and Designated Agency in North Carolina
North Carolina permits both dual agency and designated agency relationships, but each has specific requirements and limitations.
Dual Agency
Dual agency occurs when a broker represents both the buyer and seller in the same transaction.
Requirements for Dual Agency
- Written disclosure to both parties
- Informed consent from both parties
- Must be disclosed in the agency agreement
- Both parties must understand the limitations
Dual Agent Limitations
When acting as a dual agent, the broker:
| Can Do | Cannot Do |
|---|---|
| Facilitate the transaction | Advocate for one party |
| Provide factual information | Negotiate on behalf of one party |
| Present offers and counteroffers | Disclose confidential information |
| Prepare contracts | Advise on offer strategy |
What a Dual Agent Cannot Disclose
Without written permission, a dual agent cannot reveal:
| To Buyer | To Seller |
|---|---|
| Seller's minimum acceptable price | Buyer's maximum price |
| Seller's motivation | Buyer's motivation |
| Why seller is selling | Why buyer is buying |
| Seller's urgency | Buyer's urgency |
Exam Tip: In dual agency, both parties lose the right to full advocacy. The broker becomes a neutral facilitator.
Designated Agency
Designated agency is North Carolina's solution for avoiding the conflicts of dual agency while allowing a firm to work with both sides.
How Designated Agency Works
When a brokerage represents both buyer and seller:
- BIC designates different brokers for each party
- Each designated broker owes full fiduciary duties to their assigned client
- Confidentiality is maintained between designated brokers
- The BIC remains neutral and supervises both
Key Rules for Designated Agency
| Rule | Explanation |
|---|---|
| BIC cannot be designated | BIC supervises all, cannot take sides |
| Written designation required | Must document the assignment |
| Full duties owed | Each designated broker owes full fiduciary duties |
| Confidentiality preserved | Information not shared between designated agents |
Designated Agent Duties
Each designated agent:
- Represents ONLY their assigned client
- Owes full fiduciary duties
- Can advocate fully for their client
- Keeps confidential information private
Comparison: Dual Agency vs. Designated Agency
| Aspect | Dual Agency | Designated Agency |
|---|---|---|
| Number of agents | Same broker for both | Different brokers for each |
| Advocacy | None - neutral | Full advocacy for each |
| Confidentiality | Shared/limited | Maintained separately |
| Fiduciary duties | Limited | Full to assigned client |
| Client preference | Less protection | More protection |
Agency Disclosure in Offers
When presenting an offer, the broker must disclose:
- Who they represent
- Any dual agency relationship
- Any designated agency arrangement
This disclosure typically appears in the offer to purchase.
In North Carolina designated agency, who assigns brokers to represent each party?
What is the main advantage of designated agency over dual agency?
In a dual agency situation, which of the following can a broker do?