2.2 Limited Agency (Dual Agency) in Indiana
Key Takeaways
- Indiana calls dual agency 'limited agency' and requires written consent from BOTH parties before the licensee acts as a limited agent (IC 25-34.1-10-10).
- A limited agent stays neutral: cannot disclose either side's price flexibility, motivation, or confidential terms.
- A limited agent must still disclose all adverse material facts and account for all funds.
- The firm's written office policy must state whether disclosed limited agency is permitted or rejected.
- Indiana allows in-house designated agency, where two affiliated brokers each fully represent one side, as an alternative to limited agency.
What Limited Agency Is
Indiana uses the statutory term limited agent for what most states call a dual agent: one licensee (or one firm) representing both the buyer and the seller in the same transaction. The controlling provision is IC 25-34.1-10-10. Because one person cannot fully advocate for two opposing parties, the law shrinks the duties to a neutral core - hence "limited."
Limited agency arises when:
- The same broker represents both buyer and seller; or
- Two affiliated brokers in the same firm represent opposite sides and the firm has not set up designated agency; or
- A managing broker supervises both sides' agents and the office treats the firm as the agent.
The Consent Requirement (Heavily Tested)
| Requirement | Detail |
|---|---|
| Form | Written consent - verbal will not do |
| Who | Both buyer and seller must consent |
| Timing | Before the licensee begins acting as a limited agent |
| Content | Must explain the limitations and what cannot be disclosed |
| Office policy | Firm policy must permit disclosed limited agency in the first place |
If either party refuses, the firm cannot proceed as a limited agent for that pairing.
What a Limited Agent MUST Do
| Duty | Description |
|---|---|
| Treat both honestly | No advocacy preference for either side |
| Disclose adverse material facts | Property defects, hazards, title problems |
| Account for all funds | Earnest money held and disbursed properly |
| Exercise reasonable care | Competent processing for both parties |
| Maintain confidentiality | Protect each side's confidential information from the other |
What a Limited Agent CANNOT Do
| Prohibited | Why |
|---|---|
| Disclose the seller's lowest acceptable price | Confidential; would harm seller |
| Disclose the buyer's highest offer | Confidential; would harm buyer |
| Reveal either party's motivation or urgency | Neutrality |
| Advise on price or strategy for one side | Cannot advocate against the other client |
| Recommend specific terms favoring one party | Must stay neutral |
Exam Trap: A limited agent must STILL disclose adverse material facts (a cracked foundation) to both parties. The confidentiality wall covers price, terms, and motivation - never property defects or legal/title problems.
Worked scenario: As a limited agent you learn the seller will accept $245,000 on a $260,000 list. The buyer asks, "What's the lowest they'll take?" You may not answer. But if you also learn the roof leaks, you must disclose that defect to the buyer - it is an adverse material fact, not confidential negotiating information.
How Limited Agency Arises by Accident
Limited agency is not always a planned event. A common exam fact pattern: a listing agent's own buyer-client falls in love with that agent's own listing. The instant the agent's two clients are pointed at the same property, the agent is on a collision course with limited agency and must stop, disclose, and obtain fresh written consent from both before writing the offer. Continuing to advise both sides as a full agent breaches the loyalty owed to each.
| Situation | Limited Agency Risk |
|---|---|
| Listing agent's buyer-client wants that listing | Yes - same agent, both sides |
| Two agents, same firm, no designated agency | Firm-level limited agency |
| Two agents, same firm, designated agency in place | No - each is a full agent |
| Agent represents buyer; seller is unrepresented customer | No dual agency; agent owes seller honesty only |
Confidential Information - the Two-Way Wall
Without written authorization, a limited agent must keep each side's negotiating information from the other.
| Cannot tell the BUYER | Cannot tell the SELLER |
|---|---|
| Seller's lowest acceptable price | Buyer's highest offering price |
| Seller's reason/urgency to sell | Buyer's reason/urgency to buy |
| Seller's willingness to finance | How much the buyer can really afford |
| Seller's flexibility on terms | Buyer's flexibility on terms |
What must STILL be disclosed to both sides despite limited agency:
- Adverse material facts about the property's physical condition
- Environmental hazards (lead-based paint per federal law on pre-1978 homes, known methamphetamine contamination per Indiana psychologically/physically affected-property rules)
- Title or legal defects affecting the transaction
- Any fact a statute requires be disclosed
Designated Agency - the Indiana Alternative
Indiana firms often avoid limited agency by using designated agency. The managing broker assigns one affiliated broker to the seller and a different affiliated broker to the buyer. Each designated agent owes full fiduciary duties to their own client, and the wall runs between the two agents rather than inside one person.
| Approach | Duties to Each Client | Who Holds Confidences |
|---|---|---|
| Limited agency | Reduced/neutral to both | One agent must keep both sides' secrets |
| Designated agency | Full fiduciary to the assigned client | Each agent keeps their own client's secrets |
| No in-house dual | One side must go elsewhere | n/a |
Exam Trap: Under designated agency, the managing broker who supervises both designated agents may still be treated as a limited agent over the transaction, so the firm's office policy must spell this out.
A Party's Right to Refuse
A buyer or seller may always refuse limited agency. Their options:
- Demand independent representation at a different firm
- Proceed as a customer (no representation, limited services)
- Accept designated agency if the firm offers it
- Withdraw and relist/re-engage elsewhere
Document the choice in writing. If consent is refused after confidential information was already shared, the licensee may have to withdraw entirely to avoid breaching confidentiality.
Before a broker may act as a limited agent (dual agent) in Indiana, what is required?
A limited agent learns the seller's lowest acceptable price and also learns the home has a cracked foundation. Which statement reflects the agent's correct conduct?
How does designated agency differ from limited agency in an Indiana firm?