2.2 North Dakota Agency Relationships
Key Takeaways
- North Dakota recognizes seller's agency, buyer's agency, and dual agency
- A single agent represents only the buyer or only the seller; dual agency arises when one licensee or one brokerage represents both
- Dual agency requires the written consent of both parties and limits the agent to facilitating, not advocating
- Clients receive full fiduciary duties; all parties receive honesty, disclosure of material facts, and confidentiality of information given in confidence
- Licensees must disclose in writing any personal interest and any compensation received from more than one party
North Dakota defines the agency relationships a licensee may form with consumers and the duties each one carries. The state portion tests the difference between duties owed to a client (the represented party) and duties owed to all parties.
Single Agency
Seller's (Owner's) Agent
A seller's agent represents only the seller. The seller is the client, owed full fiduciary duties.
| Fiduciary Duty | Meaning |
|---|---|
| Loyalty | Act in the seller's best interests above all others |
| Confidentiality | Keep the seller's confidences (e.g., lowest acceptable price) |
| Disclosure | Tell the seller all relevant information |
| Obedience | Follow lawful instructions |
| Accounting | Account for all funds and documents |
| Reasonable care | Exercise competence and diligence |
Buyer's Agent
A buyer's agent represents only the buyer, owing the same fiduciary duties to the buyer — for example, keeping confidential the maximum price the buyer would pay.
Dual Agency
Dual agency arises when a licensee owes agency duties to more than one party in the same transaction.
| Dual Agency Scenario | Example |
|---|---|
| One licensee, both sides | An agent represents both the buyer and the seller of the same home |
| One brokerage, two agents | The buyer's agent and listing agent both work for the same broker |
Key requirement: Both parties must give written consent to dual agency, after disclosure of what it means. Without consent, undisclosed dual agency is a serious violation.
Dual agency is legal in North Dakota with consent, but it fundamentally changes what the agent can do, because the agent can no longer be a zealous advocate for either side.
What a Dual Agent Can and Cannot Do
| A Dual Agent May | A Dual Agent May Not |
|---|---|
| Facilitate the transaction | Advocate for one party over the other |
| Present all offers fairly | Disclose one party's confidential information to the other |
| Provide factual, public information | Advise one party on negotiation strategy against the other |
| Help complete paperwork | Reveal the seller's lowest price or the buyer's highest price |
The dual agent becomes a neutral facilitator. This is why some buyers and sellers prefer separate brokerages: a single agent cannot zealously negotiate for both at once.
Exam trap: A dual agent cannot tell the buyer "the seller will take less" or tell the seller "the buyer will pay more." Either disclosure breaches confidentiality.
Duties Owed to ALL Parties
Regardless of whom they represent, North Dakota licensees owe baseline duties to everyone in the transaction.
| Universal Duty | Description |
|---|---|
| Honesty | Deal honestly and in good faith with all parties |
| Material facts | Disclose facts that could adversely and significantly affect a party's use and enjoyment of the property |
| Confidentiality | Protect information received in confidence |
| Competence | Provide competent service |
Material facts include known defects, environmental hazards, and legal issues affecting the property. Information received in confidence stays confidential unless disclosure is required by law, the client authorizes it in writing, or it has become public knowledge.
Exam point: Loyalty and obedience are owed only to the client. Honesty and material-fact disclosure are owed to all parties — a distinction the state exam loves to test.
Personal-Interest and Compensation Disclosures
North Dakota requires extra written disclosure when the licensee has skin in the game.
| Situation | Requirement |
|---|---|
| Buying or selling for themselves | Disclose in writing to all parties |
| Acting for family members | Disclose the relationship in writing |
| Acting for a business the licensee owns | Disclose the interest in writing |
| Receiving compensation from more than one party | Disclose to all parties in writing |
These rules prevent secret profits and undisclosed conflicts. A licensee who flips a property to a client, or who is paid by both buyer and seller, must put the conflict in writing for everyone to see.
Worked scenario: An agent lists a home owned by an LLC in which the agent holds a 25% interest. The agent must disclose that ownership interest in writing to every party — silence would breach the personal-interest disclosure rule and expose the agent to discipline.
Exam tip: When a question involves the agent's own money, family, or double-ended pay, the answer is almost always "disclose in writing to all parties."
Confidentiality Survives the Relationship
A duty that trips up test-takers: the obligation to keep a client's confidential information secret generally continues even after the transaction or the agency relationship ends, unless the client authorizes disclosure in writing, the law compels it, or the information becomes public. An agent cannot, after closing, tell a future buyer the previous seller's bottom-line price.
| Duty | Owed To | Survives Relationship? |
|---|---|---|
| Loyalty / obedience | Client only | Ends with the relationship |
| Confidentiality | Client (and confidences from all parties) | Generally continues |
| Honesty / material-fact disclosure | All parties | Applies during the transaction |
Exam tip: When a scenario describes an agent revealing old confidential pricing information, the answer is that it breaches the surviving duty of confidentiality.
When does dual agency exist in North Dakota?
Which duty does a North Dakota licensee owe to ALL parties in a transaction?
When must a licensee disclose a personal interest in a property?