Courts vary in their interpretation of what is acceptable and not all states endorse dual agency. Primary issues in determining equitable treatment in dual agency include:
Did the agent provide timely disclosure of dual agency and were the potential consequences of dual agency sufficiently explained to both parties? Generally, both clients must provide "informed consent" meaning that not only do they consent but that they sufficiently understand the agency relationship.
Did the agent treat each party equally fair and comply with his/her duties required under the laws of agency? Most importantly, a dual agent cannot favor one party over the other. All the disclosures in the world will not relieve the Agents' liability if he/she advocates for one client at the expense of the other. It is not yet clear by the courts whether the loss of advocacy (in dual agency) results in a reduction of the agent's "duty" to the client. Proper explanation and advance authorization by all parties in the initial agency contract is the critical factor.
Dual agency is most likely to occur when a buyer, represented by a buyer’s agent, wants to purchase a property listed by that same agents' firm. A dual agent must carefully explain to each party that the agent and the agent’s firm are also acting for the other party for whom they have the property listed.
