Buyers Who Call Listing Agents Now Have More Ways to Sue Dual Agents

Who isn’t looking for more ways to sue dual agents in California? I hear from a lot of real estate clients around the country who are upset with their agents, and many of those complaints center on dual agency. They read an article I wrote about dual agency or contingencies or some other legal matter in real estate and call. In case you don’t know, in simple terms, dual agency occurs when the seller’s agent is also the buyer’s agent. This is when sellers find out too late that paying their own agent to represent a buyer might not be in their best interest. Or, buyers discover that trying to manipulate a listing agent into divulging confidential information may have backfired. By attempting to buck the system, buyers may end up with no agent advocating for them.

The new document that will most likely cause more lawsuits by encouraging parties to sue dual agents in California is the revised Agency Disclosure. Its formal name is Disclosure Regarding Real Estate Agency Relationships. I say this because I know from observation how lackadaisical many listing agents are. So many just don’t consider ramifications or cause and effect much less consequences. In fact, it is so tough to be a dual agent that I prefer to pass on it.

Dual agency is not good for sellers nor for buyers and the only people who think it is are the dual agents themselves. Further, the main reason dual agents like dual agency is because they make twice the commission. No wonder some consumers hate real estate agents. It’s rare that dual agency is better for the parties. Usually the opposite.

New language in the Agency Disclosure sets out pretty clearly the confidentiality requirements. Agents are always required to keep this sort of information confidential (without written authorization), but in dual agency, they sometimes forget. Below is the verbiage, with the new changes in bold:

“In representing both Seller and Buyer, a dual agent may not, without the express permission of the respective party, disclose to the other party confidential information, including, but not limited to, facts relating to either the Buyer’s or Seller’s financial position, motivations, bargaining position, or other personal information that may impact price, including the Seller’s willingness to accept a price less than the listing price or the Buyer’s willingness to pay a price greater than the price offered.”

Agents are often made privy to confidential information about why sellers are selling, which is none of anybody’s business but the seller.  This reduces dual agents to pretty much transaction facilitators. They can’t represent either party very well. The downside is buyers might think they don’t need representation but they certainly do. Never had a buyer say, “oh, we didn’t need you guys.” Just not gonna happen.

But what will happen, mark my words, is more parties will decide to sue dual agents because the agents will, without hesitation, disclose confidential information. I know this surely as the sun sets in the West.