Dual Agency With a Family Member Buyer
A broker's brokerage has listed a townhouse in Lethbridge for a seller client at $389,000. The broker's cousin wants to buy it and asks the broker to represent him as well, saying 'you know the seller, just get us a deal.' The seller has told the broker privately that he would accept $365,000 but wants to hold at $389,000 for now. The cousin has offered $370,000 and asked the broker what the seller's bottom line is. The brokerage's policy permits designated agency but requires written consent from both parties before any dual representation. The cousin has not signed a buyer representation agreement, and the seller has not been told the cousin is a relative of the broker.
1. What must the broker disclose and obtain before proceeding, and to whom?
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The broker must disclose to both the seller and the cousin, in writing, that the broker is related to the buyer and that the brokerage may act for both sides, and must obtain written consent from both before any dual representation begins. The seller must be told the buyer is the broker's cousin because that fact could affect how the seller views the broker's advice. The cousin must be told the broker also represents the seller and cannot advocate exclusively for him. The broker must also clarify the cousin's representation status - without a signed buyer representation agreement, the cousin may be an unrepresented party, which changes the broker's duties. None of this can be done retroactively after an offer is negotiated.
2. The cousin asks what the seller's bottom line is. How should the broker respond?
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The broker must not reveal the seller's confidential instruction to accept $365,000. That information was given to the broker in the course of representing the seller and is confidential; disclosing it to the buyer - even a relative - would breach the duty of loyalty and confidentiality and would harm the seller's negotiating position. The broker should tell the cousin that the broker cannot share the seller's confidential instructions and that the cousin should make an offer based on his own assessment of value. If the broker cannot serve both parties without compromising confidentiality, the broker should decline the dual role and refer the cousin to another brokerage, which is often the cleaner outcome.
3. If the broker proceeds with dual representation, what practical limits apply to the advice the broker can give each side?
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In a dual role the broker cannot advocate for one party against the other or give either side negotiating strategy that depends on the other's confidential information. The broker can explain the process, present the offer, and provide factual information about the property and market, but must be even-handed. The broker should put the limits in writing so both parties understand them before negotiating, and should recommend that each party obtain independent legal advice. If either party asks for advice that requires the broker to prefer one side, the broker must decline and, if necessary, withdraw from representing one of them. The test is whether each party would feel their confidences were protected - if not, dual representation is not appropriate.