The Dual Agency That Wasn't Announced
Golden Tide Realty has one salesperson, Aaron, working a rural Cape Breton area. A couple, the MacDonalds, ask Aaron to help them buy a waterfront lot. Aaron shows them several properties and they sign a buyer-service agreement. Two weeks later the owner of one of those lots, a Mrs. Fraser, calls Aaron and asks him to list her lot - the same lot the MacDonalds liked most. Aaron's managing broker is on vacation and unreachable. Aaron takes the listing, telling himself the MacDonalds 'haven't made an offer yet, so it's fine.' He does not tell the MacDonalds he now represents Mrs. Fraser. When the MacDonalds ask about the lot, Aaron says, 'The seller is asking $189,000 and I think she'd take $175,000, but don't tell her I said that.' The MacDonalds offer $175,000. Mrs. Fraser is furious and asks Aaron where he got the number.
1. Did a dual agency arise, and what were Aaron's obligations when Mrs. Fraser asked him to list the lot?
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Yes - this is a dual agency situation, whether or not anyone used the word. Aaron already represented the MacDonalds under a buyer-service agreement. When he accepted the listing on the same property, he took on representation of Mrs. Fraser as well. The fact that the MacDonalds had not yet made an offer is irrelevant; the conflict exists the moment he represents both sides on the same property.
His obligations at that moment were:
- Stop and disclose. He should have told both the MacDonalds and Mrs. Fraser, in writing, that he would be representing both and explained what that means: neither client gets undivided loyalty, and he cannot advocate for one against the other.
- Obtain informed consent from both clients, in writing, before proceeding. If either refuses, he must withdraw from one side - typically by referring the listing to another brokerage.
- Consult the managing broker. Being unreachable is not a licence to skip the step; he should have waited or declined the listing.
Silently taking the listing while telling himself 'it's fine' is the core failure. Dual agency without disclosure and consent is a serious breach, and the later leak of the seller's bottom line compounds it.
2. Evaluate Aaron's disclosure of the seller's likely acceptance price. What duty did he breach, and what are the consequences for the transaction?
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Aaron breached confidentiality and loyalty to Mrs. Fraser. A seller's willingness to accept less than asking is among the most sensitive facts in a negotiation. Even in a disclosed dual agency, an agent cannot use one client's confidences to benefit the other. Telling the buyers 'she'd take $175,000' handed them the seller's negotiating position and destroyed her ability to hold her price.
Consequences:
- To Mrs. Fraser: she has a strong complaint. She can argue Aaron failed to protect her interests, and the brokerage may face a claim for the lost negotiating room. The $14,000 gap between asking and the leaked figure is the measure of the harm.
- To the MacDonalds: they are now in an awkward position - they made an offer based on information they should not have had. They are not necessarily at fault, but the transaction is tainted.
- To Aaron: the breach supports a complaint to the regulator and possible discipline. His brokerage should also review whether the dual agency was properly documented (it was not).
What he should have done: in a dual agency, tell the buyers the asking price and any information the seller authorized for release, and nothing more. If he could not represent both fairly, he should have withdrawn from one side before the conflict crystallized.