Q. What is the difference between a subagency and a dual agency?

A. A subagent is an agent who works with buyers and shows them properties but who owes his or her fiduciary duty to the seller.

In several states, subagency is being phased out in favor of buyer brokerage, which more clearly informs everyone that the agent working with the buyer is working for the buyer’s best interests.

The most common form of dual agency occurs when the broker represents both the buyer and the seller in a single transaction. This situation requires the broker to be loyal to both parties, who most likely have opposing interests. Frankly, I can’t imagine any broker who can maintain his or her fiduciary duty in this situation but rather should facilitate the transaction without giving advice to either buyer or seller.

A lesser form of dual agency occurs when two different agents of a single brokerage firm represent both sides in a single transaction. Purists in the exclusive single agency corner believe that this type of dual agency has the potential to cause serious harm to unsuspecting buyers and sellers. Confidential information about deals is treated casually in many real estate offices. A seller broker may unknowingly share confidential information with a colleague who may one day bring a buyer to his or her seller’s door.

Within dual agency, you have disclosed dual agency and undisclosed dual agency. With disclosed dual agency, the broker discloses to both the buyer and the seller that the broker represents both sides in the transaction. The buyer and seller must agree, and they usually sign a piece of paper stating that this okay with them.

Undisclosed dual agency occurs when a broker does not tell the buyer or the seller that the he or she is representing both sides of the transaction. Some state courts have stretched the definition of “undisclosed agency” to include brokerage firms who do not disclose to buyers and sellers that they represent both sides of a single transaction even if there are two separate brokers involved.

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Published: Aug 31, 2005