Dual Agency, Designated Dual Agency, and the Role of the BIC

QUESTION: I am the broker-in-charge of a small firm. Recently, one of my agents brought an offer for one of my listings. The buyer and seller have authorized dual agency in writing,  but I was not sure whether I was allowed to practice dual agency as a BIC. Is it permissible for a BIC to be involved in a dual agency transaction? What about designated dual agency?

ANSWER: A BIC can practice dual agency and designated dual agency so long as they comply with the License Law.

If the standard agency agreements are used, a BIC can practice dual agency just like any other agent in the firm. This is because under the standard agency forms, certain information  may not be transmitted to the other party in dual agency, even if known by the party’s agent. Form 201 (“Exclusive Buyer Agency Agreement”), for example, states that: “In the event Firm serves as a dual agent, Buyer agrees that without permission from the party about whom the information pertains, Firm shall not disclose to the other party the following  information: (1) that a party may agree to a price, terms, or any conditions of sale other than those offered; (2) the motivation of a party for engaging in the transaction, unless  disclosure is otherwise required by statute or rule; and (3) any information about a party which that party has identified as confidential unless disclosure is otherwise required by statute  or rule.” The standard agency forms also include an acknowledgment by the client that the agent will not act as an advocate for or exclusive representative of the client. These  contractual obligations and limitations with the client enable the BIC to be a dual agent.

As to designated dual agency, a BIC may be a designated dual agent so long as the broker on the other side is a full broker and not a provisional broker. Rule .0104 expressly prohibits  designated dual agency between a BIC and a PB. The reason for this rule is that a BIC must be able to supervise every aspect of a PB’s activities, including examining the PB’s files. The entire purpose of designated dual agency is to place a firewall between the firm’s listing agent and buyer agent so that the client can be specifically advised during the transaction.  Without this firewall, designated dual agency is not possible. Since a BIC does not have the same duty to supervise full brokers in their firm, except for those duties outlined in Rule .0110 of course, a BIC may practice designated dual agency with a full broker in the firm; provided, however, that the BIC must make alternate arrangements to make sure the firm’s  files are in compliance with the License Law so they do not inadvertently obtain confidential information.

Participating in dual agency and designated dual agency as a BIC is not without risk. Even if you are permitted under the License Law to practice dual or designated dual agency, an  unhappy client may point to your involvement and your position of authority as the root cause of their problem, whatever it may be. This appearance may be hard to avoid, and may  expose your firm to legal claims, even if such claims lack merit. If you practice dual or designated dual agency as a BIC, be sure to proceed with caution and make every reasonable  effort to be balanced and fair to all the firm’s clients.