California Real Estate SalespersonLaws of Agency and Fiduciary DutiesHard
A broker acts as an undisclosed dual agent in a transaction without informing either party or obtaining consent. When this is discovered, what is the most likely consequence regarding the broker's commission?
- AThe broker receives half commission from each party automatically
- BThe broker keeps the full commission since the sale closed successfully
- CThe commission is redirected to the DRE as a penalty
- DThe broker may forfeit the right to any commission from the transaction
Show answer & explanationAnswer & explanation
Correct answer: D. The broker may forfeit the right to any commission from the transaction
An agent who acts as an undisclosed dual agent breaches the fiduciary duty of full disclosure and loyalty, and California courts have held that such a breach can result in forfeiture of the broker's right to any commission, regardless of whether the transaction closed successfully.
Why the other options are wrong
- A. There is no automatic half-split rule; forfeiture is the more likely legal consequence.
- B. A successful closing does not cure the fiduciary breach or preserve commission rights.
- C. The DRE does not confiscate commissions as a penalty mechanism.
Undisclosed Dual Agency Consequence
When a broker secretly represents both parties without disclosure and consent, the broker risks forfeiting the entire commission due to breach of fiduciary duty.
- Breach of loyalty and disclosure duties
- Commission forfeiture is a recognized remedy in California case law
- Transaction may also be subject to rescission by the injured party
Memory trick: Hide the agency, lose the pay — secrecy costs the commission.