National Real Estate Exam (PSI)General Principles of AgencyMedium
A large brokerage firm represents both the buyer and the seller in the same transaction, but instead of one agent representing both parties, the firm assigns one salesperson to represent the seller exclusively and a different salesperson to represent the buyer exclusively, with each owing full fiduciary duties only to their own client. What is this arrangement called?
- AUndisclosed dual agency
- BSingle agency
- CSubagency
- DDesignated agency
Show answer & explanationAnswer & explanation
Correct answer: D. Designated agency
Designated agency allows a broker to appoint two different salespersons within the same firm to represent the buyer and seller separately, each owing full fiduciary duties to their own client, avoiding the divided loyalty issues of traditional dual agency.
Why the other options are wrong
- A. Undisclosed dual agency is illegal and involves hiding the dual role, unlike this transparent designated arrangement.
- B. Single agency means representing only one party in the transaction, not applicable when the firm represents both sides.
- C. Subagency involves a cooperating broker from a different firm representing the seller's interests, not this scenario.
Designated Agency
An arrangement where a broker appoints separate salespersons within the same firm to represent the buyer and seller individually, each owing full fiduciary duties to their assigned client.
- Reduces conflicts inherent in dual agency
- Each designated agent owes full loyalty to their own client
- Must typically be authorized by state law and disclosed
Memory trick: Designated = each gets their own dedicated agent