California Real Estate Broker ExaminationAgencyEasy
A real estate broker is representing both the buyer and the seller in the same transaction with the full knowledge and written consent of both parties. This scenario best describes:
- ASubagency
- BOstensible agency
- CDesignated agency
- DDual agency
Show answer & explanationAnswer & explanation
Correct answer: D. Dual agency
Dual agency occurs when a single real estate broker represents both the buyer and the seller in the same transaction. This is permissible in California only with the full knowledge and written consent of both principals.
Why the other options are wrong
- A. Subagency is an agent representing the principal through another agent (e.g., a cooperating broker representing the seller via the listing broker).
- B. Ostensible agency (or agency by estoppel) is created when a third party believes an agency exists due to the principal's actions, which is not the case here.
- C. Designated agency is a form of dual agency where the broker designates different agents within the same brokerage to represent each principal.
Dual Agency
A situation in real estate where one real estate broker and/or their agents represent both the buyer and the seller in the same transaction.
- Requires full written disclosure and consent from both parties
- Limits the fiduciary duties owed to each principal (e.g., confidentiality of motivation)
- Permissible in California under strict conditions
- Broker acts as a neutral facilitator in some aspects
Memory trick: Agency types define who's on whose side, or if they're playing both sides wide.