What is a legal dual agency arrangement?

A legal dual agency arrangement occurs when a broker represents both the buyer and the seller in the same transaction. In this scenario, informed written consent from both parties is essential. This consent ensures that both the buyer and the seller are fully aware that the broker has a relationship with both sides and is aware of the potential conflicts of interest that may arise. It provides legal protection for the broker and establishes transparency in the transaction.

The other options do not adequately represent the requirements of a legal dual agency. For instance, not disclosing the buyer’s identity to avoid bias does not address the need for consent or the ethical considerations involved in dual agency. Seeking consent only after learning that a buyer's offer will be accepted undermines the process of obtaining informed consent, since it does not ensure that both parties have agreed to the dual representation from the outset. Lastly, representing a seller who is buying a home from a relative does not inherently create a dual agency situation unless the broker also represents the buyer; thus, it does not fulfill the criteria for a legal dual agency arrangement.