What is a 'dual agency' relationship?

Dual agency occurs when one brokerage (or one licensee) represents both the buyer and the seller in the same transaction. This creates an inherent conflict of interest because the broker's fiduciary duties run to both parties whose interests are typically opposed (the seller wants a high price; the buyer wants a low price). Legal status varies: most states allow dual agency only with full disclosure and informed written consent from both parties; some states (Colorado, Florida, Maryland, Texas) have abolished traditional dual agency in favor of transaction brokerage or designated agency. Designated agency (allowed in many states): different licensees within the same brokerage represent each side, with the managing broker overseeing as a neutral. Transaction brokerage: the licensee assists both parties without representing either fully — limited duties, no fiduciary relationship. When dual agency is permitted, the broker must disclose at first opportunity in writing, explain the limitations of representation (cannot advocate for one party against the other, cannot share confidential information), and obtain written consent. Failure to disclose dual agency is a major regulatory violation.