If a managing broker of XYZ Realty represents a buyer, and one of their salespersons at XYZ Realty represents the seller of the same property, what is the typical agency situation?

Dual agency arises when a BROKERAGE FIRM represents both the buyer and seller in the same transaction. Even if two different salespersons within the firm represent different parties, the BROKERAGE itself is in a dual agency relationship because both salespersons work under the same brokerage.

State approaches: (1) FULL DUAL AGENCY — Some states permit dual agency with written disclosure and informed consent of both parties before the agency relationship is formed; the dual agent cannot reveal confidential information of either party to the other and must remain neutral. Examples: Florida (limited use), Hawaii, Missouri (under certain circumstances). (2) DESIGNATED AGENCY — Some states recognize that one broker can DESIGNATE one salesperson to act for the buyer and another salesperson to act for the seller, with the brokerage itself remaining a coordinating role. This avoids the conflicts of full dual agency but still requires disclosure. States that recognize designated agency include Texas, Illinois (with limitations), California (in some cases), Pennsylvania. (3) PROHIBITED — A few states have effectively prohibited dual agency or designated agency in many situations (Florida moved toward 'transaction broker' status; Massachusetts, New Mexico). Florida primarily allows the broker to be a TRANSACTION BROKER, providing limited services without representing either party fully.

Disclosure requirements: In all states allowing some form of dual or designated agency: (1) The agency relationship must be disclosed in WRITING before any action that would create the relationship; (2) Both parties must give INFORMED CONSENT after understanding the implications; (3) Even after consent, certain confidential information cannot be disclosed (e.g., seller cannot reveal price floor to buyer, buyer cannot reveal price ceiling to seller); (4) The broker must remain neutral and cannot favor one party. Some states require specific BUYER REPRESENTATION DISCLOSURE forms. CONFIDENTIAL INFORMATION includes: motivations, urgency, willingness to pay above asking or accept below asking, specific terms a party would or would not accept. A broker who violates dual agency rules — for example, sharing seller's bottom-line price with buyer — can be subject to license discipline and civil liability.