Dual agency

Key Takeaways

• Washington's statutory name for one broker representing both sides of the same sale is limited dual agent, not dual agent.
• Limited dual agency requires the written consent of both parties, set out in the services agreement and separately initialed by each principal (RCW 18.86.020 and RCW 18.86.060).
• A limited dual agent may not advocate terms favorable to one principal to the detriment of the other, and may not disclose either party's confidential information.
• A limited dual agent still owes every duty in RCW 18.86.030, including reasonable skill and care, honest dealing, and disclosure of known material facts.

What It Means

Dual agency is one broker, or one firm, working with both the buyer and the seller in the same transaction. Washington law calls the arrangement Limited Dual Agency, and the word limited matters here. A broker who takes both sides keeps the duties owed to every party, but gives up the ability to argue price or terms for one client against the other.

The arrangement is set up in writing, well before anyone reaches the closing table. Each principal signs a Written Services Agreement with the firm, and that agreement has to say whether the principal consents to the appointed broker acting as a limited dual agent. The consent line is initialed on its own, so a buyer or seller who does not want it can leave it blank and keep single representation.

One firm handling both sides is not always dual agency. When two different brokers at the same firm represent the buyer and the seller, each broker stays with their own principal and it is the firm's Designated Broker who carries the dual role.

How It Works in Washington

Washington codified agency in chapter 18.86 RCW, so limited dual agency runs on statute rather than on custom. RCW 18.86.060(1) permits a broker to act as a limited dual agent only with the written consent of both parties to the transaction, set forth in the services agreement. RCW 18.86.020(2)(b)(iv) sets the shape of that consent: the agreement must state whether the principal consents, the consent must be separately initialed by the principal, and it must carry an acknowledgment that a limited dual agent may not advocate terms favorable to one principal to the detriment of the other.

The duties do not shrink to nothing. RCW 18.86.030(1) still requires reasonable skill and care, honest and good faith dealing, timely delivery of all written offers and notices, and disclosure of material facts the broker knows that a party cannot readily discover. RCW 18.86.060(2) adds four more that cannot be waived: take no action adverse or detrimental to either party's interest, disclose conflicts of interest in a timely way, advise both parties to seek expert help on matters beyond the broker's expertise, and never disclose either party's Confidential Information, even after the relationship ends.

Two written disclosures ride along. RCW 18.86.030(1)(g)(i) requires the broker to state in writing, in a separate paragraph titled Agency Disclosure, whether they represent the buyer, the seller, or both parties as a limited dual agent, before the principal signs an offer. And RCW 18.85.361(10) makes it grounds for disciplinary action to charge or accept compensation from more than one party in a single transaction without first disclosing all the facts in writing to every interested party. Our walkthrough of the current rules is here: Washington's New Agency Law: Your Complete Guide to Written Services Agreements.

Example

Maria lists her Spokane house with Cascade Ridge Realty at $525,000. Her services agreement names broker Tom Alvarez as her agent, and Maria initials the line consenting to limited dual agency. Six weeks later the Nguyens, who have been to two of Tom's open houses, ask him to help them buy. They sign their own services agreement with Cascade Ridge, name Tom as their broker, and initial the same consent line.

Tom is now a limited dual agent. The Nguyens offer $498,000 and privately tell Tom they would go to $515,000. Maria privately tells Tom she would accept $505,000. Tom may not pass either number across, and he may not steer Maria to counter at $515,000 or nudge the Nguyens toward $505,000. He writes the $498,000 offer up and delivers it the same afternoon. He also tells both sides that the inspector found a failing 1998 furnace, because that is a material fact he knows. The parties negotiate on their own and settle at $507,500. The purchase and sale agreement carries a separate paragraph titled Agency Disclosure naming Tom as a limited dual agent, which is what RCW 18.86.030(1)(g)(i) requires him to put in writing before his principal signs an offer.

Common Mistakes and Exam Traps

• Washington's statutory term is limited dual agent. An answer that says dual agent without the word limited is using national textbook wording, not the RCW 18.86 wording.
• Verbal or implied consent never creates limited dual agency in Washington. The consent must be written, in the services agreement, and separately initialed.
• A limited dual agent is not released from duties. The limit is on advocacy; skill and care, honesty, timely delivery of offers, and material fact disclosure all survive.
• When two different brokers at the same firm represent the buyer and the seller, those individual brokers are not the dual agents. The firm's designated broker is.