Professional Legal Training Course (PLTC) Real Estate Practice Exam

In a dual agency situation, it is essential for the agent to disclose that all parties involved must understand the agency relationship. This is crucial because dual agency occurs when an agent represents both the buyer and the seller in a transaction. The potential for conflict of interest is significant, and both parties need to be fully informed about the nature of the agency relationship. This transparency helps ensure that both the buyer and the seller are aware of the agent's obligations and the potential limitations on the agent's ability to advocate for either party fully.

Informing both parties enhances trust and allows them to make informed decisions regarding their respective positions in the transaction. Without this disclosure, the agent could face ethical and legal consequences for failing to maintain transparency in the agency relationship. This understanding is foundational for preventing misunderstandings and ensuring that the parties' interests are adequately protected throughout the transaction.