On November 11, 2016 the California Supreme Court in the case of Horiike v. Coldwell Banker Residential Brokerage Company et al., issued a ruling that expands the fiduciary duties of agents where their brokerage is acting as a dual agent.
As background, in many instances a seller of real property will list their property for sale with a large brokerage house like Coldwell Banker. Coldwell Banker is a large commercial brokerage firm that employs associate licensees (agents) to help its customers sell and buy property. Often times the brokerage firm, like Coldwell Banker, will wind up on both sides of the transaction representing the seller and the buyer although through different associate agents – one for the buyer and one for the seller – who are acting independently but under the brokerage firm (Coldwell Banker, ReMax, Sotheby’s, etc).
Before the Horiike v. Coldwell Banker ruling, the rule was that even though the associate agents – one on behalf of the seller and one on behalf of the buyer- were technically acting as dual agents because they were operating under the same brokerage, the agents only owed fiduciary duties to their own clients. In other words, a seller’s agent owed a fiduciary duty to the seller only, not the buyer, even if they were both operating out of a brokerage like Coldwell Banker.
This ruling, however, changed the rule. The Court held that when Coldwell Banker acted as a dual agent for the buyer and seller in the transaction, the associate licensee on the seller’s side owned the same fiduciary duty to the buyer that he owed to his own client – the seller.
This is a really interesting ruling and confirms what we thought all along – dual agency is a dangerous proposition for all involved. At least we now know that there are no split duties (duties only to one side the transaction) in dual agency.
For more information, contact us at Schorr Law, APC. 310-954-1877, firstname.lastname@example.org.