CA Supreme Court Decision Puts Controversial Issue in Spotlight, Establishing Uniform US Standard Difficult Due to Wide Variation in State Laws
They have officially banned the real estate practice of dual agency across the pond.
This week, the Royal Institution of Chartered Surveyors (RICS), a global real estate accreditation body that certifies property and construction professionals, published a statement containing more stringent conflict-of-interest requirements in advance of standards specific to the United Kingdom.
The new requirements specifically ban the practice of dual agency in the UK, under which both buyer and seller in a real estate transaction can be represented by the same entity as long as the arrangement is fully disclosed to all parties.
Under the new policy, dual or multiple relationships between brokers and agents will only be allowed with informed consent of the parties involved in a transaction. The statement also requires clearer guidance on confidentiality.
Both of the standards go into effect Jan. 1, 2018. RICS issued the new statement at MIPIM, an international real estate conference held in Cannes, France.
In the U.S., where each of the 50 states sets its own laws governing real estate transactions, imposing a similar uniform standard would prove difficult, especially going so far as to impose an outright ban on the practice.
The real estate representation arrangement is back in the spotlight after the California Supreme Court last fall upheld a lower-court ruling that a listing broker had a fiduciary responsibility to both the buyer and the seller in a dual agency transaction involving the 2007 sale of a Los Angeles home.
The case, Horiike v. Coldwell Banker Residential Brokerage Co., turned on the larger issue of a real estate brokerage firm’s fiduciary role when its agents or brokers represent both sides in a transaction. Since California is the most populous US state, the decision may have far-reaching consequences on how commercial and residential real estate brokerages do business, at least in the Golden State.
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