Agent Patel lists a home in Iowa City for seller Williams. A buyer, Davis, contacts Agent Patel directly and wants to make an offer on the Williams property without hiring a separate buyer's agent. Agent Patel informs Davis that Patel's firm can represent both parties with their written consent. Both Williams and Davis agree in writing to this arrangement. Which agency type has been created, and what is a key limitation Agent Patel now faces?
Correct Answer
D) Dual agency has been created; Patel may not disclose the seller's minimum acceptable price or the buyer's maximum willingness to pay
When Agent Patel represents both the seller Williams and the buyer Davis in the same transaction with written consent from both parties, this creates disclosed dual agency under Iowa law. A critical limitation of dual agency is that the agent cannot disclose the seller's minimum acceptable price to the buyer, nor can the agent disclose the buyer's maximum willingness to pay to the seller. Iowa Code Chapter 543B and IREC rules require written consent for dual agency and impose these confidentiality restrictions to protect both parties.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The fiduciary obligation to protect a client's private information and not disclose it to third parties without permission, surviving even after the agency relationship ends.
In real estate, a client is someone to whom the agent owes fiduciary duties through an agency relationship, while a customer is a third party to whom the agent owes only honesty and fair dealing.
An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.
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