Licensee Paul represents seller Mrs. Chen on a Lexington property. Buyer Ray approaches Paul directly, without a buyer's agent, and Paul shows him the property. Ray later signs a buyer representation agreement with Paul's brokerage. Paul's broker does NOT designate a separate agent for Ray. Under Massachusetts law, what has occurred and what is required?
Correct Answer
B) Dual agency has arisen, and both Mrs. Chen and Ray must provide informed written consent for the transaction to proceed lawfully
When Paul's brokerage agrees to represent both Mrs. Chen (the seller) and Ray (the buyer) in the same transaction, and the broker does not designate separate agents for each party, dual agency arises under Massachusetts law. Under 254 CMR 3.00, dual agency is only lawful with the informed written consent of both the seller and the buyer. Paul must obtain this consent from both Mrs. Chen and Ray before continuing to represent both parties. Without this consent, the dual agency arrangement is a violation of Massachusetts Board regulations.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created by the conduct or actions of the parties rather than by a written or oral agreement.
The legal obligation to reveal information that could affect a party's decision to enter into or the terms of a real estate transaction.
The extent of power and actions an agent is authorized to perform on behalf of the principal, as defined by the agency agreement.
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