Broker Sandra operates a large New Jersey real estate firm and has adopted a written designated agency policy. Salesperson Kim is the listing agent for seller Frank, and salesperson Leo — also affiliated with Sandra's firm — is representing buyer Grace, who wants to purchase Frank's property. Sandra properly designates Kim as Frank's designated agent and Leo as Grace's designated agent. Which of the following statements about this arrangement is accurate under New Jersey law?
Correct Answer
A) Sandra's firm is still considered a dual agent, but Kim and Leo may each act as exclusive advocates for their respective clients
Under New Jersey's designated agency framework (N.J.A.C. 11:5-6.9), when a broker designates separate salespersons to represent each party in an in-house transaction, the brokerage firm itself remains in a dual agency relationship. However, the designated agents — Kim for Frank and Leo for Grace — are each permitted to act as exclusive advocates for their respective clients, providing full fiduciary representation. This is the key benefit of designated agency: it allows individual salespersons to avoid the limitations of dual agency even though the firm-level dual agency technically remains.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The legal principle that holds a broker responsible for the actions of their agents and employees performed within the scope of the agency relationship.
An agency relationship created when a principal's actions or words lead a third party to reasonably believe that an agent has authority, and the principal fails to correct this belief.
An agency relationship created when a principal approves or accepts an agent's previously unauthorized actions, effectively granting authority after the fact.
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