An Associate Broker in New Mexico has been showing homes to a buyer under a written buyer agency agreement. The buyer later finds a property on her own and wants to make an offer without using the Associate Broker. The Associate Broker's Qualifying Broker tells the Associate Broker to represent the seller in the same transaction so the brokerage can earn both sides of the commission. The buyer has NOT been informed of this change. Which of the following statements BEST describes the legal and ethical problem with this arrangement?
Correct Answer
B) The arrangement creates an undisclosed dual agency, which violates New Mexico's requirement for written informed consent from both parties.
Under NMSA 1978, §§ 61-29-1 through 61-29-22, dual agency in New Mexico requires written informed consent from both the buyer and the seller before the dual agency relationship is established. In this scenario, the brokerage would be representing both the buyer (under the existing buyer agency agreement) and the seller (through the new listing relationship) without disclosing this to the buyer or obtaining her consent. This constitutes undisclosed dual agency, which is a violation of New Mexico's brokerage relationships statute and a breach of fiduciary duty.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created when a principal approves or accepts an agent's previously unauthorized actions, effectively granting authority after the fact.
The legal requirement for real estate agents to inform all parties about who they represent in a transaction, typically provided at first substantive contact.
A legal relationship in which one person (the agent) is authorized to act on behalf of another person (the principal) in business transactions with third parties.
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