California Dual Agency Ruling To Impact Brokerages
The California Supreme Court upheld a lower court ruling today in a decision that will impact commercial and residential real estate brokerages going forward.
Horiike v. Coldwell Banker, originally filed in 2007, involved the sale of a Los Angeles house to Hong Kong businessman Hiroshi Horikke, who claims Coldwell failed to properly advise him on the actual square footage of the house. However, the larger issue addressed in the suit is brokers' fudiciary responsibility when representing both sides of a transaction.
Courts ruled Monday that a listing broker has a fiduciary responsibility to both the buyer and seller in dual agency transactions, but how that is to be accomplished is still a bit hazy.
Some experts have an idea how it may work, but they say commercial brokerages aren’t going to like it. Lone Tree principal William Gary says it’s likely brokerages will need to address conflict of interest issues by creating alternative categories of agency relationships, impacting everyone from transaction brokers to facilitators and designated agents. [CoStar]