Guidelines for completing the new dual agency paragraph in the listing agreement

QUESTION: I have been reviewing the newly-released version of the Exclusive Right to Sell Listing Agreement (Form 101), and I see that paragraph 17, which covers dual agency, has a number of changes. Why were the changes made? And what suggestions do you have about how listing agents should go over that paragraph when they take a new listing?

ANSWER: The old version of paragraph 17 included a section where a seller could elect or decline to authorize dual agency – subparagraph (d) – and a separate section where a seller could authorize a firm to designate an agent to represent only the seller’s interests – subparagraph (e). The old paragraph 17 did not include a definition of “designated agency” and many REALTORS® were confused about whether, if the seller initialed the “Designated Agent Option” in subparagraph (e), the seller also needed to authorize dual agency in subparagraph (d). Also, the Real Estate Commission expressed concern that the language in the old version of subparagraph (e) did not make it clear that the seller was both authorizing and directing the listing firm to practice designated dual agency. A number of complaints have been filed with the Commission by consumers upset by the fact that although they selected designated dual agency, the firm did not actually designate different agents to represent only the interests of the buyer and seller.

The new paragraph 17 addresses both shortcomings. Subparagraph 17(d) in the new form provides a definition of designated agency. Both the subtitle of that subparagraph and its wording make clear that designated agency is actually just a form of dual agency, one where the buyer and the seller are both represented by the listing firm but by different agents at that firm. The subtitle of the new subparagraph 17(e) is “Authorization/Direction.” The first words in subparagraph (e) are an explicit instruction to the seller: “[I]nitial either Dual Agency or Exclusive Representation.” Listing agents should make sure that the seller initials one of those two alternatives. If the seller initials the Exclusive Representation option, no form of dual agency will be permitted and no additional initials are needed in subparagraph (e).

If, however, the seller elects to authorize Dual Agency, the seller must then check one of the two boxes provided to indicate whether the seller does or does not authorize the same individual agent to represent both the seller and the buyer. In addition, if the listing firm offers designated dual agency, the seller should indicate if the seller authorizes the firm to practice designated dual agency by initialing in the blank provided. If the seller authorizes designated dual agency, the firm must practice designated dual agency unless it’s not allowed by law for some reason or the seller agrees in writing that the firm may remain in dual agency only.

Note: similar changes have been made to paragraph 14 of the Exclusive Buyer Agency Agreement.