Maryland Home Improvement PSI Practice Exam

In a dual agency agreement, what is critical for all parties to understand regarding traditional agency duties?

1. Accounting.

2. Care.

3. Disclosure.

4. Loyalty.

The correct answer is: Loyalty.

In a dual agency agreement, the principle of loyalty becomes critically important for all parties involved. Traditionally, when an agent represents a client, they owe that client undivided loyalty. This means putting the client's interests above all others, including their own interests and those of potential buyers or sellers. In a dual agency situation, where one agent represents both the buyer and the seller, maintaining loyalty can be challenging. The agent must balance the interests of both parties without favoring one over the other. Therefore, it is essential for all parties to clearly understand how loyalty is maintained in this setup. This includes recognizing that while the agent can facilitate the transaction, they cannot advocate for one party's best interest at the expense of the other in the same way they would in a traditional single-agency relationship. The understanding of loyalty in a dual agency context shapes how all parties can expect to interact with the agent and sets the foundation for trust and transparency throughout the transaction. By being aware of the implications of loyalty in a dual agency agreement, clients can make informed decisions and manage their expectations effectively.