Dual Agency Restrictions in Michigan

Instructor: Tara Schofield

Tara has a PhD in Marketing & Management

Can a client refuse to pay you a commission if you are a dual agent? A court case shows what it takes to be protected as a dual agent and how to ensure you get paid for your work.

Dual Agency

Dual agency, as you may recall, is having one agent who represents the buyers and the sellers of a home or a piece of property. Dual agency has pros and cons for both clients, but it can be a sticky situation if one or both parties are not clear and do not approve a dual agency.

Requirements of Dual Agency

Under Michigan law, dual agency is legal and authorized, as long as there is not a conflict of interest, and both parties are aware of the dual agency. However, there are specific disclosures that are necessary. The listing and buyer agency agreements must both include a preprinted option that dual agency may be an arrangement based on the buyer's needs. An addendum should be created and distributed to the buyer and seller when the dual agency situation arises, and the box on the agency disclosure form must be marked to indicate dual agency. These steps provide adequate notification that a dual agency exists.

Clancy REALTORS - Charles Clancy v. Michael Rubick

In 2008, the Clancy REALTORS created a listing agreement with Michael Rubick, the owner of a large parcel of land that he wished to sell. Charles Clancy immediately went to work to sell the property, including talking to the adjacent neighbor to see if he was interested in purchasing the property. The neighbor was interested and entered into an agency relationship with Clancy REALTORS to purchase the property. After everyone agreed to the sales terms, the purchase agreement was signed. At the same time, the agent informed the seller of the dual agency agreement and received the seller's consent.

However, Michael Rubick refused to pay a commission because he had not been informed of dual agency earlier. The agent could have let him know of the dual agency situation when the buyer became a client of the agency. Unfortunately, Mr. Rubick didn't know about dual agency until the purchase agreement had been signed. The 'gap' became the issue. The 'gap' is the amount of time between the buyer becoming a client and the time a purchase agreement is signed. This gap may be a very short period of time or may extend into months.

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