80. Which of the following statements accurately describes undisclosed dual agency?
Answer: C
Undisclosed dual agency involves acting for both parties without informed consent of one or both.
Undisclosed dual agency refers to a situation in which a real estate agent represents both the buyer and seller in a transaction without obtaining informed consent from one or both parties involved. This lack of transparency can lead to conflicts of interest and is generally considered unethical.
A) It is permitted only when a contract is prepared by an attorney.
This statement is incorrect because undisclosed dual agency is not contingent upon the involvement of an attorney in drafting a contract. The key issue is the agent's failure to disclose representation of both parties, not the legal preparation of documents.
B) It is permitted if a transaction broker advises both the buyer and the seller.
This statement is misleading. While a transaction broker can facilitate a deal without representing either party as an agent, undisclosed dual agency specifically involves representing both parties without their consent, which is not permitted regardless of advice given.
C) It involves acting for both parties without informed consent of one or both.
This statement accurately describes undisclosed dual agency. It highlights the critical ethical issue at the heart of this practice, where an agent represents both sides of a transaction without transparency or consent, potentially compromising the interests of one or both parties.
D) It occurs whenever the firm representing the buyer is to be paid by the seller.
This statement is incorrect because the mere fact that a firm representing the buyer receives payment from the seller does not constitute undisclosed dual agency. The crucial factor is the lack of informed consent about the dual representation, not the payment arrangement.
Conclusion
Option C is definitively correct as it clearly encapsulates the essence of undisclosed dual agency, focusing on the lack of informed consent. All other options fail to address the critical ethical implications of the practice or misrepresent the conditions under which dual agency may occur. Transparency and consent are fundamental in any agency relationship, making C the only accurate statement regarding the concept.