Why Some States Don’t Allow Dual Agency - Common Practice in California

A commercial real estate broker who represents both landlords and tenants in a transaction is a “dual agent”.  Some states don’t allow dual agency because they recognize that brokers can’t effectively represent the best interests of both sides of a transaction. Yet, dual agency is a common practice in California.
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A dual agent has a fiduciary duty to both the landlord and the tenant of utmost care, integrity, honesty, and loyalty in the dealings with either the landlord or the tenant. California law limits what dual agents can reveal to their clients about the negotiations—they must not disclose confidential information provided to them by either party to the opposite party. They may however facilitate communication between the parties, keep the transaction on track, and assist with the necessary paperwork, essentially reducing them to the role of an administrator rather than a negotiator.

A dual agent holds a fiduciary duty to both the landlord and the tenant in the same transaction and therefore cannot exclusively advocate for the best interests of the landlord or the tenant. The dual agent's role in the transaction is diminished.

Dual agency is bad for both landlords and tenants because neither party gets the benefit of expert guidance. Dual agency essentially minimizes the advantage of having broker representation.

At CroninCRE we exclusively represent commercial real estate tenants. Never landlords. We are only focused on finding value and representing the best interests of our clients without conflict of interest.

No one would hire a lawyer who works for the other side. Yet, the equivalent happens every day when tenants work with commercial real estate brokers and firms that also represent landlords. So, ask your broker if they or anyone else in their office represents landlords. If so, you have a built-in conflict of interest.