In many commercial real estate transactions, the same brokerage firm, or even the same individual broker, may represent both sides of a deal. This arrangement, known as dual agency, is legal in California with proper disclosure and consent, but it raises important questions. Anyone using commercial real estate brokerage services should understand how dual agency works and what to ask before agreeing to it.
Dual agency is not inherently bad. In some cases it can make a transaction smoother. The key is transparency and informed consent. Before engaging any broker, including when reviewing DAUM's brokerage services or those of any other firm, it helps to know how potential conflicts would be handled.
The law of agency governs relationships in which one party acts on behalf of another. In real estate, a broker acting as an agent generally owes duties to the client, which can include loyalty, confidentiality, disclosure and reasonable care.
Commercial transactions can involve several types of representation:
Dual agency can occur when one agent handles both sides, or when two agents from the same firm represent opposite parties. In California, brokers must provide agency disclosures and obtain written consent from both parties for a dual agency relationship.
Dual agency can offer some advantages. Communication may be faster when one firm coordinates both sides. A broker who knows both parties' timelines may help resolve logistical issues efficiently. In some markets, a firm with a strong listing inventory may also have tenants or buyers who fit well.
The risks center on divided loyalty. A broker representing both sides cannot fully advocate for either party on price or key terms. Confidential information, such as how much a buyer is willing to pay or how motivated a seller is, must be protected. Clients may not receive the same level of negotiating advocacy they would from an agent representing only them.
Before agreeing to dual agency, or even before hiring a broker, consider asking:
For straightforward transactions where both parties already agree on major terms, dual agency may work well and reduce friction. It may also be practical when a tenant specifically wants a property the firm already represents and is comfortable with the disclosed limitations.
For complex or high-stakes deals, many clients prefer separate representation so each side has a dedicated advocate. Tenants negotiating long-term leases with significant improvement allowances, for example, often benefit from a broker who works only for them.
Regardless of the arrangement, clients can take steps to protect themselves. Read https://daumcommercial.com/ agency disclosure forms carefully before signing. Work with a real estate attorney on contract terms, especially for purchases or long leases. Do your own research on comparable rents or sales. And do not hesitate to ask questions if something seems unclear.
Firms with long histories often have established procedures for handling these situations. DAUM, which has served Southern California commercial clients since 1904, represents tenants, landlords, buyers and investors across industrial, office, retail, multi-family and medical properties.
Yes, with proper disclosure and written consent from all parties. Brokers must provide agency disclosures and obtain agreement before acting as a dual agent.
Yes. You can decline and request separate representation. If a firm represents the other party, you may choose a broker from a different firm.
Not necessarily. Compensation depends on the agreements involved. Ask your broker to explain clearly how commissions work in your specific transaction.
Dual agency is a common feature of commercial real estate, but it should never be a surprise. By asking the right questions and understanding your options, you can decide whether shared representation suits your deal or whether a dedicated advocate will better protect your interests.