Law of Agency Practice Test 2025 – Complete Exam Prep

Undisclosed dual agency refers to a situation where an agent is representing both parties in a transaction—typically a buyer and a seller—without fully informing one or both parties of this dual representation. In this context, the agent does not disclose to one party that they are also acting on behalf of the other, which can create conflicts of interest and ethical dilemmas.

The essence of undisclosed dual agency is the lack of transparency. When one party is not aware that the agent is working for the opposing party, it can lead to mistrust and potential issues regarding loyalty and confidentiality. Agents have fiduciary duties to their clients, and these duties can be compromised when they represent both sides without disclosure.

In contrast, full transparency, partnership with a third party, and sole representation all involve clear and open representations of the authority and relationships in a transaction, which are not characteristic of undisclosed dual agency. Such practices can violate real estate laws and ethical standards, making it crucial for agents to always provide clear disclosure when representing multiple clients.