Which statement is true about undisclosed dual agency?

• A. It is illegal in many states.
• B. It is encouraged to maximize commissions.
• C. It requires disclosure to all parties after closing.
• D. It is the same as disclosed dual agency.

Answer: (A)

Undisclosed dual agency involves a licensee representing both the buyer and the seller in the same transaction without telling either party that they owe duties to both sides. That creates a direct conflict of interest because the agent’s loyalty and confidentiality can be pulled in two directions, making it impossible to fully advocate for one client without compromising the other.

Because fiduciary duties require loyalty and full disclosure, many states prohibit operating in this way unless the agent first reveals the dual representation and obtains written consent from both clients. When there’s no disclosure, it breaches those duties and is illegal in many places, which is why this statement is true.

This isn’t something that’s encouraged to squeeze more money; instead, the ethical and legal framework aims to protect clients by ensuring transparency. Disclosure should occur early in the process, not after closing, so all parties can make informed decisions. Disclosed dual agency, when properly disclosed and agreed to in writing, is different and can be permitted in some jurisdictions; undisclosed dual agency is not the same and is typically prohibited.