CHICAGO, Nov. 28, 2016 /PRNewswire/ -- The California Supreme Court has upheld the appeal in the case Horiike vs. Coldwell Banker Residential Brokerage Company that began on September 7th. The Court's decision will likely cause some ripples for real estate companies that practice dual agency in either a residential or commercial capacity. The case has received national attention regarding the practice of dual agency and whether a single brokerage company can actually represent the interests of two competing parties in a fiduciary capacity. The Court's decision outlined that the brokerage company did have a duty to both learn and disclose any material facts that may have an impact on the value of the property.
The original case was based on a dispute regarding the square footage of a property purchased by the plaintiff, Hiroshi Horiike. Horiike was represented by the same company marketing the property for sale, Coldwell Banker. Horiike signed documents with Coldwell Banker outlining that Coldwell Banker was acting in a dual agent capacity and representing both the buyer and seller. The court determined that Coldwell Banker did not provide the same degree of care to the buyer as compared to the seller of the property, but owed both the buyer and seller the same degree of care and representation. Dual agency has been a common practice in both residential and commercial brokerage firms where the parties to a real estate transaction are represented by an agent (or agents) from the same brokerage company. "This court ruling proves the point that exclusive tenant representation firms have been making for years, that lines can easily blur when an agency represents both sides of a transaction," said William Strong, an ITRA Global corporate real estate advisor from San Diego. "It's very clear to us that you can only advocate for one party in a lease or purchase, and so ITRA Global advisors choose to only work for corporate space users to ensure our client's interests are our top priority." Many of the world's largest real estate companies both practice and encourage dual agency. CBRE, JLL, Colliers and DTZ/Cushman & Wakefield all represent institutional property owners and sellers as their primary clients. However, these same firms also represent corporate tenants and buyers in lease and sale transactions as dual agents. In the Supreme Court ruling today, the court opinion noted the following with respect to the practice of dual agency: