[vc_row][vc_column][vc_column_text]Copyright © 2014 Law Office of Alexander T Gruft
California cases have often analogized between yacht brokers and real estate brokers with respect to the fiduciary duties they owe to their respective clients. As such, yacht brokers and salespersons should take note of a recent California Court of Appeal decision which held that where two real estate agents who work for the same broker represent the seller and buyer, respectively, the broker is the dual agent of both the seller and buyer. As the dual agent, the broker, and its salespersons, owe a fiduciary duty to both the seller and buyer. Horiike v. Colwell Banker Residential Brokerage Company (Cal. Ct. App. – April 9, 2014).
The case arose out of a real estate transaction involving a home in Malibu, California. The buyer claimed that the listing agent, an employee of Coldwell Banker, misrepresented the square footage of the home. The buyer was represented by a licensed associate also of Coldwell Banker. After discovering the discrepancy in the square footage, the buyer sued Coldwell Banker and the listing agent for breach of fiduciary duty and intentional and negligent misrepresentation.
The Court of Appeal held that because the listing agent and the buyer’s agent were both Coldwell Banker employees, Coldwell Banker was the dual agent for the both the buyer and the seller and owed both a fiduciary duty of “the highest good faith and undivided service and loyalty.” The court further held that the listing agent owed an equivalent duty to the buyer because he acted on behalf of Coldwell Banker.
Yacht brokers who represent the buyer and seller in a transaction are legally obligated to fully disclose the dual agency to both clients and obtain their written consent. Therefore, Horiike has important implications for yacht brokers whose salespersons represent both the buyer and seller. The case makes it clear that if two different agents represent the buyer and seller, there is a dual agency when both agents work for the same broker. As such, full disclosure and informed written consent is a must in such situations.[/vc_column_text][/vc_column][/vc_row]