A real estate licensee represents a buyer and seller as a dual facilitator in the same real estate transaction. Before the closing, that licensee helps the buyer negotiate a contract to re-sell the property to another buyer.  Immediately after the closing, the same buyer – now the new owner - re-sells the property for more than 50% more than he/she paid for the property with the assistance of the same licensee.  Did the licensee act ethically and legally?

 If the licensee were an attorney, the answer is “no”, according to the Rhode Island Supreme Court Ethics Advisory Panel, which it stated in its  April 11, 2024 decision. The panel stated that an attorney violated the Rules of Professional Conduct by representing a buyer and seller with “adverse interests” especially when there was a “significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client . . .”   Panels in some other states have determined that representing a buyer and seller in the same transaction is a conflict of interest that cannot be waived.

Even though the rules that apply to attorneys and real estate licensees who represent parties with conflicting interests are not identical, dual facilitation can pose similar risks, depending on the clients’ interests and bargaining power.  Before a real estate licensee decides to work with both a buyer and seller in the same transaction, make sure to explain your relationship clearly and in writing to the consumers before signing. 

The RIAR Risk Management Committee has created a Double Ending fact sheet to help you determine how to deal fairly with consumers on both sides of a transaction or more information, please contact the RIAR Legal Hot Line at 401-432-6945 or email [email protected].