North Dakota Real Estate Practice Exam

What type of agreement must exist for dual agency to occur?

1. An oral agreement

2. A written agency agreement from both parties

3. An understanding between agents

4. A temporary agreement

The correct answer is: A written agency agreement from both parties

For dual agency to occur, there must be a written agency agreement from both parties involved. This is essential because dual agency represents a situation where a single agent or broker serves as the representative for both the buyer and the seller in a transaction. To ensure clarity and prevent conflicts of interest, states like North Dakota require a written agreement that outlines the terms and conditions of the dual agency relationship. This written documentation protects all parties involved by making the agent's role clear, ensuring that both the buyer and the seller understand their rights and obligations within the dual agency framework. In contrast, an oral agreement may not provide the necessary legal protection or clarity, while an understanding between agents is insufficient to establish a dual agency relationship. A temporary agreement does not adequately define the ongoing nature of the arrangements required for dual agency to exist. Thus, a written agency agreement is the foundational requirement for legitimatizing dual agency transactions.