Designated Dual Agency Bill Threatens to Erode Consumer Protections

A bill moving through the Minnesota legislature threatens to erode consumer protections by “allowing for designated agency in real estate transactions.” If passed, the law would impinge on anyone anytime he or she bought or sold a house in the state.

According to Consumer Advocates in American Real Estate (CAARE), designated agency is a "legal fiction” that lets a single agency attempt to represent the interests of both the buyer and seller in a real estate transaction. The pretense is that a buyer’s agent and seller’s agent can negotiate against each other even though the agency that employs them is prohibited from doing so.

Contrary to claims that designated dual agency removes the risks of straight dual agency, CAARE says that “designated agency is worse than dual agency.” States that allow designated agency, says CAARE, “have legalized the intentional misrepresentation of dual agency.” 

Right now there is an imminent risk that Minnesota will become one of those states.

Introduced February 11, 2019, in the Minnesota state senate, SF 1020 has been referred to the Minnesota Senate Commerce and Consumer Protection Finance and Policy Committee. A companion bill, HF 1112, was introduced February 14 in the house of representatives where it was referred to the Minnesota House Commerce Committee.

As a so-called designated agent, an agent may pose as an exclusive buyer agent or an exclusive seller agent – even though his or her brokerage retains access to all confidential negotiating information. All of the pitfalls of dual agency remain in place. Agents still are enticed by bigger commissions and managers still receive bonuses by keeping the transaction within their agency.

With no way to monitor how information is being shared within an agency—whether you’re a home buyer or a home seller—your agent’s “designation” offers no assurance he or she is representing your interests.

That’s why it is in the interest of all Minnesotans—especially committee members’ constituents—to voice their opposition to designated agency.