If a real estate agent intends to act for both the buyer and the seller in a transaction, they must fully disclose the arrangement to all parties – or risk jeopardizing the deal, Toronto real estate lawyer Lisa Laredo says in Law Times.

In Partners Realty Ltd. v. Morrow, the Ontario Superior Court recently found the failure to disclose dual agency constituted a material breach in the listing agreement, resulting in a loss of almost $18,000 in commission for the agent.

“The simple rule is that an agent cannot serve two masters,” Laredo says in Law Times.

“The exception to the rule is where the agent fully discloses the dual relationship and all material facts in her knowledge to both parties along with all facts and circumstances likely to affect the decision of the principals. In addition, the agent must show that the decision by the principal was taken after having received the information and having agreed to accept the agent’s recommendation.”

The basis of the rule, Laredo tells the legal publication, is to avoid the appearance of a conflict of interest and the possibility of any hidden benefit to the agent.