Question

The Marinos are selling their home to the Snyders. Tim is representing both the Marinos and the Snyders in the transaction. He had initially listed the Marinos' home and realized their home would be perfect for his buyer clients, the Snyders. After making all the necessary disclosures to both parties, he showed the Snyders the Marinos' home and they are buying it. The Marinos are paying commission on the transaction to Tim's broker, who in turn, will compensate Tim. Since the Marinos are paying Tim's commission, does this constitute an agency relationship, and, if so, what kind of an agency relationship?

A) The fact that one party (the Marinos/sellers) or another party (the Snyders/buyers) pays a commission does not create an agency relationship.
B) Yes, this constitutes an agency relationship. Due to the Marinos' paying the commission, the relationship would be between Tim, a special agent to the Marinos, and the Marinos (sellers).
C) Yes, this constitutes an agency relationship between the Marinos, the Synders and Tim. The payment of commission by the sellers produces a single agency relationship between the parties.
D) None of the above.

Answer 1

C) Tim's payment of commission from the Marinos while representing both parties in the transaction constitutes a dual agency relationship in real estate.

Step-by-step explanation:

The student is asking whether the payment of the commission by the Marinos to Tim constitutes an agency relationship, and if so, what kind.

In real estate, an agency relationship is generally created by a contractual agreement, not merely by who is paying the commission.

In this scenario, Tim is acting as a dual agent, representing both the buyer and the seller.

For an agency relationship to exist, there must be an agreement where the agent agrees to represent the interests of the client.

The payment of the commission itself does not determine the presence of an agency relationship.

The fact that Tim has made the necessary disclosures and is representing both parties indicates that he is a dual agent, creating a fiduciary relationship with both the Marinos and the Snyders.

Answer B) "Yes, this constitutes an agency relationship.

Due to the Marinos' paying the commission, the relationship would be between Tim, a special agent to the Marinos, and the Marinos (sellers)" is not entirely accurate because it does not acknowledge the dual agency role Tim is playing, given that he is also representing the Snyders.

The correct answer is C) "Yes, this constitutes an agency relationship between the Marinos, the Snyders, and Tim.

The payment of commission by the sellers produces a single agency relationship between the parties."