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Designated Agency, Fiduciary Duty & The Practice of Law

Real Estate Broker/Owner with Harsch Associates

Designated Agency & Fiduciary Duty

I would really appreciate it if someone could help me understand how in real estate brokerage, agents may claim they are serving as fiduciaries in a manner wholly unacceptable in the practice of law or for that matter in any other function where fiduciary duty is imposed. 

If the role of a designated agent is legitimate wherein under the same firm and frequently within the same physical office location, two different agents are considered able to provide fiduciary duties to two separate parties with theoretically opposing interests (that's one of the justifications for the agency after all, that the agent protects the principal with interests that are in opposition to the interests of the other party), if this is so then why cannot lawyers who are under the very same fiduciary duties as real estate agents, do the same? 

I think any response will attempt to justify this anomaly by saying that real estate is different, that agents can impose various "guardrails" and protections to ensure that they remain apart and independent and thus can properly represent their client's interests. Why if this is so, couldn't attorneys set up the very same protections within their office and thus retain their fees for both sides in-house? 

Any self-respecting attorney would quickly and emphatically scoff at the very idea and most look at what is now accepted practice in real estate with cynical skepticism and disbelief. They would be offended at the possibility of the perception of conflicting interests, damage to confidentiality, or collusion by the two attorneys within the firm.

How did this come about? I recall very well the man who "invented" designated agency and his rationale. Quite simply it was to make it possible to claim a firm was providing fiduciary duties, while doing so on for inhouse sales. This same attorney had previously invented "real estate brokerage" which he called transaction brokerage which permits in-house sales without any conflict of interest. 

The question, therefore, is this: if a real estate firm can provide a fiduciary duty to two separate clients who have interest in the same transaction then why can't a law firm do the same, given they are bound by the identical duties of a fiduciary? 

It would seem logical that either the practice of law could adopt designated legal representation within the same firm or the practice of designated agency in real estate is not legitimate and should be disallowed. Either the legal profession is too stuffy and hampered by tradition or the real estate profession has pulledthe wool over the eyes of the entire nation. 

Which is it going to be since fiduciaries can't have it both ways?


Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It's always nice when somebody can break down complex finance terms for the masses. I appreciate you

Jan 17, 2022 10:26 PM
Paul Harsch

Thank you for your reply and I'm very glad that you found my post to be helpful. Feel free to contact me if I could ever answer any specific questions you might have. 

Best regards, Paul

Jan 18, 2022 01:09 AM