Designated agency vs disclosed dual agency in New Jersey: who represents whom

The five relationships on the NJ CIS

New Jersey's Consumer Information Statement (CIS) tells buyers and sellers how a brokerage firm can work with them. Since P.L. 2024, c.32 took effect on August 1, 2024, it lists five business relationships: seller's agent, buyer's agent, disclosed dual agent, designated agent and transaction broker. DOBI Bulletin 24-11 explains that the law wrote the four relationships that already existed into statute and added designated agency as the new one.

If a firm does not affirmatively choose a relationship, the law makes the choice for it. Bulletin 24-11 says a firm that performs brokerage services for a buyer or a seller is that party's agent by default. The broad outline of all five sits on our agency and CIS study guide.

Designated agency: who represents whom

Designated agency only comes up when the buyer and the seller are both clients of the same brokerage firm. Instead of the whole firm representing both sides, the firm designates different individual licensees: one to represent only the buyer as the buyer's agent, and another to represent only the seller as the seller's agent. The statute says the designation can be made by the firm, including by a broker or managing broker of the firm.

Section 8 of the law (N.J.S.A. 45:15-16.93) is direct about the effect: each designated agent solely represents their own party, the two designated agents are not dual agents, and each owes fiduciary duties solely to their own principal. The CIS adds that designated agents have the same duties as a buyer's or seller's agent and advocate for their client in negotiations.

The firm is a different story. Bulletin 24-11 says that in a designated agency transaction, the brokerage firm, other than the two designated licensees, acts as a disclosed dual agent. The CIS puts it this way: the firm that supervises the designated agents remains a dual agent of both buyer and seller and cannot provide undivided loyalty to either party.

• The buyer's designated agent: full advocate for the buyer only.
• The seller's designated agent: full advocate for the seller only.
• The brokerage firm and everyone else licensed with it: disclosed dual agent of both.

Disclosed dual agency and its limits

A disclosed dual agent is a brokerage firm that works for both the buyer and the seller in the same transaction. The CIS says it is most likely to occur when a buyer's agent shows the buyer a home listed by the same firm. Without designated agency, the dual agency covers everyone licensed with the firm, so the buyer's agent and the listing agent are both working for both sides.

Under section 7 of the law (N.J.S.A. 45:15-16.92), a disclosed dual agent must take no action adverse to either party, disclose conflicts of interest to both, advise both to get expert advice on matters outside the agent's expertise, and keep each party's confidential information. The CIS gives the examples exam writers love: the highest price a buyer can afford to pay, the lowest price a seller will accept, and either party's motivation to buy or sell. The firm needs a party's express permission before sharing that kind of information with the other side, and it cannot coach either party on how to gain an advantage at the other's expense.

The CIS also says, in plain terms, what the parties give up: by consenting to dual agency, the buyer and seller forfeit their right of undivided loyalty.

Transaction broker: no agency at all

A transaction broker works with the buyer, the seller or both without representing either one. Bulletin 24-11 says no agency relationship is created, no fiduciary duties are owed, the firm may not promote one party's interests over the other's, and it is not required to keep any information confidential. The CIS describes the firm as a manager of the transaction that performs tasks to help it close.

That last point is the big contrast with dual agency. A disclosed dual agent owes confidentiality to both sides. A transaction broker owes it to neither. Section 9 of the law (N.J.S.A. 45:15-16.94) still requires honest, competent dealing with all parties, prompt presentation of written offers and counteroffers, keeping the parties fully informed, and advising them to get expert advice. Like dual agency, the relationship extends to everyone licensed with the firm.

The consent and disclosure each one needs

Both dual agency and designated agency require the informed consent of both parties, and both must be in writing. In residential deals that writing is usually the brokerage services agreement. The details from P.L. 2024, c.32:

1. Disclosed dual agency (section 7): only with the informed consent of both parties. In a residential deal, consent is given in the brokerage services agreements the buyer and seller each sign. In a commercial deal, it must be in writing.
2. Designated agency (section 8): it takes effect only once there is a written designated agency agreement with each party, with each party's informed written consent. In residential deals that can be part of the brokerage services agreement; in commercial deals it is a written agreement with each party.
3. How consent is shown (sections 3 and 5): the consent goes in the brokerage services agreement or in a document that requires the buyer's or seller's separate initials or signature, along with an acknowledgment that a disclosed dual agent will not advocate terms that favor one party over the other.
4. The firm's written disclosure of its role (section 2): the firm must tell its principal in writing whether it is acting as buyer's agent, seller's agent, disclosed dual agent, designated agent or transaction broker, no later than when the principal signs the brokerage services agreement, in a paragraph or separate signed writing titled "Agency Disclosure."
5. Compensation: a dual agent, and a broker-salesperson or salesperson acting as a designated agent, may be paid through the firm by either or both parties, as long as the sources and amounts are disclosed in writing to the buyer and the seller.

Signing the CIS acknowledgment is not consent. N.J.A.C. 11:5-6.9(b) says receiving the statement does not by itself amount to informed consent to dual agency, and the CIS says on its face that it is not a contract. The CIS has its own deadlines too. Under the 2024 law, a represented party gets it as soon as reasonably practical and no later than signing the brokerage services agreement, and an unrepresented party gets it before signing an offer or as soon as reasonably practical after. The older Commission rule, N.J.A.C. 11:5-6.9(e), sets earlier triggers that licensees still follow: a verbal explanation of the relationships before you discuss a buyer's motivation or finances (or a seller's motivation or price), and the written CIS before that discussion or no later than the first showing.

Designated vs dual vs transaction broker: side by side

Three scenarios

These are illustrative. The people are made up; the rules are from the sources below.

One more variation the exam can use: Maya's seller never consented to dual or designated agency. The firm cannot act for both sides without the informed written consent of both parties. How the firm then handles it is a matter for the firm and its broker; what it may not do is quietly represent both sides.

How this shows up on the exam

On the national portion, expect the general agency rules: dual agency needs the informed consent of all parties, a dual agent cannot share one party's confidential information with the other, and an agent who works with a party without representing them owes honesty but not loyalty. Agency is 13% of the national portion in the PSI outline, and national questions treat designated agency in general terms, so answer them with the general rule. On the New Jersey portion, use the state rules: five relationships, the firm stays a dual agent in designated agency, a transaction broker owes no confidentiality, and default agency applies when nothing is designated. On the state side, "Agency/Conflicts of Interest/Disclosure Requirements" is a subtopic of the 22 items on statutes and rules governing licensee activities, the largest New Jersey area on the exam outline.

Our suggestion: drill the three confidential examples (highest price, lowest price, motivation) and the phrase "the firm remains a dual agent" until they are automatic, then test yourself on the national agency topic and a full practice exam. The NJ-only rules sheet is a good one-page review the night before.