Dual Representation & Conflict of Interest (RES)

Conflict-of-interest rules are core to the CEA framework and a reliable source of exam questions — mostly because candidates confuse what's *prohibited* (dual representation) with what's *allowed* (co-broking), and get the disclosure point wrong.

The rule is regulation 5 — and it is a criminal offence

Candidates lose marks here by filing dual representation under "the Code of Ethics". It is not in the Code at all. It sits in regulation 5 of the Estate Agents (Estate Agency Work) Regulations 2010, headed "No dual representation", drafted in three tight limbs worth knowing precisely:

• Reg 5(1) — the prohibition. *No salesperson or estate agent who is a natural person shall, in respect of the same property, have as clients both vendor and purchaser or both landlord and tenant.* Note the two words the exam leans on: the test is the same property, and it turns on who your clients are.
• Reg 5(2) — consent is irrelevant. The prohibition applies *regardless of the consent or agreement of the client or of any or all the parties to the relevant transaction*. That is the statutory answer to "but I disclosed it and both sides agreed" — the legislation forecloses it in terms, which is why disclosure can never cure it.
• Reg 5(3) — it is an offence. On conviction: a fine of up to $25,000, imprisonment of up to 12 months, or both — the same ceiling as the regulation 6 moneylender ban, and heavier than the regulation 7 transaction-money offence ($10,000 / 6 months). CEA has prosecuted salespersons for it in court.

Why the ban is absolute is easy to see: the seller wants the highest price and the buyer the lowest, so genuine loyalty to both is impossible. Taking a fee from both sides is the clearest evidence you had both as clients — but the offence is complete once both are your clients, whoever ends up paying you.

Prohibited vs allowed — don't confuse these

So co-broking is not dual representation — it's the normal way two sides are each represented. The line is crossed when the *same* salesperson tries to serve both sides on one property. Two refinements the exam likes: CEA looks at substance, not labels, so a salesperson who in substance or effect acts for — or is paid by — both parties breaches the ban even if a colleague is nominally put on the other side; and where the other side's salesperson is from your own agency or is related to you, that is a genuine co-broke but a declarable conflict, to be disclosed in writing in the estate agency agreement (or immediately in writing if it surfaces later).

Why an intra-agency co-broke is lawful at all — the answer is in reg 5(1)'s own words. The prohibition binds a salesperson and an **estate agent *who is a natural person*. A licensed estate agency that is a company or partnership is therefore not itself caught by reg 5(1), which is precisely why two different** salespersons of the same agency may each act for one side. What that does *not* do is switch off the conflict rules: the connection must still be declared in writing under paragraph 13 of the Code, below.

And if the other party is unrepresented, you still act for your client alone — but you must make sure that party understands you do not represent them and are not looking after their interests. Being helpful to them is fine; letting them believe you are their agent is not.

Every other conflict — paragraph 13 of the Code

Once you are past reg 5, the governing provision changes. Conflicts falling short of dual representation are handled by paragraph 13 of the Code of Ethics and Professional Client Care (the First Schedule to the same Regulations), headed "Duty to avoid conflict of interests". Its opening rule is that you must not accept an appointment, or continue to act, where doing so would place your interests in conflict — or potential conflict — with the client's. It then spells out how that works in practice:

• Declare it in writing, as soon as possible — any interest that may at any time be in **direct *or indirect*** conflict with the client's (para 13(2)(a)).
• If you cannot declare it — on grounds of confidentiality or for any other reason — you must decline to act or withdraw (para 13(2)(b)). And if you do declare it but the fully-informed client does not consent, you must likewise decline or withdraw (para 13(2)(c)).
• Buying the client's property: you must not acquire, directly or indirectly, the client's property or any right or interest in it without the client's express knowledge and consent (para 13(2)(d)).
• Referral fees and rebates: no fee, reward, commission, rebate or other payment for referring third-party services may be taken without the client's express knowledge and prior consent in writing — and para 13(3) requires disclosure **in advance and in writing of both the fact *and the quantum*. Mentioning that there is a referral fee while withholding the amount** still breaches the Code.
• No compromising engagements — you must not take on any business, work or professional activity that would, or could reasonably be expected to, compromise the discharge of your obligations to your client (para 13(4)).

Consequences — discipline, and for reg 5 prosecution too

Keep the two tracks apart, because a Section B answer usually needs both. A breach of paragraph 13 is a Code breach: it goes to CEA and a Disciplinary Committee. Dual representation is a Code-level failure *and* an offence under reg 5(3) — the salesperson can be prosecuted in court on top of any CEA sanction. One set of facts, two separate consequences.

• Dual representation only — prosecution under reg 5(3): a fine of up to $25,000, imprisonment of up to 12 months, or both.
• Breach of fiduciary duty and the Code → CEA disciplinary action.
• The agent may have to account for (give up) the secret profit.
• The affected transaction can be voidable at the client's option.
• Reputational damage and possible suspension/revocation of registration.

Common mistakes

• Believing disclosure makes dual representation acceptable — reg 5(2) says it applies *regardless of the consent of any or all the parties*.
• Treating dual representation as only a Code breach — it is an offence under regulation 5, prosecutable on top of CEA discipline.
• Taking a referral fee without telling the client (secret commission) — or naming the fee but withholding the amount, which para 13(3) also forbids.
• Confusing legitimate co-broking (allowed) with dual representation (prohibited).
• Thinking a colleague's name on the other side fixes it — CEA judges the substance of who you really acted for and who paid you.
• Letting an unrepresented buyer or tenant assume you act for them too.