Humber/Ontario Real Estate Course 2 Exam Practice

In a dual agency scenario, what must the brokerage ensure to receive compensation from both the buyer and seller?

1. The compensation must be disclosed only to the buyer in writing.

2. The compensation must be disclosed only to the seller in writing.

3. The compensation must be disclosed verbally to both parties.

4. The compensation must be disclosed in writing to both parties.

5. One client must be kept unaware of the compensation agreement.

6. The compensation must only involve a flat fee.

The correct answer is: The compensation must be disclosed in writing to both parties.

In a dual agency scenario, where the brokerage is representing both the buyer and the seller in the same transaction, it is crucial that the compensation arrangement is disclosed in writing to both parties. This written disclosure ensures transparency and helps all parties involved understand how the brokerage will be compensated for their services. Option A, B, C, and E are incorrect because they do not fully address the importance of written disclosure to both parties in a dual agency scenario. Disclosing the compensation arrangement only to one party, verbally, or keeping one client unaware of this information would not be in compliance with the necessary standards and could lead to misunderstandings or conflicts of interest. Option F is also incorrect because the type of compensation (flat fee, commission, etc.) is not the primary focus when it comes to dual agency disclosure requirements. The key factor is making sure that the compensation agreement is clearly documented in writing for both the buyer and the seller.