Where the two are from the same agency, that is a conflict requiring each client's written consent
A worked RES examination question on conduct conflicts of interest, from our Paper 2 bank — with the rule it turns on, and why each of the four options is right or wrong.
The question
Owen and Priya both work at XYZ Realty. Owen represents the seller and Priya the buyer in one private resale. Owen tells Priya that, because they co-broke, CEA will decide how they split the co-brokerage fee, and that any dispute over the split can be taken to the Small Claims Tribunal.
Consider the following statements.
- (i) What Owen and Priya are doing — each acting for his or her own client in the one resale — is co-broking.
- (ii) Owen is right that CEA will determine how he and Priya split the co-brokerage fee.
- (iii) Being from the same agency, Owen and Priya face a conflict of interest requiring each client's written consent.
- (iv) Owen is right that a dispute over his and Priya's fee split may be taken to the Small Claims Tribunal.
The answer, and why
Answer: B
The rule. Co-broking is two salespersons cooperating, each for their own client's best interests, in one transaction. How the co-brokerage fee is split is a matter for the salespersons and their agencies, not for CEA, and a fee-split dispute is not a matter for the Small Claims Tribunal. Where the two are from the same agency, that is a conflict requiring each client's written consent.
Why B is correct. (i) what Owen and Priya are doing is co-broking and (iii) the same-agency conflict needing written consent are correct. (ii) is false — CEA does not fix their fee split. (iv) is false — the Small Claims Tribunal does not resolve the split.
The other options.
- A adds the false (ii), giving CEA the fee-split role.
- C adds the false (iv), the Small Claims Tribunal.
- D drops the correct (i), the definition itself.
Exam note. CEA does not referee commission splits, and the Tribunal is not the forum. The same-agency conflict is the real disclosure point.
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