Which scenario best describes an illegal dual agency?

In the context of real estate, dual agency occurs when a broker represents both the buyer and the seller in a transaction. For this representation to be legal, both parties must give informed consent. The first scenario describes an illegal dual agency situation because it highlights the broker representing both parties without obtaining their consent, which violates the ethical and legal guidelines established to prevent conflicts of interest and ensure fair representation for each client.

This scenario is problematic because it places the broker in a position where they may struggle to remain impartial, as they have conflicting loyalties to both parties. Without proper disclosure and consent, the broker cannot fulfill their fiduciary duty to either client, creating a significant risk of misrepresentation and damage to the clients' interests.

The other scenarios do not describe illegal dual agency. A transaction broker managing a client relationship generally serves without representing either party in a fiduciary capacity, thus avoiding dual agency issues altogether. A sub-agent working under a different broker is answering to a different party and is not engaged in dual agency. Meanwhile, a single agent acting under the instructions of the principal is fulfilling their duty as per the client's direction and is not in a dual representation situation.