In a commercial real estate transaction, a broker may sometimes represent both the buyer and the seller. California law permits this type of “dual agency” when the relationship is properly disclosed and the parties consent.
But dual agency also creates an obvious concern: how can the same brokerage represent parties whose interests may be directly opposed?
A recent California Court of Appeal decision, Urban Sunrise LLC v. Vogt, provides a useful example of how courts analyze these disputes. The case involved a failed commercial real estate transaction and claims that the brokers breached their fiduciary duties while acting as dual agents.
The Court of Appeal ultimately ruled in favor of the brokers.
The decision is important not because dual agents have no fiduciary duties. They do. Rather, it illustrates the limits of those duties and the importance of the parties’ written agreements, disclosures, and their own responsibility for due diligence.
What Happened in Urban Sunrise?
The dispute arose from a proposed commercial real estate acquisition involving five properties.
The brokers involved in the transactions acted as disclosed dual agents, representing both sides of the proposed transactions.
The buyer ultimately did not complete the acquisitions and claimed losses exceeding $1 million. It later sued the brokers under several theories, including breach of fiduciary duty, professional negligence, constructive fraud, and rescission.
Among other things, the buyer argued that the brokers had failed to disclose important information and had not adequately protected the buyer’s interests during the transactions.
One issue concerned insurance.
The buyer contended that the brokers should have investigated the availability and cost of insurance for the properties, including issues associated with wildfire coverage.
The written agreements, however, placed responsibility for investigating insurance on the buyer. The buyer also had access to its own insurance professional.
The trial court entered summary judgment in favor of the brokers, and the buyer appealed.
What Did the Court of Appeal Decide?
The Court of Appeal affirmed the judgment for the brokers.
The court recognized that a real estate broker acting as a dual agent owes fiduciary obligations to the parties.
But the existence of a fiduciary relationship does not mean that the broker automatically becomes responsible for every problem that later arises in the transaction.
The court examined what the brokers knew, what they were required to disclose, what had actually been disclosed to the parties, and what responsibilities the written agreements placed on the buyer itself.
That distinction was important.
The buyer had agreed in writing to the dual-agency relationship. The transaction documents also allocated certain due-diligence responsibilities to the buyer.
The court was therefore unwilling to convert the brokers’ fiduciary obligations into a general duty to perform responsibilities that the contracts placed on the buyer.
Dual Agency Does Not Eliminate the Buyer’s Own Due Diligence
The insurance issue provides a particularly useful example.
Commercial properties can present significant insurance questions. The cost or availability of coverage may materially affect whether a transaction makes economic sense.
But that does not necessarily mean the broker must independently investigate every insurance issue for the buyer.
In Urban Sunrise, the transaction documents placed responsibility for investigating insurance on the buyer, and the buyer had its own insurance professional.
The court rejected the attempt to shift that responsibility to the brokers after the transaction failed.
For businesses and investors, the lesson is broader than insurance.
Commercial real estate agreements frequently allocate responsibility for investigating zoning, title, environmental conditions, financing, insurance, physical conditions, leases, and other aspects of the property.
Those provisions matter.
A party generally should not assume that the existence of a fiduciary relationship will override responsibilities that it expressly accepted in the transaction documents.
What About the Broker’s Fiduciary Duties?
The decision does not eliminate or minimize a dual agent’s fiduciary obligations.
A dual agent still must comply with California’s disclosure requirements and cannot conceal material information that the agent has a duty to disclose.
But fiduciary duty is not unlimited.
When litigation later arises, courts may look closely at what information the broker actually possessed, what the broker reasonably should have known, what was disclosed, and what responsibilities the parties themselves agreed to undertake.
That makes the written record particularly important.
Dual-agency disclosures, purchase agreements, due-diligence provisions, communications between the parties, and the involvement of outside professionals can all become important evidence if the transaction later results in litigation.
A Broker Who Is Also a Lawyer Does Not Automatically Become the Client’s Attorney
The case also involved an unusual issue because one of the brokers was also an attorney.
The buyer argued, in part, that the broker’s involvement in preparing transaction documents created additional duties associated with an attorney-client relationship.
The court rejected the argument that the circumstances established such a relationship merely because the broker was licensed as an attorney and participated in preparing transaction documents.
That distinction can be important in business transactions.
A professional may possess more than one license or professional qualification, but that does not necessarily mean that every interaction creates every possible professional relationship.
Whether an attorney-client relationship exists depends on the circumstances and the nature of the engagement, not simply on whether one participant happens to be a lawyer.
The Practical Lesson for Commercial Real Estate Transactions
Urban Sunrise illustrates an important point about commercial real estate litigation.
When a transaction fails, the dispute often becomes a retrospective examination of who was responsible for identifying a particular risk.
The buyer may blame the broker. The broker may point to the purchase agreement. The seller may rely on disclosures. Other professionals may have been responsible for insurance, title, financing, environmental review, or other aspects of due diligence.
The written agreements therefore become extremely important.
A business purchasing commercial property should understand not only what the seller and brokers are required to disclose, but also what the agreement requires the buyer to investigate independently.
And when a broker represents both sides of the transaction, the dual-agency relationship deserves particular attention before the transaction closes, not only after a dispute develops.
The broader lesson from Urban Sunrise is straightforward: a fiduciary relationship matters, but it does not necessarily erase the responsibilities that sophisticated parties accepted for themselves in their written agreements.
Legal Authorities
- Urban Sunrise LLC v. Vogt (Cal. Ct. App. 2026)
- California Civil Code §§ 2079.13–2079.24 (agency disclosure in real property transactions)
Related practice areas: Commercial Real Estate Disputes · Real Estate