Dual representation occurs when one firm earns fees from both borrower and lender on the same loan. It creates an inherent conflict because the firm cannot fully advocate for either side. Borrowers should ask in writing whether the advisor or broker takes any compensation from the lender.
Why does it happen?
Some lenders pay correspondent fees to brokers and advisors who deliver loans through their channels. The fees are economic compensation for origination work the lender would otherwise do internally. The conflict is the borrower's: the broker's loyalty is divided.
What should sponsors require?
Written disclosure of all fees the advisor will receive on the deal, from any party. A waiver letter from any lender-paid compensation if the advisor purports to act solely as the borrower's agent. Independent legal review of the engagement letter language for both fee streams.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1