What consequence might arise from failing to disclose an agency relationship?

Failing to disclose an agency relationship can lead to legal disputes and potential penalties because such nondisclosure undermines the trust and transparency required in real estate transactions. In many jurisdictions, agents are legally obligated to inform all parties involved about their role and the nature of their relationship. Not fulfilling this duty can result in parties feeling misled or deceived, which could lead to litigation or claims for damages. Furthermore, regulatory bodies may impose penalties on agents for not adhering to disclosure requirements, reinforcing the importance of proper communication and ethical practices within the profession. This creates a significant risk of legal complications, which underscores the necessity of adhering to disclosure obligations in agency relationships.