WHAT IS AN AGENCY RELATIONSHIP?
A Realtor is a licensed real estate agent who is also a member of the Canadian Real Estate Association. A Realtor works within a legal relationship called agency relationship.
The agency relationship exists between you, the Realtor, and the Realtor’s brokerage, the company under which the Realtor who is representing you is licensed with and working for. Laws have been designed to govern agency relationships and help you feel safe by outlining fiduciary duties that Realtors owe to clients. Briefly the fiduciary duties include: loyalty, obedience, confidentiality, accounting, disclosure and competence.
ARE THERE DIFFERENT BUYER AGENT RELATIONSHPS?
Yes, the following buyer agency relationships can be established:
Customer Relationship (no written agreement)
When a person goes to a real estate agent for help in finding a home to buy or rent and does not sign a Buyer Agency Agreement, the agent is presumed to be representing the buyer as a customer.
In the real estate business, regardless if you are a Buyer or Seller, you can expect any real estate professional you contact to provide you at the minimum:
1. Customer duties of care (provide accurate information)
2. Make no misrepresentation of material facts
3. Be fair and ethical
Client Relationship (by written agreement)
A buyer may enter into a written contract known as a Buyer Agency Agreement with a real estate agent, which provides that the agent will represent the buyer in locating a property to buy. The agent is then known as the buyer’s agent. That agent assists the buyer in evaluating properties and preparing offers, and negotiates in the best interests of the buyer. The agent’s fee is paid according to the written agreement between the agent and the buyer. If you as a buyer wish to have an agent represent you exclusively, you must enter into a written buyer agency agreement.
The Realtor in a Buyer Agency Relationship has to provide the following fiduciary duties:
Competence In agency law the agent is the “extension of the principal” (client). The real estate agent must exercise duties of superior skill and knowledge while pursuing the client’s affairs.
Obedience A real estate agent is obligated to lawfully obey the clients reasonable instructions even if he doesn’t agree.
Accounting A real estatet agent is to safeguard and account for all of the documents and monies entrusted to his care and belonging to the client.
Loyalty One of the most important duties of a real estate agent is loyalty. To place the interests of his client above all else, except the law, in carrying out his duties.
Disclosure A real estate agent must disclose any information relevant to the transaction to his client including any facts affecting the value or desirability of the property and all known relevant and material information.
Confidentiality Any information provided by the client, in no way shape or form, can be used to cause the client harm or interfere in the client’s business now or in the future. This duty should not be confused with the agents professional duties of disclosing “known” material facts about the property to non-clients. This latter obligation to disclose is based on the professional duties of treating all people fairly and honestly.
In a dual agency relationship, both parties consent, in writing, to this agency relationship. Such disclosure is required under the Real Estate and Business Brokers Act of Ontario (REBBA 2002).
This relationship involves the following obligations:
1. The Broker will deal with the buyer and the seller.
2. The Broker will have fiduciary duties to both the buyer and the seller.
The Broker will have a duty of disclosure:
1. The Broker may disclose that the buyer is willing to pay a price or agree to terms other than those contained in the offer, or that the seller may be willing to accept a price or terms other than those published or contained in a counter offer;
2. The Broker may disclose the motivation of the buyer to buy or the seller to sell;
3. The Broker may disclose personal information about the Buyer or Seller to the other.
4. The Broker may disclose to the buyer defects about the physical condition of the business or property known to the Broker.
In summary, dual agency occurs when a broker or agent is representing both the buyer and the seller in the same transaction. The broker or agent has promised a duty of confidentiality, loyalty and full disclosure to both parties simultaneously.
WHAT IS THE BUYER REPRESENTATION AGREEMENT
When you are buying your home, a real estate broker or agent may ask you to sign a representation agreement. A representation agreement defines the nature of the relationship between you and the brokerage, including the broker or real estate agent. Typically to have a client relationship a buyer representation agreement is entered into.
Representation agreements can be written, oral or implied. However, your broker or real estate agent is required by law to reduce the agreement to writing and provide it to you for your signature. The agreement should be in writing in order to protect the interest of all parties.