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REALTORS® are
governed by the legal concept of "Agency". A
REALTOR®
is legally obligated to look after the best interests of the person he or
she is working for. The
REALTOR®
must be loyal to that person. A real
estate company may be your
REALTOR® -
if you have clearly established an Agency relationship
with that
REALTOR®.
But often, you may assume such an obligation exists when it does not.
REALTORS®
believe it is important that the people they work with understand when an
Agency relationship exists and when it does not - and understand what it
means. When working with a
REALTOR®,
it is important to understand who the
REALTOR® works for. To whom is the
REALTOR®
legally obligated? In real estate, there are different
possible forms of agency relationship:
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1.
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Seller's Agent
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When a real estate
brokerage is a "Seller's Agent", it must do what is best for the
seller of a
property.
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A written contract, called a
"Listing Agreement"
establishes seller agency. It also explains services the brokerage
will provide, establishes a fee arrangement for the
REALTOR'S®
services and specifies what obligations a Seller may have. |
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A Seller's Agent must tell the
Seller anything
known about a Buyer. For instance, if a Seller's Agent knows a Buyer
is willing to offer more for a property, that information must be shared
with the Seller. |
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Confidences a Seller shares with a
Seller's Agent
must be kept confidential from potential Buyers and others. |
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Although confidential information about the
Seller cannot be discussed, a Buyer working with a Seller's Agent can
expect fair and honest service from the Seller's Agent and disclosure of
pertinent information about the property. |
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2.
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Buyer's Agent |
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A real estate
brokerage acting as a "Buyer's Agent"
must do what is best for the Buyer. |
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A written contract called a
"Buyer Representation
Agreement"
 establishes Buyer Agency.
It also explains services the brokerage will provide, establishes a fee
arrangement for the
REALTOR'S®
services and specifies what obligations a Buyer may have. |
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Typically, Buyers will be obliged to work exclusively with that
brokerage
for a period of time. |
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Confidences a Buyer shares with the
Buyer's Agent must be kept
confidential. |
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Although confidential information about the
Buyer cannot be disclosed,
a Seller working with a Buyer's Agent can expect to be treated fairly and
honestly. |
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3. |
Dual Agent
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Occasionally, a real estate
brokerage will be the Agent of both the Buyer
and the Seller. The Buyer and Seller must consent to this
arrangement in their listing and buyer agreements. Under this "Dual Agency" arrangement, the
brokerage must do what is best for both the Buyer and the Seller. |
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Since the
brokerage's loyalty is divided between
the Buyer and the Seller who have conflicting interests, it is absolutely
essential that a "Dual Agency Relationship" be established in a written
"Agency Agreement". This agreement specifically describes the rights
and duties of everyone involved and any limitations to those rights and
duties. |
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4. |
Customer
Service |
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A real
estate brokerage may provide service to Buyers and Sellers without
creating buyer or seller agency. This is called "Customer Service"
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Under this
arrangement, the brokerage can provide many valuable services in a
fair and honest manner. This relationship can be set out in a Buyer or
Seller Customer Service Agreement. |
Who's working for you?
It is
important that you understand who the
REALTOR®
is working for. For example, both the Seller and the Buyer may have
their own agent which means they each have a
REALTOR®
who is working for them. Or, some
Buyers choose to contact the Seller's agent directly.
Under this arrangement the
REALTOR®
is working for the Seller, and must do what is best for the seller, but may
provide many valuable services to the Buyer. A
REALTOR® working with a
Buyer may even be a
"Sub-Agent" of
the Seller. Under Sub-Agency, both the listing agent
and the co-operating agent must do what is best for the Seller even though the
sub-agent may provide many valuable services to the Buyer. If the Seller and the
Buyer have the same agent, this is a "Dual Agency" and
the
REALTOR® is working for both the Seller and the Buyer.
Code of Ethics
REALTORS® believe it is important that the people they work with
understand their agency relationship. That's why “ONTARIO
REGULATION 580/05”
made under the
REAL ESTATE AND BUSINESS BROKERS ACT, 2002 (REBBA 2002)
came into effect on March 31, 2006. All licensed REALTORS® in Canada are
mandated by the following Regulations of the Act by way of the Code of
Ethics regarding Representation Agreements namely Sections 10 through 17
as outlined herein. |
