REALPROS ASSOCIATE LOGIN
MLS:  
 Home
 Profile
 Agent Listings
 Search Listings
 Services & Info
 Links
RealPros BUSINESS DIRECTORY CONTACT
    REAL ESTATE NEWS RealPros Newsletter Foreclosures

Agency Relationships Guide:

line

Introduction
 
The Real Estate Council of Alberta written this to help you make an informed decision about the type of relationship that you choose to have with your real estate industry member. You have a number of relationship choices and your industry member has the responsibility to explain the options you have. It is in your best interest that you understand what duties you are owed and what limitations there are, or might be, when you choose a certain relationship. Ask questions and be sure you are satisfied with the answers before you enter into a particular relationship.
 
Customer Status (Non-Agency)
 
You are not in an agency relationship upon initial contact with an industry member. An agency relationship is established when a brokerage, including its representatives, acts on your behalf. You may choose to remain as a customer and still work with an industry member. If you do not wish to have an agency relationship but still want to work with an industry member, you should be aware that the brokerage is not your agent and does not owe you agency duties. Duties to a customer are limited in common law to honesty, reasonable care and skill, and to not negligently or knowingly provide false or misleading information. You or the brokerage may prefer that you be a customer, however the choice is yours.
 
You should be aware that an agency relationship can be created if either party acts as if such a relationship exists. For example, an implied agency relationship may be created if you provide confidential information to an industry member, or ask an industry member for advice about a possible purchase or sale. You should be careful not to form this relationship until you have made an informed decision to have that brokerage or industry member act on your behalf and you have consented to an agency relationship in writing.
 
If you choose to be a customer, you will be asked by your industry member to acknowledge your choice by signing a Customer Acknowledgement Form. As a customer, the brokerage will provide facilitation services that help you complete a transaction. Those services cannot require exercising discretion or judgement, giving confidential advice, or advocating on your behalf. The brokerage can also provide standard contracts and other relevant forms, and can complete the forms for you based on your instructions.
 
 
Client Status (Agency)
 
An agency relationship is established when a brokerage, including its representatives, acts on behalf of a buyer or a seller. The agent has authority to represent the client in a real estate transaction. Agents are obligated to protect and promote the interests of their clients and must exercise discretion and judgement when carrying out duties on behalf of the client. In addition to agency obligations, industry members are bound by statutory obligations set out in the Real Estate Act (Alberta) and its Rules.
 
If you choose to be in an agency relationship with a brokerage or industry member you may be asked to sign a written service agreement confirming your choice. Written service agreements provide clarity and transparency regarding the agency relationship. The written service agreement for sellers is the Seller Brokerage Agreement, and the Buyer Brokerage Agreement is for buyers. These forms explain the duties and obligations of the agent and the client. The duties of an agency relationship are extensive. 
 
Agent Duties to the Client
 
Undivided Loyalty
The agent must act solely in your best interests, must always put your interests above the agent’s own interests and above the interests of other parties. Among other things, this means avoiding conflicts of interest and protecting your negotiating position at all times.
 
Confidentiality:  
The agent has a duty to keep your confidences. Confidential information includes any information about you, the property, or the transaction that is not required by law to be disclosed, but if disclosed could be used by another party to your disadvantage. The duty of confidentiality continues even after the agency relationship ends.
 
Full Disclosure
The agent must inform you of all facts known to the agent that might affect your relationship or influence your decision in a transaction. This includes any conflicts of interest the agent might have in providing services to you. The agent should not decide if information is important to you, rather, the agent is obligated to disclose all relevant information to you. However, any confidential information from a previous agency relationship will not be disclosed to you unless the previous client agrees in writing.
 
Obedience:   
As long as instructions are reasonable and ordinary under the circumstances, the agent must obey all of your lawful instructions. If you ask the agent to do something unlawful, the agent would be obliged to refuse, and consider terminating the relationship and existing service agreement.
 
Reasonable Care and Skill:
   The agent must exercise reasonable care and skill in performing all assigned duties. The agent is expected to meet the standard of care that a reasonable and competent industry member would exercise in a similar situation.
 
Client Duties to the Agent
 
These are also set out in the written service agreement and include the duty to: 

  • compensate the agent for expenses incurred as a result of carrying out responsibilities as requested on your behalf;
     
  • pay any agreed-upon remuneration or compensation as outlined in the signed service agreement; and, 
  • disclose to the agent matters that could affect a transaction, including material facts that must be passed onto the third party in the transaction. 

Types of Agency Relationships
 
The brokerage and its representatives may provide services to clients under the provisions of either common law agency or designated agency. If the brokerage has not elected to operate under designated agency, by default it is operating under common law agency. The industry member who you may be working with will be able to advise you as to the type of agency (common law or designated) under which their brokerage operates. Under common law, your agency relationship is with the brokerage and all of its representatives. Under designated agency, your agency relationship is with the designated industry member(s). The difference between these two types of agency relationships and what this means to you is detailed below.
 
Common Law Agency
 
If the brokerage operates under common law agency, your relationship is with the brokerage. Therefore, the broker, associate brokers and associates employed by that brokerage are also in an agency relationship with you. The Exclusive Seller Brokerage Agreement and the Exclusive Buyer Brokerage Agreement explain the nature of the agency relationship in detail. Should the other party to a potential transaction be represented by another brokerage, your brokerage will continue to represent you as a sole agent. Should the other party to a potential transaction be represented by the same brokerage as represents you, the brokerage has a conflict of interest. The conflict arises from the brokerage’s obligation to be loyal, disclose all relevant facts, and maintain confidentiality of personal information for you and the other party in the transaction, which results in competing interests. Several options exist to resolve this conflict, one being transaction brokerage, which will be discussed shortly.
 
Sole Agency
:
 
 
In sole agency, your brokerage owes you the duties already described. You are still in a sole agency relationship with your brokerage even if the other party in a potential transaction is a customer of the same brokerage, a client of a different brokerage, or represents him or herself. During the brokerage’s efforts to sell your property or help you purchase one, the brokerage may represent another party in the same potential transaction. The brokerage must discuss your options with you as soon as this potential conflict arises. Your industry member will present you with options and the solutions included in the agreement, and seek your informed consent.
 
Transaction Brokerage
:
 
In transaction brokerage, the same brokerage represents both the buyer and seller in the same real estate transaction. In this case, either your agent or another agent of the brokerage is representing the other party to the transaction. Transaction brokerage is permitted with the fully informed and voluntary consent of both parties to the transaction. The brokerage must obtain your written consent to transaction brokerage before this relationship may occur, before any offer is made to buy or sell a property, and before the identity of the other party and circumstances of the transaction are known. If the other party to the potential transaction is represented by the same brokerage as represents you, your industry member needs to discuss the Transaction Brokerage Agreement with you at that time and seek your informed consent. With transaction brokerage, the nature of the brokerage services to you and the other party change from representation to facilitation. The Transaction Brokerage Agreement is an amendment to your existing buyer or seller agreement, if applicable.
The brokerage obligations to both parties also change as follows: 

  • The brokerage must not exercise discretion or judgment on behalf of either buyer or seller; 
  • The brokerage must not give confidential advice or advocate on behalf of buyer or seller; and, 
  • The brokerage must treat the interests of both buyer and seller in an even-handed, objective and impartial manner.

Finally, as a transaction facilitator, the brokerage will fulfill all other facilitation services to both parties as far as they are consistent with the terms of their respective agreements.
 
Designated Agency
 
If a brokerage operates under designated agency, your agency relationship is with the industry member and not with the brokerage. Should the other party to a potential transaction be represented by another industry member in the same brokerage, each industry member will be in sole agency with their respective clients. This is a key difference between common law agency and designated agency. Therefore, should you choose to work with an industry member who is employed by a brokerage operating under designated agency, you will need to sign a written service agreement. If you are a seller of property you will be asked to sign the Exclusive Seller Designated Brokerage Agreement, and if you are a buyer, you will be asked to sign the Exclusive Buyer Designated Brokerage Agreement. These documents explain the nature of the agency relationship in detail and confirm your choice of agency representation. A designated agency relationship allows your designated agent to fulfill his or her full duties and obligations to you when the other party to a transaction is represented by another industry member of your brokerage.
 
Sole Agency
:
 
 
In sole agency, the industry member owes the client the agency duties already described. Sole agency occurs when one industry member represents one party in a real estate transaction. You are still in a sole agency relationship if the other party in the transaction is a client of the same brokerage, a customer of the same brokerage, a client of a different brokerage, or represents him or herself. Other agents in the brokerage may represent another party in a potential transaction with you. Should your industry member represent another party to a potential transaction with you, they have a conflict of interest. The conflict arises from their obligation to be loyal, disclose all relevant facts, and maintain confidentiality of personal information for you and the other party in the transaction, which results in competing interests. Several options exist to resolve this conflict, one being transaction brokerage, which will be discussed shortly.
 
The industry member must discuss your options with you as soon as this potential conflict arises. Your industry member will present you with options and the solutions included in the agreement, and seek your informed consent.
 
Transaction Brokerage
:
 
In transaction brokerage, the same industry member represents both the buyer and seller in the same real estate transaction. Transaction brokerage is permitted with the fully informed and voluntary consent of both parties to the transaction. The industry member must obtain your written consent to transaction brokerage before this relationship may occur, before any offer is made to buy or sell a property, and before the identity of the other party and circumstances of the transaction are known. If the other party to the potential transaction is represented by the same industry member as represents you, your industry member needs to discuss the Transaction Brokerage Agreement with you at that time and seek your informed consent. With transaction brokerage, the nature of the brokerage services to you and the other party change from representation to facilitation.
The industry member obligations to both parties also change as follows: 

  • The brokerage and the industry member must not exercise discretion or judgment on behalf of either buyer or seller;
     
  • The brokerage and the industry member must not give confidential advice or advocate on behalf of buyer or seller; and, 
  • The brokerage and the industry member must treat the interests of both buyer and seller in an even-handed, objective and impartial manner. 

Finally, as transaction facilitators, the designated agent and the brokerage will fulfill all other facilitation services to both parties as far as they are consistent with the terms of their respective agreements.
 
Making an Informed Decision
 
You have a number of relationship choices as explained in this brochure. Your real estate industry member has the responsibility to explain the options you have. It is in your best interest that you understand what duties you are owed and what limitations there are, or might be, when you choose a certain relationship. Ask questions of your industry member and be sure you are satisfied with the answers before you enter into a particular relationship. Your industry member will request that you sign this brochure to acknowledge that you have read and understood the information, and have made an informed choice.

    Home About Us Meet the team Search Properties For clients For Realtors Contact Us Privacy Policy
RE/MAX Real Estate Mountain View,  #222 - 4625 Varsity Dr. NW  Calgary, AB, T3A 0Z9
Phone: 403-547-1222  Fax: 403-592-9242
Copyright © 2017 Pathways Software Solutions Inc. - Disclaimer
All rights reserved.