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BCFSA’s information is clear, concise, easy-to-read explanations of the requirements for real estate professionals under the Real Estate Services Act (“RESA”), Real Estate Services Regulation (“Regulation”), Real Estate Services Rules (“Rules”), and other applicable legislation.
This information is intended for use by real estate professionals, to support their understanding of the standards they must meet in the delivery of real estate services.
Agency is a relationship between two parties in which one person, the agent, is granted the authority to represent and act for another person, the principal, in dealings with others. Once an agency relationship is entered into, the agent is legally obligated to work in the interests of the principal. Ideally, an agency relationship is created by a written contract where the authority of the agent is clearly laid out.
In some instances, agency can also be created through the conduct of the real estate professional, even if there is no intention on the part of the parties to enter into an agency relationship. That is known as implied agency, which is discussed further in the guidelines.
Under common law, when acting as an agent, you owe a number of fiduciary obligations to your client, including the obligation of loyalty which requires that you act solely in your client’s best interest and put your client’s interests first, even before your own. Section 30 of the Real Estate Services Rules further breaks down your fiduciary obligations as an agent into a number of duties owed to your client including:
- The duty of confidentiality;
- The duty to avoid a conflict of interest, or, where a conflict cannot be avoided, make disclosure;
- The duty to obey all lawful instructions of the client; and
- The duty to make full disclosure of all material information.
All of the duties expire at the end of the agency relationship except for the duty of confidentiality, which extends forever.
The brokerage models of designated agency and brokerage agency also directly impact how you work with your clients and unrepresented parties in a transaction.Learn more about duties to clients
Agency Under the Designated Agency Model
Under the designated agency model, agency is created when the brokerage and the client agree that the brokerage will designate one or more real estate professionals engaged by that brokerage to provide real estate services as the designated agent(s) for the client.
This means that two real estate professionals within the same brokerage who are designated agents for different clients can represent a buyer and a seller in a transaction, or two buyers competing for the same property, without a conflict of interest being created.
The duties owed to each client under the Real Estate Services Rules must be provided by each designated agent unless the parties agree to modify the relationship per the Real Estate Services Rules.
(a) Dual Agency
Dual agency is only permitted under very restricted circumstances. When it is permitted, a real estate professional at the brokerage may represent a buyer and a seller in the same transaction, or two competing buyers for the same property, as long as the appropriate disclosures and forms are completed. Dual agency is only permitted when the real estate is in a remote location that is under-served by real estate professionals, and it is impracticable for parties to be provided trading services by different real estate professionals.Learn more about Dual Agency
Because real estate professionals who operate as part of a team work closely with their team members and share confidential information, they are unable to operate as designated agents apart from each other and must collectively represent the same client. Two or more team members can only represent a buyer and a seller in the same transaction, or two competing buyers, if the dual agency relationship they have entered into complies with the exemption under the Real Estate Services Rules.
Agency Under the Brokerage Agency Model
Brokerage agency is created when the brokerage and all its real estate professionals provide real estate services to the client. This means the agent dealing directly with the client, and all real estate professionals engaged by that brokerage automatically assume the same agency obligations as the brokerage in relation to that client.
Brokerage agency is more often practised by smaller brokerages where it is not feasible or realistic to keep client information completely confidential from other real estate professionals at the brokerage (e.g. when everyone is sharing one small office or one filing system).
Brokerage agency is also the only brokerage model for brokerages that deal solely in rental property management and/or strata management.
(a) Dual Agency
Dual agency is permitted under very restricted circumstances. Under the brokerage agency model, dual agency can occur when one real estate professional represents a buyer and seller in a transaction, or two buyers are competing for the same property. It can also occur when any two real estate professionals at the brokerage are dealing with competing parties.Read the Guidelines on Dual Agency
Because all real estate professionals who operate under brokerage agency cannot be designated from each other, every real estate professional at the brokerage is in an agency relationship with the client. Teams therefore cannot exist under the brokerage agency model unless the entire brokerage identifies itself as a team.
Courts have found, in some instances, that an agency relationship can be created as a result of the conduct of the real estate professional.
This type of agency is created through implication. Implied agency is an agency relationship that is established by the actions and conduct of the parties, rather than by an express agreement or contract between them. If one party has, by implication, authorized another to act on his or her behalf, and the agent accepts this authority by acting in this capacity (even without realizing the consequences), the courts may determine that implied agency has been created.
Implied agency can arise when real estate professionals interact with members of the public, friends, or family members without a formal or explicit agreement about the intended relationship. In the trading services context, an example could be a real estate professional who has “off and on” conversations with an unrepresented buyer who is contemplating purchasing a specific property or has a specific set of needs and is searching for a property that fulfills those needs.
If you are acting on behalf of a person who is not otherwise represented, you may be found to be acting as the party’s agent, if your actions would lead the party to believe that you were acting as their real estate professional. An implied agency relationship may be found to exist, even when you did not intend to act as the party’s agent.
In any transaction which involves an unrepresented party, if you do not intend to act in an agency relationship with that party, it is very important for you to confirm with that party that he or she is being treated as an unrepresented party, not a client. It is also important that your conduct is consistent with such statements, and that you provide the Disclosure of Risks to Unrepresented Parties form.
Ongoing Duty of Confidentiality
Of all the duties owed to your client, only the duty of confidentiality extends forever. This means that even at the end of an agency relationship (whether the relationship has been terminated or concluded), you must continue to maintain the confidentiality of your client’s information.
The ongoing duty of confidentiality is also impacted by brokerage models. Under the designated agency model, each real estate professional must ensure that any confidential information is kept from all other designated agents in the brokerage. Under a brokerage agency model, it would not be a violation for other real estate professionals at the brokerage to have access to the information.Learn more about confidentiality