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This FAQ explains the concept of agency in its various forms, and how these relationships can be created and terminated.
Agency is the relationship a consumer has with a real estate professional, rental property manager, or strata manager. Under the Real Estate Services Act, the legislation governing the conduct of licensed real estate professionals, when an agency relationship is created, several duties are owed from the real estate professional to their client.
An agency relationship can happen one of three ways:
- You enter into a service agreement outlining the scope of work to be done and the duties owed to you. This may include a listing contract or rental management contract.
- You and the real estate professional have an oral agreement where they agree to provide services to you (such as when working with a buyer’s real estate professional).
- While oral agreements are permitted, it is always best practice to have to a written contract, so all parties are clear as to the services being offered and what your obligations under the agreement are.
- An implied agency relationship is created.
- This can happen where there is no intention on the part of the real estate professional to enter into an agency relationship, but their conduct leads you to believe they are advocating on your behalf (they provide you advice etc.).
Is my agency relationship with the real estate professional I hire or the brokerage (commonly referred to as an agency) that they work for?
There are two types of brokerage models in BC: those that practice designated agency, and those that practice brokerage agency.
- Most brokerages in BC operate under designated agency. That means that while you are entering into a contract with the brokerage, there is a real estate professional(s) assigned to represent you. In this case, your information will be kept confidential from every other real estate professional at the brokerage.
- Many smaller brokerages and all strata and rental property management brokerages operate under brokerage agency. That means when you enter into a service agreement with the brokerage, even though you may only be working with one or two real estate professionals, it is assumed that all real estate professionals at the brokerage have access to your confidential information and therefore your agency relationship is with the entire brokerage and not just the one person.
It is important to understand what brokerage model the real estate professional you hire works under. This may affect what happens if you want to purchase a property listed by another real estate professional at the same brokerage, or if there is another buyer represented by the brokerage competing with you for the same property.
Dual agency is a scenario where one real estate professional represents two competing parties in a transaction, or, under the brokerage agency model, two real estate professionals at the same brokerage represent two competing parties. For example, this can be the buyer and seller in a single transaction, or two buyers working with the same real estate professional and both want to purchase the same property.
Dual agency in BC is only permitted in very specific circumstances because of the conflict of interest it creates. Under dual agency, the real estate professional must modify the duties that are owed to you so that he or she can represent both parties without providing an advantage to one over the other. For example:
- If a real estate professional represents a buyer and seller, they cannot provide either party advice on what to offer on the property, or what to accept as this would put one client’s interests over the other.
- With two competing buyers for the same property, the real estate professional cannot give advice that would help one client secure the property over the other client.
Dual agency is only permitted when:
- the real estate is in a remote location;
- the remote location is under-served by real estate professionals; and
- it is impracticable for parties to be provided trading services by different real estate professionals.
For a dual agency relationship to be created, all parties must agree and sign forms indicating they understand the limitations on the duties owed to them but wish to proceed.
Every brokerage and its real estate professionals must provide all the following unless there is an agreement to modify the relationship and limit the duties owed. These duties include:
- acting in the best interests of the client;
- acting in accordance with the lawful instructions of the client;
- acting only within the scope of the authority given by the client;
- advising the client to seek independent professional advice on matters outside of the expertise of the real estate professional;
- maintaining the confidentiality of information respecting the client;
- disclosing to the client all known material information respecting the real estate services, and the real estate and the trade in real estate to which the services relate;
- communicating all offers to the client in a timely, objective and unbiased manner;
- using reasonable efforts to discover relevant facts respecting any real estate that the client is considering acquiring;
- taking reasonable steps to avoid any conflict of interest; and
- if a conflict of interest does exist, promptly and fully disclosing the conflict to the client.
Once your relationship with your real estate professional ends (i.e., you complete a purchase, sale or lease, or you terminate the relationship), most of the agency obligations owed to you end as well, except for confidentiality. The duty to keep your information confidential goes on forever.
This requirement can influence how you proceed in future transactions where your previous real estate professional is representing the party on the other side. In such cases a conflict may arise as your former real estate professional must keep your information confidential but must also provide their new client with all the information they can about you in order to further their client’s interests.
Should such a situation arise, your former real estate professional may ask his current client to permit him or her to modify the duties owed to them in order to maintain your confidential information or may advise their current client to find independent representation eliminating the conflict.
This content was developed with financial support from the Real Estate Foundation of BC.