In the Ontario real estate industry, there are three main types of agency relationships that can exist between a real estate agent and a client: seller’s agency, buyer’s agency, and dual agency.
What Is Sellers Agency In Real Estate?
Seller’s agency is when a real estate agent represents the seller of a property and has a legal duty to act in the best interests of the seller. This means that the agent is responsible for finding a buyer for the property and negotiating the best possible price and terms for the seller. The agent will also handle the paperwork and other administrative tasks involved in the sale of the property.
What Is Buyers Agency In Real Estate?
Buyer’s agency is when a real estate agent represents the buyer of a property and has a legal duty to act in the best interests of the buyer. This means that the agent is responsible for helping the buyer find a suitable property and negotiating the best possible price and terms for the buyer. The agent will also handle the paperwork and other administrative tasks involved in the purchase of the property.
What Is Dual Agency In Real Estate?
Dual agency is when a real estate agent represents both the buyer and the seller in a transaction. This means the property is listed by the same brokerage as the agent working with a buyer of the property. This can be a complex situation because the agent has a legal duty to act in the best interests of both parties, which may be conflicting. In order to avoid any potential conflicts of interest, the agent must disclose their dual agency status to both the buyer and the seller and obtain their written consent. The agent must also be careful to remain neutral and not show favoritism towards either party.
Dual Agents Responsibility
In Toronto, a real estate agent must follow specific rules when acting as a dual agent:
- Disclosure: The dual agent must provide written disclosure to both the buyer and the seller, informing them of the nature of the relationship and the duties and obligations of the agent.
- Confidentiality: The dual agent must maintain confidentiality and not disclose confidential information obtained from either the buyer or the seller, unless authorized to do so.
- Impartiality: The dual agent must act impartially and not show favoritism towards either the buyer or the seller.
- Duty to provide honest and full information: The dual agent must provide honest and full information to both parties and cannot withhold or provide false information.
- Representation of both parties: The dual agent must provide representation to both the buyer and the seller and must not place one party’s interests ahead of the other.
These rules are governed by the Real Estate and Business Brokers Act, 2002 (REBBA 2002) and the regulations made under REBBA 2002, which governs the practice of real estate in Ontario. Failure to follow these rules can result in disciplinary action by the Real Estate Council of Ontario (RECO)
Protecting Yourself in a Dual Agency Situation
- Use two different agents with the same brokerage: Consider splitting a real estate agent who represents your specific interests to provide you with guidance and protect your rights.
- Understand the laws: Familiarize yourself with the laws and regulations regarding dual agency in Ontario, specifically the Real Estate and Business Brokers Act, 2002 (REBBA 2002) and the regulations made under REBBA 2002.
- Review the disclosure documentation: Before signing any agreement, carefully review all disclosure documentation provided by the dual agent, including the Working With a Realtor form, to ensure you fully understand the nature of the relationship.
- Seek clarification: If you have any questions or concerns about the dual agency situation, don’t hesitate to ask the dual agent for clarification.
- Consider obtaining independent legal advice: Consider seeking independent legal advice from a lawyer experienced in real estate law to ensure your rights are protected.
It is important for both buyers and sellers to understand their agency relationships with their real estate agent because it determines the level of loyalty and confidentiality that the agent owes to them. For example, a seller’s agent is required to keep the seller’s confidential information, such as the seller’s motivation for selling or their bottom line price, to themselves. On the other hand, a buyer’s agent is required to keep the buyer’s confidential information, such as their maximum budget or their preferred location, to themselves.
It is also important for both buyers and sellers to understand their agency relationships because it determines the level of representation that the agent provides. For example, a seller’s agent is required to represent the seller’s best interests and negotiate the best possible price and terms for the seller. On the other hand, a buyer’s agent is required to represent the buyer’s best interests and negotiate the best possible price and terms for the buyer.
In summary, the agency relationships in the Ontario real estate industry are important because they determine the legal duties and responsibilities of the real estate agent and the level of representation and confidentiality that the agent provides to their client. It is important for both buyers and sellers to understand their agency relationships in order to make informed decisions and protect their interests during the real estate process.
