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Agency Law Agency is a legal concept that governs the conduct of several professionals: Mortgage Consultants, Insurance Agents, Stockbrokers, Appraisers, REALTORS® etc. In the real estate industry, the Realtor has a legal obligation to work in the best interest of their client. Typically, a REALTOR® represents a Buyer or a Seller. In some instances, a situation arises in which a REALTOR®/Broker represents both the Selelr and the Buyer. This event is called Dual Representation. The terminology used in the real estate industry is sometimes confusing. In Ontario, the words "Realtor", "Agent" and "Broker" are all synonymous. The sales representative with whom one signs a "Listing Agreement" contract or a "Purchaser Agreement" contract, is licensed to work on behalf of this brokerage. We believe that it is crucial that every individual involved in a transaction understands the terms of the contract they sign and who will pay for the services rendered. When working with a REALTOR®, it is important to understand whom they represent (see chart below). Please take the time to read the following carefully if you are planning to buy and/or sell a property through a real estate professional. 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 REALTOR® may be your agent if you have clearly established an agency relationship with that individual. REALTORS® believe it is important that the people they work with understand when an agency relationship exists and when it does not - and to understand what it means. In the real estate industry, there are different forms of agency relationships: SELLER'S AGENT When a real estate company is a "SELLER'S agent", it must do what is best for the vendor of a property. A Seller's agent must tell the Seller anything known about a purchaser. For instance, if a Seller's agent knows a purchaser is willing to offer more for a property, that information must be shared with the vendor. Confidences a seller shares with a Seller's agent must be kept confidential. A Buyer can expect fair service and disclosure of pertinent information about a property. Nothing will be misrepresented about a property. All questions will be answered honestly. BUYER'S AGENT A real estate company acting as a "BUYER'S Agent" must do what is best for the Buyer. A written contract establishes Buyer's agency. It also explains services the REALTOR® will provide, spells out who will pay and specifies what obligations a purchaser may have. Typically, purchasers will be obliged to work exclusively with that REALTOR® for a given time period. A REALTOR working for a Buyer will keep information about the Buyer confidential from the Seller. DUAL REPRESENTATION Occasionally, a real estate company will be the agent of both the Seller and the Buyer in the same transaction. This is called "dual represntation ". Under this arrangement, an Agent is obliged to look after the interest of both the buyer and the seller. Since the agent has promised confidentiality, loyalty and full disclosure to both parties, it is necessary to limit these promises in this situation and in addition to these limited promises, the Agent is still obliged to represent both the buyer and the seller in the transaction with duties of good faith, obedience, honesty, competence and accountability. Ask to see Dual Representation Consent Agreement for further details on limits. A REALTOR can be in dual representation only if both the Buyer abd Seller agree in writing. Please discuss this with your REALTOR®. WHO PAYS? Usually, a REALTOR will be paid from the proceeds of the sale. The Listing Agreement states the REALTOR's fee. Under the M.L.S. system, the fee offered to the Agent working with the buyer is indicated on the listing advertised through the M.L.S. system, simplifying the negotiation of the buyer' s agent fee at the time of the transaction. Where deficiency in the amount of the fee occurs, the buyer remains responsible for the Buyer Agent's fee. Please discuss this matter with your sales representative. HONESTY AND INTEGRITY Most real estate professionals in our province are members of the Ontario Real Estate Association (OREA). Only OREA members can call themselves REALTORS®. When working with a REALTOR®, you can expect not only strict adherence to provincial laws, but also to a Code of Ethics. That code of ethics is very important to the client since it assures them that they will receive the highest level of service, honesty and integrity. HIGHEST PROFESSIONAL STANDARDS Before receiving a real estate license, candidates must successfully complete an extensive course of study developed by OREA on behalf of the Ontario Government. In the two years after receiving their license, the new professionals are required to complete three additional courses as part of their articling with an experienced broker. If you are selling these are your options:
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