When you are working with a Realtor, there are different forms of agency relationship which must be explained to you before signing any contract. An agency relationship disclosure is necessary when you are either entering into a Buyer Representation Agreement or a Listing Agreement.
In real estate, these are the different possible forms of agency relationship:
1. Seller Representation
A real estate brokerage must do what is best for the seller of a property when representing a seller. An agency relationship is created between the seller and the brokerage when a Listing Agreement is entered into. The Listing Agreement explains the services which will be provided by the brokerage, details of the service fees and will include any of the seller’s obligations. Confidential information about the seller cannot be discussed with any potential buyers of the property. However, the seller’s agent still owes fair and honest service to any buyer, and must disclose any information about the physical property.
2. Buyer Representation
A real estate brokerage representing a buyer must do what is best for the buyer. The Buyer Representation Agreement is a written contract which creates an agency relationship between the buyer and the brokerage. Buyers most often will be required to work exclusively with that brokerage for a specified period of time. As with seller representation, any personal information about the buyer must be kept confidential. The buyer’s agent owes fair and honest service to any seller.
3. Dual Representation
Sometimes a real estate brokerage represents both the seller and the buyer in a real estate transaction. All parties must consent to this arrangement. A disclosure form must be signed to this effect. The brokerage must do what is best for both the seller and the buyer. Representation agreements describe in detail the rights and duties of everyone involved.
When representing both the buyer and the seller, the brokerage has a duty of full disclosure to both the seller and the buyer- this pertains to all known factual information about the property in question.
4. Customer Service
Under this arrangement, a brokerage provides services to buyers and sellers without creating buyer or seller representation. Many valuable real estate related services can be provided, at all times in a fair and honest manner.
It is very important to understand who the Realtor is working for in any real estate transaction. Requirements and obligations for representation and customer service are found in a Code of Ethics which is administered by the Real Estate Council of Ontario (RECO).
What is RECO?
RECO administers the Real Estate and Business Brokers Act 2002 and all associated regulations. These regulations are all in public interest on behalf of the Ontario Ministry of Government Services. RECO is committed to working with consumers by enforcing the standards required to obtain and maintain registration for brokerages, brokers and salespersons.
You can find out more about RECO at www.reco.on.ca
Tammy Dufault
Century 21 BJ Roth Realty Ltd.
