Agency Law (Working with a Realtor®)

When a real estate brokerage represents a seller, it must do what is best for the seller.

A written contract, known as a Listing Agreement, creates an agency relationship between the seller and the brokerage and establishes seller representation. It also explains services the brokerage will provide, establishes a fee arrangement for the Realtor®'s services and specifies what obligations a seller may have.

A seller's agent must tell the seller anything known about a buyer. For instance, if a seller's agent knows a buyer is willing to offer more for a property, that information must be shared with the seller.

However, confidential information a seller shares with a seller's agent must be kept confidential from potential buyers and others.

Although confidential information about the seller cannot be discussed, a buyer working with a seller's agent can expect fair and honest services from the seller's agent and disclosure of pertinent information about the property. Nothing will be misrepresented about a property. All questions will be answered honestly.

When a real estate brokerage represents a buyer, it must do what is best for the buyer.

A written contract, known as a Buyer Representation Agreement, creates an agency relationship between the buyer and the brokerage and establishes buyer representation. It also explains services the brokerage will provide, establishes a fee arrangement for the Realtor®'s services and specifies what obligations a buyer may have.

Typically, buyers will be obligated to work exclusively with that brokerage for a specified period of time.

Confidential information a buyer shares with a buyer's agent must be kept confidential.

Although confidential information about the buyer cannot be discussed, a seller working with a buyer's agent can expect fair and honest services from the buyer's agent and disclosure of pertinent information about the property. Nothing will be misrepresented about a property. All questions will be answered honestly.

Occasionally a real estate brokerage will be the agent of both the buyer and the seller. The buyer and seller must consent to this arrangement in writing. Under this "multiple representation" arrangement, the brokerage must do what is best for both the buyer and the seller.

Since the brokerage's loyalty is divided between the buyer and the seller who have conflicting interests, it is absolutely essential that a multiple representation relationship be properly documented. Representation agreements specifically describe the rights and duties of everyone involved and any limitations to those rights and duties.

Your agent will discuss dual agency during conversations dealing with representation and provision of service.

A Realtor® can be a dual agent only if both the buyer and seller agree in writing.

A real estate brokerage may provide services to buyers and sellers without creating buyer or seller representation. This is called "customer service".

Under this agreement, the brokerage can provide many valuable services in a fair and honest manner. This relationship can be set out in a buyer or seller customer service agreement.

Real estate negotiations are often complex and a brokerage may be providing representation and/or customer service to more than one seller or buyer. The brokerage will disclose these relationships to each buyer and seller.

Usually, the Realtor® will be paid from the proceeds of the sale. The listing agreement states the Realtor®’s fee.

When more than one Realtor® is involved often a buyer will work with one Realtor® and a seller will work with another. It may appear that the Realtor® working with the buyer is working for that buyer, in an agency relationship. That is not necessarily the case.

The Realtor® working with a buyer may be a “sub-agent” of the seller. In this case, the Realtor® is actually a seller’s agent. While a seller’s agent can provide many valuable services to a buyer, he or she must do what is best for the seller.

If a written contract exists with a buyer, a Realtor® can be a buyer’s agent.

Buyers and Sellers will always be told – in writing – who a Realtor® is working for.

Most real estate professionals in our province are members of the Ontario Real Estate Association (OREA) – and only members of OREA can call themselves a Realtor®.

When you deal with a Realtor®, you can expect not only strict adherence to provincial laws, but also adherence to a Code of Ethics. And that code is very important to you – because it assures you will receive the highest level of service, honesty and integrity.

Before receiving a real estate licence, candidates must successfully complete an extensive course of study developed by OREA on behalf of the Ontario Government. And that is only the beginning: in the two years after receiving their licence, the new professionals are required to successfully complete three additional courses as part of their articling period with an experienced broker.

NOTE: Should you consider to buy or sell any real estate, be sure you have your agent explain agency law to you so that you completely understand the relationship, if any, you may have with the agents involved. Buyers and Sellers will always be told, in writing, who a Realtor is working for.

It may be best for you to sign a contract up front with any agent working for you, so that your best interests are looked after.