Brian Madigan LL.B., Broker
BRMadigan@iSourceRealEstate.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300
Toll Free: 1-888-507-0817

 

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Buyer Representation Agreement Explained (Ontario) Part 7 REPRESENTATION

April 10, 2015 - Updated: April 10, 2015

Buyer Representation Agreement Explained (Ontario) Part 7A REPRESENTATION

 

We will review this paragraph in three sections, namely, representation, multiple representation and finally customer service.

 

Here is the paragraph in its entirety:

 

3. REPRESENTATION: The Buyer acknowledges that the Brokerage has provided the Buyer with written information explaining agency relationships, including information on Seller Representation, Sub-Agency, Buyer Representation, Multiple Representation and Customer Service. The Brokerage shall assist the Buyer in locating a real property of the general description indicated above and shall represent the Buyer in an endeavour to procure the acceptance of an agreement to purchase or lease such a property. The Buyer acknowledges that the Buyer may not be shown or offered all properties that may be of interest to the Buyer. The Buyer hereby agrees that the terms of any buyer's offer or agreement to purchase or lease the property will not be disclosed to any other buyer. The Buyer further acknowledges that the Brokerage may be entering into buyer representation agreements with other buyers who may be interested in the same or similar properties that the Buyer may be interested in buying or leasing and the Buyer hereby consents to the Brokerage entering into buyer representation agreements with other buyers who may be interested in the same or similar properties without any claim by the Buyer of conflict of interest. The Buyer hereby appoints the Brokerage as agent for the purpose of giving and receiving notices pursuant to any offer or agreement to purchase or lease a property negotiated by the Brokerage.

 

MULTIPLE REPRESENTATION: The Buyer hereby acknowledges that the Brokerage may be entering into listing agreements with sellers of properties the Buyer may be interested in buying or leasing. In the event that the Brokerage has entered into or enters into a listing agreement with the seller of a property the Buyer may be interested in buying or leasing, the Brokerage will obtain the Buyer’s written consent to represent both the Buyer and the seller for the transaction at the earliest practicable opportunity and in all cases prior to any offer to purchase or lease being submitted or presented. The Buyer understands and acknowledges that the Brokerage must be impartial when representing both the Buyer and the seller and equally protect the interests of the Buyer and the seller in the transaction. The Buyer understands and acknowledges that when representing both the Buyer and the seller, the Brokerage shall have a duty of full disclosure to both the Buyer and the seller, including a requirement to disclose all factual information about the property known to the Brokerage. However, The Buyer further understands and acknowledges that the Brokerage shall not disclose:

• that the seller may or will accept less than the listed price, unless otherwise instructed in writing by the seller;

• that the Buyer may or will pay more than the offered price, unless otherwise instructed in writing by the Buyer;

• the motivation of or personal information about the Buyer or seller, unless otherwise instructed in writing by the party to which the information applies or unless failure to disclose would constitute fraudulent, unlawful or unethical practice;

• the price the Buyer should offer or the price the seller should accept; and

• the Brokerage shall not disclose to the Buyer the terms of any other offer.

However, it is understood that factual market information about comparable properties and information known to the Brokerage concerning potential uses for the property will be disclosed to both Buyer and seller to assist them to come to their own conclusions. Where a Brokerage represents both the Seller and the Buyer (multiple representation), the Brokerage shall not be entitled or authorized to be agent for either the Buyer or the Seller for the purpose of giving and receiving notices.

MULTIPLE REPRESENTATION AND CUSTOMER SERVICE: The Buyer understands and agrees that the Brokerage also provides representation and customer service to other buyers and sellers. If the Brokerage represents or provides customer service to more than one seller or buyer for the same trade, the Brokerage shall, in writing, at the earliest practicable opportunity and before any offer is made, inform all sellers and buyers of the nature of the Brokerage's relationship to each seller and buyer.

 

 

 

Part 7A review

I will break up the paragraph and offer my commentary in “italics” as usual.

 

3. REPRESENTATION:

 

The Buyer acknowledges that the Brokerage has provided the Buyer with written information explaining agency relationships, including information on

 

There are several type of relationships and service arrangements that may be offered or negotiated as between the Brokerage and the buyer. They are referenced in a document entitled “Working with a REALTOR®” or “Working with a Commercial REALTOR®”. Both documents are prepared by OREA. We will also review those documents in detail, so there will just be short references here.

 

Seller Representation,

 

This is an agency appointment, which includes fiduciary duties at common law and statutory duties under the Real Estate and Business Brokers Act, 2002, wherein the Seller known as the Principal is referred to as the CLIENT.

 

Sub-Agency,

 

In a sub-agent arrangement, the Agent has an Agent, who is then referred to as the “sub-agent”.

 

Buyer Representation,

 

This is an agency appointment, which includes fiduciary duties at common law and statutory duties under the Real Estate and Business Brokers Act, 2002, wherein the Buyer known as the Principal is referred to as the CLIENT.

 

Multiple Representation and

 

Formerly, this arrangement was referred to as “dual agency” and still appears as “dual agency” in the CREA Code of Ethics. Here, the Brokerage acts for two consumers in an agency capacity whose interests may conflict with one another. Commonly, this would be the Seller and the Buyer in the same transaction, or it could be two prospective buyers both seeking the same property. Finally, there could be two sellers both in conflict with one another, negotiating with the same buyer.

 

Customer Service.

 

This is a non- agency appointment, which includes statutory duties under the Real Estate and Business Brokers Act, 2002, wherein the Buyer is described as the CUSTOMER. No fiduciary duties are owed in this arrangement. Information and facts may be provided BUT NOT ADVICE. The moment “advice” becomes part of the relationship, that consumer moves from customer status to client status. And then, once a client always a client. It is very, very difficult to re-establish a customer relationship after advice has been given. Difficult, but not impossible!

 

The Brokerage shall assist the Buyer in locating a real property of the general description indicated above and

 

This provision reasserts the deal which is ASSISTANCE.

 

shall represent the Buyer in an endeavour to procure the acceptance of an agreement to purchase or lease such a property.

 

This says REPRESENT. That effectively means AGENCY, together with all the fiduciary responsibilities and obligations. Those obligations arise by implication of agency law.

 

The Buyer acknowledges that the Buyer may not be shown or offered all properties that may be of interest to the Buyer.

 

Seeing absolutely every property would be impossible. There are about 90,000 transactions handled each year through the Toronto Real Estate Board. In addition, there are thousands of new homes and condominiums which never appear on the TREB MLS.

 

So, there could be something which the buyer might like to have seen, but got missed. Here, we need very simple straightforward criteria. These are submitted into a computerized daily search. However, you can appreciate that sometimes mistakes are made. A property might be overlooked or misdescribed in some way. By the time the buyer finds out about it, someone else has bought the property.

 

The Buyer hereby agrees that the terms of any buyer's offer or agreement to purchase or lease the property will not be disclosed to any other buyer.

 

This is the competitive bidding war situation. You would think that the Brokerage would not be telling and this provision drafted as an “acknowledgement, but it’s not. This seeks the buyer’s agreement. So, the buyer won’t tell any other buyer. Why? Well, it might scare them off, if the information were believed to be truthful.

 

So, two buyers, both sitting in adjacent conference rooms at the offices of the Brokerage agree not to disclose the terms of their own Offers.

 

The Buyer further acknowledges that the Brokerage may be entering into buyer representation agreements with other buyers who may be interested in the same or similar properties that the Buyer may be interested in buying or leasing and

 

Here is an acknowledgement. There may be more than one buyer in competition. This can arise with one sales representative of the brokerage or two. If there is one, then that one person knows both Offers. It would be much simpler if there were two different people. Now, it’s easy to keep a secret!

 

This said representation agreements. It does not cover customer service agreements. This means two CLIENTS.

 

the Buyer hereby consents to the Brokerage entering into buyer representation agreements with other buyers who may be interested in the same or similar properties without any claim by the Buyer of conflict of interest.

 

You will appreciate that there is indeed a conflict of interest. There’s no question about that. But this statement says “consent” and further says that there will not be a claim about a conflict of interest.

 

I should point out, that under the Act, specific consent need be obtained at the relevant time. So, this consent is really “no consent” at all. It just says that!

 

The Buyer hereby appoints the Brokerage as agent for the purpose of giving and receiving notices pursuant to any offer or agreement to purchase or lease a property negotiated by the Brokerage.

 

This is a limited authority appointment. If there are notices, then the notices may be lawfully given to and received by the brokerage.

 

 

 

 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com


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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

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