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 7B MULTIPLE REPRESENTATION

April 12, 2015 - Updated: April 12, 2015

 

Buyer Representation Agreement Explained (Ontario) Part 7B MULTIPLE REPRESENTATION

 

Here is the portion of the paragraph dealing with multiple representation:

 

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. 

 

Part 7B review

 

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

 

3. REPRESENTATION:

 

MULTIPLE REPRESENTATION:

 

This is just a capitalized sub-title.

 

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.

 

Just a quick comment. I have no idea why OREA sometimes capitalizes the word “seller” and sometimes not. OREA always capitalizes Buyer, because this is a Buyer Representation Agreement. The same or similar reasons do not apply to “seller” which sometimes is “Seller”.

 

This really is just a “heads up” that there could be a potential conflict of interest.

 

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,

 

Assuming that the Brokerage has a listing, and the Buyer is interested.

 

the Brokerage will obtain the Buyer’s written consent to represent both the Buyer and the seller for the transaction

 

This is significant. The Buyer’s consent is necessary, IF the Brokerage is to represent both.

 

at the earliest practicable opportunity and

 

When? Well, as soon as possible.

 

in all cases prior to any offer to purchase or lease being submitted or presented.

 

The last moment for this would be the Offer. Naturally, this matter needs to be resolved prior to any Offer and really, as soon as it reasonably can be dealt with. It should not be left until Offer time. That  places undue pressure upon the buyer to make a quick decision about a matter that is very serious.

 

Although it is not mentioned here, the Seller MUST agree as well. Effectively, they both have a VETO.

 

The Buyer understands and acknowledges that the Brokerage must be impartial when representing both the Buyer and the seller and

 

Impartiality! What is that? That sounds crazy! How’s that going to happen? It’s nice in theory, but there is a conflict of interest here. The role of the Brokerage is not like that of an umpire or referee, so, there’s not going to be any impartiality in the sale and purchase of the property. The Brokerage wants the deal to happen. But, you have to appreciate, it does sound “nice”.

 

equally protect the interests of the Buyer and the seller in the transaction.

 

Again, another “motherhood statement”. Both parties are entitled to equal protection. This is not the Human Rights Code. This is an impractical, unobtainable, impossible target. It’s just not going to happen in real life. Naturally, it sounds much better than it really is. Once you think about it, you’ll appreciate that it is an impossibility.

 

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,

 

The DUTY of  FULL DISCLOSURE. What does that mean? Actually, that’s not agency at all. That’s just the exact opposite of agency. I am about to tell ALL your secrets. You appreciate with this statement that the Principal is giving up some portion of their right to and expectation of confidentiality in the circumstances.

 

including a requirement to disclose all factual information about the property known to the Brokerage.

 

So, now we are going to mention a few things. Some are out and some are in. Facts are in. Ok, it’s just facts about the property. Without getting into Philosophy 101, “what truly is a FACT?”

 

However, The Buyer further understands and acknowledges that the Brokerage shall not disclose:

 

This is the start of the non-disclosure, or still secret list.

 

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

 

The seller’s PRICE. We are not going to talk about that. Now, unless there is a low end listing price intended to generate a bidding war, everyone in society seems to know that there’s always a little give and take in the price. Here, with multiple representation, the Brokerage and its sales representatives can’t even mention a one cent discount in a million dollar deal.

 

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

 

The buyer’s PRICE. We are not going to talk about that. Now, unless we have run into the one person in society who seems anxious to pay the top end amount without any negotiation or signback, everyone else in society seems to know that there’s always a little give and take in the price. Here, with multiple representation, the Brokerage and its sales representatives can’t even mention a one cent potential increase by the buyer in a million dollar deal.

 

Of course, written instructions to the contrary could be given in both cases.

 

• 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 Brokerage is not going to deal with the issue of motivation. But, that’s just exactly the information that the other parties need to WIN in the negotiations. It’s helpful to know. So, the fact that the Bank is about to repossess the property is information which cannot be disclosed to the buyer. Well, at least, without the seller’s authorization. Now, for the next question. If this information is “passed on” in secret, is it even true? The seller may simply be “playing” both the agent and the prospective buyer.

 

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

 

We are again back to the price. If there is one single matter that everyone wants to know, it is the price. So, no guidance on the price for either client, that doesn’t sound quite right. We have really backed off the agency duties with this one. This is the key to the puzzle. Advice is needed, not information. Here, you will notice that both clients are effectively downgraded to customers. That’s the information only and no advice business. Who would agree to this? And more particularly, who would agree to this in advance?

 

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

 

Remember that we still have a conflict of interest and multiple representation situation when we have two buyers. A key difference here is whether both buyers have the same sales person at the Brokerage. That difference is huge. Two different agents is likely just a “technical foul”, one of the little logical glitches that could arise. But, Brokerages demand that they be the agent in law, and never, ever the sales person.

 

This provision simply clarifies that each buyers’ offer will remain secret and will not be disclosed to the other buyer or buyers at the brokerage.

 

However, it is understood that factual market information about comparable properties and

 

This is the start about what can be disclosed. Information is available that would be available if the consumer were simply a customer. No interpretation, just facts. The moment we slide over into advice, that’s agency and that’s not allowed.

 

information known to the Brokerage concerning potential uses for the property will be disclosed

 

Possible new developments. So, here, we are talking about possibilities. These are essentially facts which have not yet come to pass. So they are “maybes”. How good is that?

 

to both Buyer and seller to assist them to come to their own conclusions.

 

Facts and potential facts must be told to both parties, so that they can figure out what is meant. What happened to agency? What happened to competence? What happened to confidentiality and loyalty? All that went by the wayside in this set of circumstances. Each party will be on their own, so I do hope that they are both good at real estate and both good at analyzing information and both good at negotiating or else, one of these parties is going to have the upper hand.

 

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.

 

This is a rather limited restriction. Assume that we have a deal. The buyer and the seller are now to send notices directly to one another or possibly their lawyers. The agent is not to be involved. You can imagine a sales professional trying to fax something out to his own fax machine!

 

However, the key element in this situation is the question of time and delivery. If the buyer gives something to the agent at 4;00 pm for delivery to the seller and the actual delivery is 5:30 pm to the seller, when was the true delivery for legal purposes in this situation. The seller’s agent had it at 4:00 pm. This restriction eliminates that potential conflict of interest.

 

 

 

 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com


Tagged with: buyer representation agreement bra agency explanation ontario law multiple representation
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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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