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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Multiple Representation Resources

October 31, 2016 - Updated: October 31, 2016

Multiple Representation Resource Material and Sources of Information

 

I am setting out some material related to multiple representation. Scroll through the material and you will find:

 

1)    Unethical Conduct Bulletin,

 

2)    Code of Ethics,

 

3)    Multiple Representation Bulletin,

 

4)    Ask Joe Consumer Column,

 

5)    Comments About Topic on Social Media,

 

6)    Listing Agreement,

 

7)    Buyer Representation Agreement.

 

You will find the material highlighted in “green”, for ease of reference.

 

The purpose is to place the material in one location as a resource. Naturally, you will have to update this as time goes by.

 

 

Unethical conduct in multiple representation

 

 

Multiple representation is an issue that RECO has been monitoring for some time. Over the past couple of years we have issued a Registrar's Bulletin"Ask Joe" columns, and newsletter articles on the subject to help registrants give well informed advice and consumers make well informed decisions. A recent media inquiry has brought the issue to the forefront.

 

Media interest in multiple representation

A few weeks ago, RECO was contacted by a CBC current affairs program. The reporter recorded several "hidden camera" videos where, as part of a multiple representation arrangement, registrants representing the seller promised to control the offer process or disclose the value of other offers to their buyer clients.

 

RECO has submitted a formal request to get copies of the videos and the names of the registrants that appear in them.

 

Unacceptable conduct must stop

 

These practices are a clear breach of Real Estate and Business Brokers Act, 2002 and the Code of Ethics. Engaging in this sort of behaviour undermines consumer protection, consumer confidence, and puts the reputation of the real estate profession at risk.

 

This behaviour is also contrary to two of our most important regulations:

 

  • A registrant shall treat every person the registrant deals with in the course of a trade in real estate fairly, honestly and with integrity (Code of Ethics, Section 3).
  •  
  • A registrant shall promote and protect the best interests of the registrant's clients (Code of Ethics, Section 4).

 

There are also several critical disclosure and consent requirements that all registrants must follow in a multiple representation situation. This should serve as a reminder for all registrants to review the Registrar's Bulletin on the topic. Failure to abide by these regulations will lead to serious consequences.

 

Depending on the circumstances, an individual who engages in unethical behaviour could receive fines up to $25,000. For particularly severe cases, RECO could revoke their registration.

 

If any broker or salesperson is engaging in questionable practices, their Broker of Record and the brokerage's owner should put a stop to it. If they don't, the Broker of Record could also face disciplinary sanctions.

 

Consumer outreach

 

Our "Ask Joe" column in the Toronto Star has covered multiple representation several times. This Saturday's column will take a fresh look at the issue, spelling out the pros and cons of multiple representation. We'll also be issuing a consumer bulletin on the topic.

 
 

The Code of Ethics

 

Fairness, honesty, etc.

 

3. A registrant shall treat every person the registrant deals with in the course of a trade in real estate fairly, honestly and with integrity. O. Reg. 580/05, s. 3.

 

Best interests

 

4. A registrant shall promote and protect the best interests of the registrant’s clients. O. Reg. 580/05, s. 4.

 

Multiple Representation Registrar’s Bulletin

 

March 1, 2016 Bulletin #2016-2

 

This bulletin describes the disclosure obligations of a brokerage before it enters into a multiple representation situation. This includes representing a buyer and seller or multiple prospective buyers in the same transaction.

 

Services

 

In all situations, before entering into an agreement regarding trading in real estate, registrants are required to:

 

  • Describe the services that are generally available to buyers and sellers;
  •  
  • Describe the services that will be provided and the alternatives available to the potential client or customer;
  •  
  • Inform prospective buyers and sellers of the possibility of multiple representation, including a description of the services the brokerage would provide in a multiple representation situation; and
  •  
  • Make it clear to prospective buyers and sellers that the brokerage cannot represent multiple clients in a transaction unless all of the potential clients consent in writing to that representation.

 

Written consent from clients

 

When a multiple representation situation arises, registrants must explain how the services provided to the client will differ from a single representation situation, including any differences in the sharing of information. These disclosures are to be made at the earliest practical opportunity and before an offer to purchase is made.

 

The brokerage must also obtain the written consent of all of the parties it is representing in that transaction, via their salespersons or brokers.

 

Written consent is required in situations where a single brokerage represents two or more clients in a trade, even if different salespersons or brokers are involved. Given that the brokerage has a fiduciary relationship with more than one client to a trade, it must be clear to all clients to the trade how information related to the transaction will be exchanged and how services will be provided.

 

Consent to multiple representation is required when:

 

  • A brokerage is representing both the buyer and seller in a transaction; or
  • A brokerage is representing multiple prospective buyers in a single transaction.

 

In the case of multiple buyers, it may not be clear to the buyer’s brokerage that a single brokerage is representing multiple buyers until one or more buyers have expressed interest in the same property. This knowledge may come through the listing brokerage, or its representatives, as they are in a position to know the source of all buyers. The listing brokerage is then expected to pass on this information to the buyers’ brokerage. In such situations, consent to the multiple representation would be required as soon as the brokerage becomes aware that it is operating in a multiple representation situation.

 

IF WRITTEN CONSENT FROM A CLIENT IS REFUSED

 

In situations where a client refuses to consent to multiple representation, the brokerage must release one or more of its clients to seek alternate representation with another brokerage. The brokerage cannot represent more than one party to a trade without the written consent of all parties it is representing in that transaction.

 

Multiple customers

 

A customer is a person who has entered into a service agreement with a brokerage related to a real estate transaction, but who is not being represented by that brokerage as a client. This might apply to a situation in which a brokerage has entered into an agreement with a person to assist in a real estate transaction, but the brokerage or its representatives are not providing any fiduciary advice or services to the person as part of that agreement.

 

Registrants must treat customers with fairness, honesty and integrity, but do not have the obligation of protecting the customer’s best interest as they would with a client.

 

With respect to services provided to customers, registrants must disclose to buyers and sellers that they may act for more than one customer in a transaction. A brokerage does not require a customer’s or client’s written consent to provide services to an additional customer in a transaction.

 

Relevant sections of REBBA 2002 and the Code of Ethics

 

Code of Ethics: Sections 3451016 and 17

General Regulation: Section 22

Registrar’s Bulletin — Multiple Representation

 

 

Ask Joe: The Star 18 June 2016


What is multiple representation in real estate?

 

Also known as dual agency, the term refers to the same real-estate brokerage representing both the buyer and seller, both of whom should be aware of a few caveats.

 

A real-estate professional will guide clients of a brokerage with his or her knowledge, experience and strategic abilities, whereas customers will receive more limited service.  (DREAMSTIME)  

 

By JOSEPH RICHER Registrar

 

Sat., June 18, 2016

 

I’m interested in a house, but the brokerage representing me is also representing the seller. What do I need to know about this arrangement?

 

When the buyer and seller are clients of the same brokerage, it’s known as multiple representation, which is sometimes referred to as dual agency. The term applies even if you are dealing with different representatives who work for the same brokerage.

 

Multiple representation can also arise if two buyers are interested in purchasing the same property and they are represented by the same brokerage.

 

Although it’s common for multiple representation to occur in the real-estate market, there are caveats you should know about.

 

For example, the brokerage will know about the seller’s home and sales strategy. This could be valuable to you when you put together an offer. On the other hand, it has information about your circumstances that could be useful to the seller during negotiations. You can see where a conflict of interest could exist.

 

This is why, when a potential multiple representation situation arises, there are disclosure requirements in Ontario. The brokerage will give you certain information so you can make an informed decision. First, it will disclose it proposes to represent more than one client in the transaction. Second, the brokerage will disclose how its obligations to promote and protect your best interests will differ compared to if they represented only you.

 

Typically, the differences will include the disclosure of information, as well as the services the brokerage is able to provide. These disclosures should be made in writing to prevent disputes later on. No matter what happens, the brokerage must always deal with you fairly, honestly and with integrity, and provide you with conscientious and competent service.

 

You and the other person have to consent in writing before the brokerage can proceed with multiple representation. If one client doesn’t provide written consent, the brokerage must release one of the clients. It’s then up to the brokerage to decide which client to keep. If it releases you, you’ll have to find another brokerage, and could ask for a referral.

 

There’s also a difference between a client of a brokerage and a customer of a brokerage. The difference is relevant because the rules about multiple representation only apply when the brokerage has two clients involved in the same transaction.

 

When you’re a client of a brokerage, your real-estate professional will guide you with his or her knowledge, experience and strategic abilities, and have to look out for your best interests.

 

In contrast, a customer receives more limited service. For example, a customer buying a home shouldn’t expect their representative to analyze and discuss any shortcomings of a property. A client, on the other hand, would receive this service. Typically, a customer relationship is best suited to buyers and sellers who are familiar with the real-estate world, and don’t need the extra help.

 

When it comes to multiple representation, it’s important to think it over and make sure you understand all the implications before you decide how to proceed.

 

Joseph Richer is registrar of the Real Estate Council of Ontario (RECO). He oversees and enforces all rules governing real-estate professionals in Ontario. Email questions to askjoe@reco.on.ca . Find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at youtube.com/RECOhelps 

 

Comments: Discussions Real Estate Forums on Social Media

 

·        End multiple representation

·        Refer it out and take a referral fee

·        No reason to end, I work within the rules

·        Many agents don’t act ethically, rampant abuse

·        Seller expects reduction, if I took Buyer to another property, no reduction

·        Our job as deal-maker

·        Double-ending before Offer date has to stop

·        CBC is pushing for elimination of double-ending

·        No double-ending in multiples

·        Just simply follow Code of Ethics

·        Some discount brokers need to double end

·        Multiple representation makes for smoother deals, no second agent

·        We need some policing to eliminate the bad apples

 

Listing Agreement

 

MULTIPLE REPRESENTATION:

 

The Seller hereby acknowledges that the Listing Brokerage may be entering into buyer representation agreements with buyers who may be interested in purchasing the Seller’s Property.

 

In the event that the Listing Brokerage has entered into or enters into a buyer representation agreement with a prospective buyer for the Seller’s Property, the Listing Brokerage will obtain the Seller’s written consent to represent both the Seller and the buyer for the transaction at the earliest practicable opportunity and in all cases prior to any offer to purchase being submitted or presented.

 

The Seller understands and acknowledges that the Listing Brokerage must be impartial when representing both the Seller and the buyer and equally protect the interests of the Seller and buyer.

 

The Seller understands and acknowledges that when representing both the Seller and the buyer, the Listing Brokerage shall have a duty of full disclosure to both the Seller and the buyer, including a requirement to disclose all factual information about the Property known to the Listing Brokerage.

 

However, the Seller further understands and acknowledges that the Listing 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 Seller or buyer, 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 Listing 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 Listing Brokerage concerning potential uses for the Property will be disclosed to both Seller and buyer 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 Seller understands and agrees that the Listing Brokerage also provides representation and customer service to other sellers and buyers.

 

If the Listing Brokerage represents or provides customer service to more than one seller or buyer for the same trade, the Listing 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 Listing Brokerage’s relationship to each seller and buyer.

 

Buyer Representation Agreement

 

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.

 

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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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