- 1. What is designated agency?
Designated agency is an alternative way of providing representation services to consumers. In a designated agency relationship, the agreement to provide brokerage services is still between the brokerage and the consumer, but the agency relationship is between the consumer and the individual REALTOR(S)® designated as their sole agent(s).
2. What are the benefits of designated agency?
Designated agency is consistent with both consumer expectations and existing practices within many brokerages. Designated agency also eliminates the conflicts of interest that arise when two REALTORS® in the same brokerage represent the buyer and seller (or two competing buyers), in the same transaction (in-house transaction). Prior to the implementation of designated agency on June 1, 2012, most REALTORS® acted as if they only represented their respective clients; however, in reality they and their brokerage were in a conflict of interest as a result of the concurrent representation of competing parties. A REALTOR® working under designated agency is a sole agent for each of their clients. The only exceptions are:
i.) When a buyer represented by the REALTOR® becomes interested in a property whose seller is represented by the same
ii.) When the REALTOR® has a designated agency relationship with two buyers competing for the same property.
In such cases the designated agent must seek the consent of the buyer and seller (or the two buyers), to act as their limited
- 3. What happens if two competing buyers are represented by different REALTORS® who are licensed by the same brokerage?
The buyers would each have a designated agency agreement with their respective REALTORS®. Each designated agent must maintain the confidentiality of their client's information, act solely in their client's best interests, and provide full agency representation. In designated agency, this is not a conflict of interest, and should not be a concern for either the clients or the REALTORS® representing them.
- 4. What happens if a buyer and seller (or two competing buyers) interested in the same property are represented by the same REALTOR® in the brokerage?
As the Designated Agent of both the seller and the buyer (or the two buyers), the REALTOR® would owe conflicting duties of loyalty to both buyer and seller (or both buyers). Accordingly, the Designated Agent would have to obtain the consent of both to continue to represent them both as their limited dual agent. Separate Limited Dual Agency Agreements for buyers and sellers and competing buyers are available on WEBForms™.
- 5. Can a brokerage, for business reasons, treat all or some of its in house transactions as limited dual agency transactions under designated agency?
The designated agency system does not prevent this. The brokerage would simply appoint all of its REALTORS® to be Designated Agents for every seller and buyer that it represented. In this case, every in-house transaction becomes a limited dual agency transaction, regardless of whether there is one or two REALTORS® involved in the transaction. If the brokerage wants to treat only certain transactions as limited dual agency transactions, then it would simply appoint all of its REALTORS® to be Designated Agents of either or both of the seller and buyer or competing buyers involved in that transaction. This type of representation may suit brokerages which:
- i.) operate in a small market area where information is known about most of the community,
ii.) specialize in a specific market segment (e.g. dairy farms) where information is known about most of the sellers
and buyers, or
iii.) have a small number of licensees who regularly provide holiday relief for each other or share information about
and act jointly for their clients
PRIVACY & CONFIDENTIALITY
- 6. How are privacy and confidentiality different under designated agency?
Under brokerage agency, the service agreement and agency relationship was between the brokerage and the client. The agency obligation of client confidentiality—whether personal information, information relating to the service agreement or relating to a specific transaction—was at the level of the brokerage. Thus, even though the client only dealt with one specific REALTOR®, the client's file was notionally available to all REALTORS® in the brokerage, and the knowledge of the specific REALTOR® was attributed by law to all other REALTORS® in the brokerage.
The brokerage and the designated agent undertake they will not disclose any confidential information concerning the client to any other member of the brokerage or other person unless authorized by the client or required by law.
Under designated agency, while the agency obligation of client confidentiality is at the level of the REALTOR®, the brokerage is still responsible for keeping client information confidential with respect to its dealings with third parties. The brokerage must also ensure each designated agent within the brokerage keeps their clients' information confidential from other REALTORS® licensed with the brokerage who are not acting as designated agents for the same clients.
- 7. Does the managing broker have access to the client's information?
The managing broker has access to the client's information as it relates to the creation and administration of the service agreement between the brokerage and the client. As a general rule, the managing broker would not have access to the client's confidential information except in the following circumstances:
- i.) Where it is required for the managing broker to ensure their REALTORS® are in compliance with the brokerage's
policies and procedures governing designated agents;
ii.) To ensure REALTORS® were providing services competently and performing their due diligence; or
iii.) To ensure the brokerage (as opposed to the designated agent) is treating the interests of both the seller and
buyer (or two competing buyers) in an even-handed, objective and impartial manner.
- 8. Should "tour averages" be disclosed without the consent of the seller?
No. It is not uncommon for listing representatives to ask REALTORS® in their brokerage to estimate the eventual sale price of a property (either before or after it has been listed). This information may be useful and of interest to the seller. However, it would be inappropriate for the listing representative to disclose those estimates, or even the average of those estimates, to other REALTORS® (including REALTORS® in their own brokerage), without the consent of their client, the seller, as that information, in the hands of a buyer, may be prejudicial to the interests of the seller, and disclosing it without the consent of the seller may breach the listing representative's duty of loyalty to their client.
- 9. In a matrimonial dispute where the wife and the husband have each retained different REALTORS® to co-list the matrimonial home what are the duties of those two REALTORS®?
As with all listings the first question that a REALTOR® must ask themself is "who is my client". A fundamental condition of the listing contract is that it must contain the authorization of the seller to list the property. If more than one person is the registered owner of the property all of those persons must sign the listing contract and as such all of those persons become "the seller". If a husband and wife own the property jointly both of them become "the seller" and they both must sign the listing contract. This requirement does not change simply because they are having matrimonial difficulties.
- The listing contract authorizes the listing brokerage to appoint one or more licensees to act as the Designated Agent of the seller. Accordingly where two REALTORS® are co-listing a matrimonial home the listing contract will, where they are engaged by the same brokerage, include them both as the Designated Agent of the seller. If the two REALTORS® are from different brokerages a co-listing agreement will be executed by the husband and wife as seller and both brokerages resulting in the same thing.
- The Designated Agent owes fiduciary duties to their client. Where the Designated Agent is comprised of more than one REALTOR® all of those REALTORS® owe fiduciary duties to the client. Where the client is comprised of more than one person the Designated Agent owes fiduciary duties to all of the persons who make up the client. Accordingly where two different REALTORS® co-list a matrimonial home owned jointly by the husband and wife each of those REALTORS® owes fiduciary duties to "the seller." As the seller includes both the husband and wife each of the REALTORS® owes fiduciary duties to BOTH the husband and wife.
- In a matrimonial dispute, if the husband and wife do not wish nor expect "their REALTOR®" to be disclosing information or providing advice to their spouse then both the husband and wife, as seller, should modify the fiduciary duties of their Designated Agent by providing that each REALTOR® comprising the Designated Agent will owe fiduciary duties to the husband or wife but not both. Where both the husband and wife are represented by lawyers those lawyers should draft a non-disclosure agreement that reflects the expectations of their clients and protects the REALTORS®.
- 10. Can I still use the old forms?
No. The old forms should not be used. Some real estate boards in the province will not accept listings using the old forms. Some boards have extended a grace period during which old forms may still be accepted. Similarly, some boards may or may not extend a similar grace period for extensions of a listing signed prior to June 1, 2012. In no case will a listing extension be accepted after August 1, 2012 unless accompanied by a signed replacement listing on the new MLS® form. REALTORS® should check with their local board if they are in doubt.
- 11. As of June 1, 2012 do I have to get new listing contracts and buyer agency contracts/ acknowledgements signed by existing clients?
No. REALTORS® have, in fact, been practicing designated agency for many years, even though the previous documents didn't expressly identify it. As there is no practical change in the relationship between sellers and buyers and the REALTORS® who represents them, the execution of new agreements or acknowledgements is unnecessary. However, listing extensions signed after August 1, 2012 must be accompanied by a signed replacement listing on the new MLS® form.
- 12. What if the Contract of Purchase and Sale is for a property that was listed on an old MLS® form?
In completing the agency disclosure section of the Contract of Purchase and Sale, the REALTOR® should simply assume the existence of a designated agency relationship between the client and the REALTOR® regardless of the form of listing contracts or buyer agency contracts/ acknowledgements signed prior to June 1, 2012.
- 13. Is it mandatory to complete the designated agent blank in Clause 7A of the MLS® contract?
Yes. The brokerage (which is entering into the MLS® Contract) must insert the full name of the REALTOR(S)® who will be the Designated Agent(s) in the space provided in Clause 7A.
BUYER`S AND SELLER`S SERVICE AGREEMENTS
- 14. Is it necessary to have written service agreements with buyers and which form do I use?
Designated Agents acting for buyers do not face the same written service agreement requirement as Designated Agents acting for sellers. Buyers have the option of (1) signing a service agreement (i.e., Exclusive Buyer's Agency Contract or Buyer Agency Acknowledgement form), or (2) initialing and signing the Working With a REALTOR® brochure, each of which confirm the nature of the designated agency relationship. In all cases, consumers should read the Working With a REALTOR® brochure prior to signing an agency related document.
- 15. When would the Buyer Agency Acknowledgement form be used?
HOLIDAYS, OPEN HOUSES & CHANGING BROKERAGES
- 16. What happens to a "REALTOR®'s" listings if they change brokerages?
The listing contract is a service agreement between the seller and the Listing Brokerage. The contract includes a clause that states, if for any reason the Designated Agent ceases to be licensed with the brokerage, the brokerage will designate another REALTOR® licensed with the brokerage to act as the sole agent for the seller. A similar clause is contained in the buyer's service agreement. Despite these clauses, each brokerage will have a policy for such circumstances. If the listing is transferred to the REALTOR®'s new brokerage, a new listing contract should be entered into with that brokerage. The Council Rules require licensees to inform clients of material changes to the real estate services that are being provided to the client.
- 17. Who can take care of my listings if I am sick or away on holidays?
Clause 7A of the MLS® listing contract provides that the brokerage can designate another of its REALTORS® to act on the seller's behalf for the period of time you are away or otherwise unavailable. That other REALTOR® becomes the designated agent of the seller as well. Alternatively, an additional REALTOR® may be appointed as a designated agent for the seller at the time of listing the property.
- 18. Must a REALTOR® who "hosts" an open house for the seller's Designated Agent always become a designated agent for the seller?
If the seller's Designated Agent cannot be present at an open house, they may choose to have another REALTOR® "host" the open house. In most cases, that "host REALTOR®" would be appointed as an additional Designated Agent of the seller and represent the interests of the seller at the open house.
If the "host REALTOR®" has no confidential information about the seller or the property and the listing Designated Agent does not intend the "host licensee" to be the designated agent of the seller, the onus falls on the listing Designated Agent to ensure that the seller has consented to the "host REALTOR®" not representing the interests of the seller while "hosting" the open house.
In this situation, there is a potential for confusion that REALTORS® should be aware of. Prospective buyers might assume that, because the "host REALTOR®" is conducting the open house, the "host REALTOR®" is acting for the seller. The key to avoiding potential problems in all cases is to ensure that full and complete disclosure is made to both the seller and the buyer, and that both parties have provided their informed consent to the type of representation offered by the "host REALTOR®."
- 19. Does the Seller have to be notified and provide a signature to authorize a replacement (or additional) designated agent?
As in the case of a REALTOR® changing brokerage there is no requirement that the client sign any further documentation. The documents allow for the addition of other Designated Agents so that REALTORS® do not have to get clients to enter into a new listing or buyer's agency contract every time they are sick, go on vacation or are unavailable to hold an open house. The Council Rules would, at a minimum, require the primary Designated Agent to advise the client that an additional Designated Agent has been appointed. There is nothing preventing individual brokerages from creating internal policies requiring some type of written disclosure or even confirmation by the client if they so desire.
- 20. What is the role of a managing broker in a designated agency brokerage?
A managing broker in a designated agency brokerage has the same responsibilities that managing brokers have under brokerage agency. For example, the managing broker needs to ensure the business of the brokerage is carried out competently and in accordance with the Real Estate Services Act, Regulations and Rules. In addition to carrying out these responsibilities which are common to all managing brokers, the managing broker of a designated agency brokerage is obligated to:
- i.) Establish the policies and procedures for information barriers that are necessary to protect the confidentiality of clients;
ii.) Employ the revised forms now available on WEBForms™;
iii.) Ensure compliance by the designated agents with the brokerage's policies and procedures governing designated agents;
iv.) Supervise the activities of designated agents and support staff to ensure the designated agents fulfill their mandates as
provided in the designated agency agreements entered into with sellers and buyers;
v.) Ensure the brokerage (as opposed to its REALTORS® acting as designated agents) treats the interests of the buyer and
seller (or competing buyers) represented by the brokerage in an even-handed, objective and impartial manner;
vi.) Establish the policies and procedures for information barriers that are necessary to protect the confidentiality of clients.
- 21. What can the managing broker do to assist a buyer's Designated Agent who asks for assistance on a purchase contract, when the seller's Designated Agent is in the same brokerage (or vice versa)?
If a REALTOR® asks the managing broker for assistance, it would be advisable for the managing broker to review the offer and go through a set of standard questions. A brokerage may develop a "due diligence" checklist and provide it to all their REALTORS® to guide them when representing sellers or buyers. The managing broker could refer to this checklist and ask the appropriate questions to ensure the designated agent has addressed all the issues that need to be addressed. In addition, the managing broker may refer the REALTOR® to prior information,
such as brokerage policies or procedures, or brokerage checklists for writing offers or counter offers.
The managing broker may also provide information or advice on issues of mutual interest to both clients. For example, upon reviewing the purchase contract, the managing broker may notice it does not address the issue of financing when it is clear the buyer will need to obtain a mortgage to complete the transaction. The managing broker can draw this deficiency to the attention of the designated agent representing the buyer and provide advice that a condition related to financing should be included in the purchase contract.
Without giving advice to either Designated Agent, the managing broker can also give general information and provide alternatives to address issues that have been brought to their attention. For example, the managing broker can explain to a Designated Agent the difference between a term and condition in the purchase contract. A managing broker may be given a set of facts related to a specific transaction and be asked whether a particular clause drafted by the Designated Agent properly addresses the issue they are trying to address in the purchase contract. Again, the managing broker can assist with the drafting of a clause in the purchase contract to achieve the desired intent but they cannot advocate on behalf of either party. Ultimately, the Designated Agent must represent their respective clients, advocate on their behalf, and assist the clients in resolving any issues that arise during the negotiating process.
- 22. If a managing broker actively trades in real estate and is the Designated Agent for one of the parties in a transaction, how is the situation handled if another REALTOR® in the same brokerage represents the other party to the transaction?
The issues involved in this situation have not changed with the introduction of designated agency. If a managing broker represents one of the parties in an in-house transaction, he or she will not be able to fulfill their role as managing broker for that transaction or carry out their supervisory role for the REALTOR® who is the Designated Agent for the other party. In this case, another member of the brokerage would have to assume the managing broker's supervisory responsibilities in order to ensure the brokerage fulfills its responsibilities and ensure that the managing broker and the other Designated Agent involved in the transaction fulfill their responsibilities as Designated Agents for their respective clients.
TEAMS AND PREC`S
- 23. Do the names of all team members have to be included as Designated Agents on the MLS® Listing Contract, the Exclusive Buyer's Agency Contract, the Buyer Agency Acknowledgement and the Contract of Purchase and Sale?
Yes. The full names of all members of the team must be inserted in the space provided on the MLS® Listing Contract, the Exclusive Buyer's Agency Contract, the Buyer Agency Acknowledgement, or the Contract of Purchase and Sale form. Where there are space considerations in a document additional names should be provided on a Schedule A. While all members of the team must be listed as the Designated Agent any single member of the team may execute documents on behalf of the brokerage; i.e. all members of the team are not required to sign the document.
- 24. Can a single member of a team be appointed as the designated agent of a buyer or seller?
No. As team members share, or are deemed to share, confidential information of their clients, all members of the team must be listed as the Designated Agent of any buyer or seller represented by the team or any of its members. Where both the buyer and the seller are being represented by the team as Designated Agents they must agree to the team limiting its agency obligations.
If a Designated Agency relationship has already been established with one party but has not yet been established with the other party, there is also the option of treating that second party as a customer, with all team members being Designated Agents for the first party, and all team members treating the second party as a customer.
- 25. How should a REALTOR® who is a Personal Real Estate Corporation complete section 7 of the MLS® listing contract?
REALTORS® who are Personal Real Estate Corporations must identify themselves in all documents as such (i.e. "John Doe Personal Real Estate Corporation"). There is one exception to this general rule which may appear in publications or advertising where the source data fields can't accommodate the full licensee name of the personal real estate corporation; e.g. in the MLS®, on REALTOR.ca etc. In those cases it should appear as John Doe PREC* with the footnote reference being '*PREC means Personal Real Estate Corporation.'
DISCLOSURE OF REMUNERATION & CO-LISTINGS
- 26. Does Designated Agency affect the" disclosure of remuneration" requirements of Rule 5-11 with respect to in-house transactions?
No. Under limited dual agency, the whole of the commission was disclosed to the buyer because the brokerage had agreed to treat the parties impartially. Under Designated Agency, Designated Agents acting for buyers and sellers are still required to disclose to their client and to their brokerage the amount of any remuneration to be received from someone other than their client. For example, the Designated Agent acting for a buyer must disclose to that buyer the amount of the Cooperating Brokerage Commission being received from the Listing Brokerage. If both REALTORS® are in the same brokerage, the Designated Agent acting for the buyer should disclose that the brokerage is receiving the Cooperating Brokerage commission from the seller.
As a general rule, Designated Agents who agree to a commission adjustment with their own client are not required to disclose this to the other party in the transaction. However, if a single REALTOR® is the Designated Agent of both buyer and seller (or competing buyers), and acting as a Limited Dual Agent for both, they have an obligation to treat both clients impartially. That impartiality extends to making sure that both clients are advised of any commission adjustments agreed to by one of them.
By way of illustration:
a) a REALTOR® is the Designated Agent of both the seller and the buyer in a transaction and, with the consent of the seller and the buyer, is acting as the Limited Dual Agent of both those parties. As a Limited Dual Agent the REALTOR® is obliged to disclose to the buyer the full amount of the commission being paid to the brokerage, rather than just the Cooperating Brokerage portion.
b) a REALTOR® is the Designated Agent of the buyer in a transaction. Another REALTOR® in the same brokerage is the Designated Agent of the seller in that transaction. As the sole agents of their respective clients the two REALTORS® are not required to act as Limited Dual Agents. The REALTOR® who is the Designated Agent of the buyer is obliged to disclose to the buyer only the Cooperating Brokerage portion of the commission being paid to the brokerage.
- 27. How does Designated Agency apply to a co-listing between two different brokerages?
Under the old system of brokerage agency, all REALTORS® at both co-listing brokerages would have been agents of the seller and, if an offer was made by a buyer represented by a REALTOR® from either brokerage, Limited Dual Agency would be required. Under designated agency, the only agents of the seller are the listing representatives appointed by each brokerage to be the Designated Agents. Limited dual agency would be required only in the event that a prospective buyer is represented by one of those listing representatives. If the prospective buyer is represented by any other REALTOR® engaged by either brokerage, Limited Dual Agency would not be necessary, as both the seller and the buyer would be represented by different Designated Agents.
- 28. If REALTOR® #1 lists their own property with REALTOR® #2, who works in the same brokerage, may REALTOR® #3 in that same brokerage act as the Designated Agent of a prospective buyer without being a limited dual agent?
REALTOR® #3 could act as the Designated Agent of the buyer without being a limited dual agent as long as there is no sharing of the confidential information of either the buyer or the seller among REALTOR® #3 (who represents the buyer), and REALTOR® #1 (who owns the property), and/or REALTOR® #2 (who represents the seller). If any confidential information has been shared, the brokerage would have to seek and obtain the consent of the buyer and the seller to have REALTORS® #2 and #3 continue to represent the parties as limited dual agents.
Due to the sensitive nature of this type of transaction, brokerages and their REALTORS® should proceed with caution and ensure that the buyer is fully apprised of the unique situation and the fact that the seller is a REALTOR® with the brokerage. REALTOR® #1 will be required to provide the usual disclosure of interest in trade to the buyer in advance of acceptance of the offer so that the buyer will know that the seller is a REALTOR®.
The foregoing also applies where a REALTOR® wishes to purchase a property listed by their brokerage where another REALTOR® is the listing representative.
- 29. REALTOR® #1 has an expired listing re-listed by REALTOR® #2 in the same brokerage. Are there any circumstances under which REALTOR® #1 could be the designated agent of a buyer and REALTOR® #2 could be the designated agent of the seller?
The situation should be treated the same as if the new listing had been taken by another brokerage. REALTOR® #1's concern is with their new buyer. Because they know confidential
information about their former client (the seller) they need to obtain the consent of their current client (the buyer) to not have to disclose everything they know about the seller and their property. Without that consent they will be between a rock and a hard place. They will owe an unqualified duty to their current client (the buyer) to disclose everything they know about the seller and the property (including confidential information) and a duty of confidentiality to their former client (the seller). To refuse to disclose the confidential information to their current client (the buyer) breaches their duty of disclosure to that client but disclosing the confidential information breaches their duty of confidentiality to their former client (the seller).
REALTOR® #1 could act as the Designated Agent of the buyer if the buyer had executed either an Exclusive Buyer's Agency Contract or Buyer Agency Acknowledgement form.. Clause 7C of the Exclusive Buyer's Agency Contract and clause 4C of the Buyer Agency Acknowledgement form state:
"The Buyer's Brokerage and the Designated Agent will not be required to disclose to the Buyer confidential information obtained through any other agency relationship."
Accordingly, if REALTOR® #1 has the buyer sign either the Exclusive Buyer's Agency Contract or the Buyer Agency Acknowledgement form, they will not be required to disclose the confidential information that they know about the seller (their former client).
Applying that same reasoning would mean that REALTOR® #2 could act as the Designated Agent of the seller at the same time as REALTOR® #1 acted as the Designated Agent of the buyer.
The key to proceeding in this manner is for REALTOR® #1 to obtain the modification of duty of disclosure from their current client (the buyer) through the execution of either the Exclusive Buyer's Agency Contract or the Buyer Agency Acknowledgement form.
- 30. If I am representing a buyer, does it have to be an exclusive right to represent?
No, you can enter into a designated agency agreement (for buyers) that is non-exclusive.
- 31. Is it necessary to have written service agreements with sellers and which form do I use?
A signed service agreement with the seller, acknowledging designated agency, is required in order to list a property on the MLS® System. A seller will provide their written acknowledgement of the designated agency relationship that exists between them and their REALTOR® through the signing of the MLS® Contract.