The practice of dual agency has come under fire of late — specifically in the BC real estate market. New rules which come into effect on June 15, 2018, seek to strengthen protections for customers by limiting dual agency practice in the province of British Columbia. But other provinces have not, yet, banned the use of dual agency. To help, we’ve put together a quick snapshot of how each province handles dual agency and what it means for homebuyers and sellers in the Canadian real estate market.
What is dual agency?
Dual agency occurs when a single agent represents both the buyer and seller in a real estate transaction or when the buyer and the seller are represented by two different agents that work for the same real estate brokerage.
Dual agency in B.C.
B.C. is the first province to introduce legislation that will limit dual agency and this new legislation is scheduled to come into effect on June 15, 2018. However, based on B.C.’s lead, it’s expected that we could see additional provincial legislation that would limit or restrict dual agency in almost all real estate transactions.
As of June 15 2018, dual agency is prohibited in all real estate transactions in B.C., except in underserved areas (which will be clearly defined). Once the new rules are in effect, agents will be required to comply or face stiff fines. Prior to the new rules, agents who engaged in dual agency had to:
- Represent both sides equally;
- Disclose the dual agency relationship in writing to both parties;
- Keep confidential information confidential for both parties to prevent giving one or the other party leverage against the other.
As of June 15, 2018, there is a ban on dual agency in B.C. However, there is a narrow exemption for licensees to practice dual agency if all three of the following requirements are met:
- the real estate is in a remote location;
- the location of the real estate is under-served by licensees;
- and it is impracticable for the parties to be provided trading services by different licensees.
In their disclosure package, RECBC states: “In the very rare circumstance where a trade does fall within the exemption, you must use the Disclosure of Risks Associated with Dual Agency form.”
Dual agency in Alberta
In Alberta, the relationship known as dual agency is defined in the province’s Real Estate Services Act as “designated agency.” The Act stipulates that agents from the same brokerage firm are allowed to represent both the buyer and seller, however, each party must work with their own agent — preferably one that doesn’t share the same geographical office as the other agent representing the other half of the real estate transaction.
In Alberta, both the buyer and seller must sign an agreement to state that they know and agree to allow agents from the same real estate brokerage to represent them.
Dual agency in Saskatchewan
The Association of Saskatchewan Realtors has set out the following rules and limitations for dual agency situations.:
- The realtor will not advise what the buyer will pay nor what the seller will accept outside of what is written in the offer.
- The realtor will not share the motivations of either the seller to sell or the buyer to buy unless given express permission by either party.
- The realtor will act fairly towards both parties, without bias towards one or the other.
- The realtor will not share any personal or financial information unless expressly approved to do so by either the buyer or the seller in writing.
- The realtor will tell the buyer all of the material defects known about the property.
- Both the seller and the buyer can be given comparable property information at any time.
- The buyer and seller must both be advised – in writing – of the dual agency scenario. The deal cannot proceed without express written approval by both parties involved.
Dual agency in Manitoba
Manitoba defines dual agency as “limited joint representation” and, just like in other provinces, both the buyer and seller must acknowledge in writing that they’ve been advised of the limited joint representation and that they agree to move forward under limited representation.
Manitoba defines agents duties under limited joint representation as follows:
“[the agent has] a duty to not disclose any information about the selling or purchase price, motivation for purchase or sale, and/or any personal or financial information about either the buyer or seller unless the disclosure is authorized in writing; [the agent has] a duty to disclose all known material latent defects about the property; and
a duty to disclose information on other listed and sold properties to the seller and buyer at any time.”
Dual agency in Ontario
Like British Columbia, the government of Ontario is considering limiting the practice of dual agency. The idea is to revise the Real Estate Business Brokers Act (REBBA), which includes doubling fines for unethical realtors.
Government and Consumer Services Minister Tracy MacCharles stated, in The Toronto Star: “Our default will be that multiple representation doesn’t occur. That is a preferred direction we’re going in.” MacCharles continued, “where it turns out a client wants to buy a property listed by their own agent, one party will be assigned to another agent in the same brokerage. There will be cases, however, where agents still represent both sides of the transaction. But the conditions around those cases are still unclear pending further consultation.”
The biggest concern, right now, is the effect these proposed changes could have on rural communities and some commercial sales, where buyers and sellers often have their own legal counsel. As MacCharles states, “We’re trying to protect our consumers, give some choice to the consumers and recognize this is a significant industry worth millions of dollars, if not billions, every month.”
Dual agency in Quebec
Quebec allows for dual agency but there are no requirements for how a buyer or seller is to be notified. In fact, the only real indication either the seller or the buyer has is that the name of the agent and/or the brokerage is shown on the listing sheet.
Dual agency in Nova Scotia
Novia Scotia has a few different kinds of agency relationships.
#1: Common law agency
A common law agency is when a buyer or seller enters into an agreement with two different agents from the same brokerage. Remember, the brokerage will gain when each agent closes a sale, which means the brokerage has a vested interest in making sure the sale is finalized. Since both agents are representing the same brokerage business, the law considers both sides of the transaction to be represented by the same business. This doesn’t mean that each individual agent is exempt from providing “undivided loyalty, advice and advocacy” for their client, but the law wants to ensure that buyers and sellers are 100% protected, particularly in situations where there might be a conflict of interest.
In the case of both a buyer and a seller having separate agents who are both working for the same brokerage, the buyer would have a “Buyer Designated Brokerage Agreement” (BDBA) with their designated agent and the seller would have what’s known as a “Seller Designated Brokerage Agreement” (SDBA) with their designated agent. These documents set out the terms and stipulations that all parties must adhere to, including notice that each designated agent will maintain the confidentiality of their individual client, providing them with full agency representation.
#2: Designated agency
In Nova Scotia, there is also a designated agency relationship. This is when a client and an individual “designated” agent is clearly outlined in the brokerage agreement. It means that no other representatives of the brokerage firm are allowed to provide advice or assistance to that client.
#3: Dual agency
Finally, in Nova Scotia, a dual agency relationship is created when both a buyer and a seller are represented by the same agent. In this situation, the brokerage must put in place written procedures and policies that will protect the information and interests of individuals doing business with the agent.
In cases where both the buyer and the seller have signed on with the same individual designated agent, they must agree to the transaction by signing a “Transaction Brokerage Agreement” (TBA). This document informs both parties that the agent can only provide impartial information and cannot offer advice to either party. This document must be signed by both parties before any offer to purchase document is prepared.
Dual agency in New Brunswick
New Brunswick allows for dual agency representation but only with the express written permission from both the buyer and the seller. In fact, the provincial real estate board provides a standard dual agency agreement that may be used by all real estate agents and brokerages. This dual agency agreement must be signed by both parties but only after the impact of the dual agency relationship has been explained, including how this relationship will impact the agent’s duties and obligations to both parties.
Dual agency in Prince Edward Island
Prince Edward Island allows for dual agency, and like other jurisdictions in Canada, the buyer and seller must both be aware of the dual agency relationship and must agree to this situation in writing.
Dual agency in Newfoundland & Labrador
Dual agency is currently allowed in Newfoundland, provided all parties are advised of the dual representation at the earliest possible opportunity.
As in other jurisdictions, agents are required to:
- Treat both parties equally;
- Not disclose any information that could provide an advantage to either party;
- Obtain agreement in writing from both parties.
Dual agency across Canada
Consumers, as always, need to pay careful attention to who is representing them in a home sale or purchase and if a dual agency situation arises, the rules across the country stipulate that they have a choice: They may continue to use their agent or, if they feel there is a potential conflict of interest situation, they may choose to find alternative representation.
Since the real estate industry is a multi-billion dollar industry in Canada, it’s wise that any jurisdiction that does opt to make changes to the way the business of real estate is practised considers, first, how these changes will impact all parties involved. The ultimate goal of all professionals involved is to safeguard the needs of the home buyer and seller.