Understanding Agency

Whether you are buying or selling a house, the kind of relationship you have with your agent really does matter. Now I’m not talking about how well you get along; I’m referring to the “agency” relationship you have – this is the legal relationship you have according to the Real Estate Act of Alberta.

According to RECA (the Real Estate Council of Alberta), there are three kinds of relationships you can have with a real estate professional:

  1. A real estate brokerage (the organization a REALTOR® works for) can act as your agent. This is called a common law agency relationship and it includes all the agents in the brokerage as well as the staff.
  2. An individual real estate professional can act as your agent which is called designated agency. This is the most common form of representation.
  3. You can also be a customer to a real estate professional.

Each form of representation comes with different responsibilities for the agent and brokerage and is determined by the contract that you sign, which will clearly set out the REALTOR®’s duties to you as well as your responsibilities. The real estate professional must explain the scope and limits of these relationships to you before signing an agreement so you can make an informed decision about the representation you’d like to have.

If you choose not to be a customer and have an agent who acts on your behalf you are in an agency relationship and the agent (or whole brokerage in common law agency) has the highest level of responsibility to you which include:

  • Undivided loyalty: only acting in your best interest and put them above their own and those of other people. avoiding conflicts of interest and always protecting your negotiating position.
  • Confidentiality: keeping information confidential, even after the transaction has completed or the relationship ends. This includes your personal, property and transaction information, unless the law says it must be disclosed (like certain property defects) or you agree to disclose.
  • Full disclosure: you must be told, in writing, the services your agent will provide. They must tell you of any potential conflicts. They can’t give you confidential information from another agency relationship.
  • Obedience: the agent must obey all your lawful and reasonable instructions. They cannot do something unlawful like hide a known defect that must be disclosed.
  • Reasonable care and skill: they must act reasonably and competently and exercise care and skill in all their duties. For example, one couldn’t provide commercial real estate services if they are not competent to do so.
  • Full accounting: your agent must account for all money, keys or documents a client puts in their care during the relationship and return items when the agreement ends.

You also have responsibilities to the agent like giving the agent any information that could affect a transaction or their ability to act as your agent and pay any fees or expenses, as outlined in your agreement.

If you choose to have a customer relationship with a real estate professional, then you are choosing to represent yourself while the agent represents the other party. You will not receive the services listed above but they will help facilitate the transaction and still have a duty to act honestly, use reasonable care and skill, and make sure the information they give you is correct.

In some cases, the same real estate professional or brokerage represents both the buyer and the seller. The people involved can decide to handle this several ways:

  1. Either the buyer or the seller can get a different agent.
  2. The buyer or the seller can stay with the same real estate professional, but in a customer relationship. The professional can give information and help, without acting as an agent.
  3. The agent can help facilitate the transaction, without acting in the interest of either side.

All parties must understand and agree to this change of relationship in writing, before either side presents or accepts the initial offer on the property. I’ve personally had nothing but success in these situations with happy sellers and buyers at the end of the transaction.

Regardless of the path that you choose, making an informed decision about your relationship is key and I would be honoured to protect and represent you in all your real estate ventures. Join me on Facebook and Google for the latest in real estate news and information!