February 18th - 2007

Dealing with multiple buyer representation

Representing both a buyer and a seller in a real estate transaction can be tricky.

Representing both a buyer and a seller in a real estate transaction can be tricky. But how do you deal with representation involving multiple buyers?
 
Section 22 of the REBBA 2002 Regulation 567/05 (General) states: “A registrant shall not represent more than one client in respect of the same trade in real estate unless all of the clients represented by the registrant in respect of that trade consent in writing.” The Registrar’s bulletin on page 105 of the Guide to REBBA 2002 goes on to say that “Consent to multiple representation is required not only when a brokerage is representing both the buyer and the seller in a transaction, but in situations where the brokerage is representing multiple buyers in a single transaction…. In such situations, consent to the multiple representation would be required when the brokerage becomes aware that it is operating in a multiple representation situation”
 
Sections 13 and 14of the REBBA Code of Ethics, state that representation agreements must be reduced to writing, signed by the brokerage and submitted to the buyer or seller client for signature. “The Code does not require a signature, but registrants need to be aware of practical issues and risks associated with an unsigned representation agreement. In particular, entitlement to commission may become a problem. Representation agreements must be clearly distinguished from other agreements between brokerages and customers, such as a Service Agreement. Services to customers do not include the fiduciary duties that registrants owe to clients.”
 
A recent question and answer on OREA’s Legal Forum outlines the best way to handle a multiple representation situation involving buyers and avoid any pitfalls or non-compliance with REBBA 2002.
 
Question: Dual Representation – We are the listing agent, another registrant from another brokerage has submitted offers from two separate clients on one of our listings. Is she required to prove that she has written consent from both clients, or is that an internal form in her own brokerage?
 
Merv’s Answer: The brokerage representing multiple clients must comply with their obligations under REBBA 2002 as an internal matter with their clients. This is discussed in several places including the Registrar’s Bulletin on Representation on pages 104 –105 of the RECO Guide to REBBA 2002. Both buyers should be fully informed and consent by whatever documentation that the brokerage considers would satisfy the Code. If they use Part 3 of OREA’s Form 320, it should be completed by using the additional comments and/or disclosures by “Co-operating Brokerage.” The selling brokerage would have two separate Confirmations of Co-operation and Representation, one for each buyer. So it would be documented, but on two forms. Each one of the forms would state in the comments that the buyer understands that the selling brokerage is representing another buyer with an offer on the property.
 
Learn more about representation agreements in the Guide to REBBA 2002 under the General Section, subsection 1(1) or the Code Section 13 and 14 or the Registrar’s Bulletin section. OREA’s course Multiple Offers: Risks and Rewards can be another good source of information; to find out more about the course contact your local board or check the course listing at www.oreacollege.com. You can also view more Q&As regarding representation and a variety of other common real estate scenarios at www.orea.com and click on Legal Forum under the Legal tab.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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