November 15th - 2012

Legal Beat: Multiple representation and the dangers of duality

While working on Legal Forum, I received the following question from a REALTOR® on an issue related to multiple representation, formerly known as dual agency.

While working on Legal Forum, I received the following question from a REALTOR® on an issue related to multiple representation, formerly known as dual agency.

“Good morning Merv. I have just set up my forms on EasyOffer. In form 100 and form 300 under clause 3, the bold print now clearly states that if a brokerage is involved in a multiple representation situation, the brokerage cannot act as agent to give or receive notices for either party.

So the obvious question is, who will perform this role? Will the buyer be communicating/delivering documents directly with the seller and vice versa?

Will their home addresses (which may not even be in the same country) be the address for service to deliver these notices? I am totally confused on how the mechanics of this are to be accomplished. Notwithstanding the language in clause 3, what would be the effect of coining a clause which does allow the brokerage to act as agent for the giving and receiving of notices?”

The OREA agreement of purchase and sale (APS) restricts the authority of the brokerage for the delivery and receipt of notices in multiple representation situations, as follows: The seller hereby appoints the listing brokerage as agent for the seller for the purpose of giving and receiving notices pursuant to this agreement. Where a brokerage (buyer's brokerage) has entered into a representation agreement with the buyer, the buyer hereby appoints the buyer's brokerage as agent for the purpose of giving and receiving notices pursuant to this agreement. 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. Any notice relating hereto or provided for herein shall be in writing. In addition to any provision contained herein and in any schedule hereto, this offer, any counter-offer, notice of acceptance thereof or any notice to be given or received pursuant to this agreement or any schedule hereto shall be deemed given and received when delivered personally or hand delivered to the address for service provided in the acknowledgement below, or where a facsimile number is provided herein, when transmitted electronically to that facsimile number.

MERV'S COMMENTS
My answer was: “As courts have held, it is usually inappropriate for a REALTOR® to accept and give notices in a multiple representation situation. See for example the case of McKee v Montemarano 2008 CanLII 36163 and 2009 CanLII 520. One simple example is when the parties have agreed on a “bump” provision for 24 hours’ notice. If the brokerage is representing both the buyer and seller, does the time run immediately when the REALTOR® has only one of the clients sign a notice? Since the brokerage has knowledge now, does the other client also have knowledge and is the time already running? Other similar situations are discussed in OREA seminars such as “Make me an offer” and Merv’s Comments. It may be more suitable for the parties to have personal knowledge of the notice. That could be achieved by delivery to them personally, to their fax machine, to their lawyers, or however else they may decide based on the specific clause. Instead of faxing or handing forms to another registrant within your own brokerage, you can convey the forms directly to and from the parties themselves, unless the APS states otherwise. The parties can agree on whatever method they prefer in a clause in the schedule to the APS, since clause 3 states, “In addition to any provision contained herein and in any schedule hereto.” Clause 26 of the APS states that any pre-set clause can be overridden by any specific clauses added to the APS if there is a conflict.

For more information, see Multiple Representation/Dual Agency in OREApedia. See also the January 2012 issue of EDGE, “Whose side are you on anyway? Multiple representation is a complex scenario”. For an earlier Q&A in Legal Forum, see the topic of Agency, Subtopic: Multiple Representation, Feb. 20, 2006.”

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