Agency Law

REALTORS® are governed by the legal concept of “agency”.   An agent is legally obligated to look after the best interests of the person he or she represents. Realtors®  believe it is important that the people they work with understand when an agency relationship exists and when it does not – and Ottawa Homes for Saleunderstand what it means.

In real estate there are different possible forms of agency relationships.

1. Seller Representation
When a real estate brokerage represents a seller, it must do what is best for the seller of a property.  A written contract,called a listing agreement, creates an agency relationship between the seller and the brokerage and establishes seller representation. A seller’s agent must tell the seller anything known about a buyer.  For instance, if a seller’s agent knows a buyer is willing to offer more for a property that information must be shared with the seller. Confidences a seller shares with a seller’s agent must be kept confidential from potential buyers and others. Although confidential information about the seller cannot be discussed, a buyer working with a seller’s agent can expect fair and honest service from the seller’s agent and disclosure of pertinent information about the property.


2. Buyer Representation
A real estate brokerage representing a buyer must do what is best for the buyer.  A written contract, called a buyer representation agreement, creates an agency relationship between the buyer and the brokerage, and establishes buyer representaton.  It also explains services the brokerage will provide, establishes a fee arrangement for the REALTOR®’s services and specifies what obligations a buyer may have. Typically, a buyer will be obliged to work exclusively with that brokerage for a period of time. Confidences a buyer shares with the buyer’s agent must be kept confidential. Although confidential information abou the buyer cannot be disclosed, a seller working with a buyer’s agent can expect to be treated fairly and honestly.                                              

3. Multiple Representation
Occasionally a real estate brokerage will represent both thfinalfront5e buyer and the seller. The buyer and the seller must consent to this arrangement in writing. Under this multiple representation arrangement, the brokerage must do what is best for both the buyer and the seller.  Since the brokerage’s loyalty is divided between the buyer and the seller who have conflicting interests, it is absolutely essential that a multiple representation relationship be properly documented. Representation agreements specifically describe the rights and duties of everyone involved and any limitations to those rights and duties.


4.Customer Service
A real estate brokerage may provide services to buyers and sellers without creating buyer or seller representation. This is called “customer service”. Under this agreement, the brokerage can provide many valuable services in a fair and honest manner. This relationship can be set out in a buyer or seller customer service agreement.


Who’s Working for You?
It is important that you understand who the REALTOR® is working for. That’s why requirements and obligations for representation and customer service are included in a Code of Ethics which is administered by the Real Estate Council of Ontario.  The Code requires REALTORS® to disclose the nature of the services they are providing and also requires them to submit written representation and customer  service agreements to buyers and sellers.