Brokerage #1 has been selected for the Listing, but the area is rather remote and Brokerage #1 is not interested in in attempting to secure or develop more business in that area.
The Seller would like to have some Open Houses conducted. Who would do that? Possibly, Brokerage #2 which operates in that area.
What do we need:
- Co-listing agreement, or
- Sub-agency agreement.
Going forward, either would work, but neither the Seller nor Brokerage #1 want to sign a Co-listing agreement. That is just not going to happen!
So, what’s the real solution here? A sub-agency agreement would be perfect. This is where Brokerage #1 retains Brokerage #2 to do the work. In effect, the Sub-agent has a direct relationship with the agent and an indirect relationship with the Principal.
Example of Sub-agency Agreement
SUB-AGENCY AGREEMENT
This Sub-Agency Agreement (“Agreement”) is made effective as of the ___ day of _______, 20, by and between:
Brokerage #1
Name: [Full Name of Brokerage #1]
License #: [Registration Number]
Address: [Address of Brokerage #1]
Phone: [Phone Number]
Email: [Email Address]
AND
Brokerage #2
Name: [Full Name of Brokerage #2]
License #: [Registration Number]
Address: [Address of Brokerage #2]
Phone: [Phone Number]
Email: [Email Address]
WHEREAS, Brokerage #1 is the listing brokerage for the property located at [Address of Property] (“Property”);
WHEREAS, Brokerage #1 desires to have Brokerage #2 conduct an open house for the Property;
WHEREAS, Brokerage #2 agrees to assist Brokerage #1 in conducting an open house on the terms and conditions set forth in this Agreement;
WHEREAS, the seller(s) of the Property (the “Seller”) have given their consent to allow Brokerage #2 to conduct the open house;
NOW THEREFORE, the parties agree as follows:
1. Appointment
Brokerage #1 hereby appoints Brokerage #2 as a sub-agent for the purpose of conducting an open house for the Property, and Brokerage #2 agrees to perform the duties outlined in this Agreement.
2. Scope of Duties
Brokerage #2 shall conduct an open house for the Property on the following date(s) and time(s):
- Date(s): [Insert Date(s)]
- Time(s): [Insert Time(s)]
Brokerage #2’s duties shall include:
- Advertising and promoting the open house (if agreed upon).
- Greeting potential buyers and providing information about the Property.
- Notifying Brokerage #1 of any inquiries, offers, or relevant feedback received during the open house.
- Ensuring the open house is conducted in accordance with all applicable laws, regulations, and brokerage policies.
3. Seller’s Consent
The Seller(s) of the Property hereby consent to this Sub-Agency Agreement and authorize Brokerage #2 to conduct the open house as described above. By signing below, the Seller acknowledges that they have been informed of and agree to the terms of this Agreement.
Seller’s Consent:
Seller(s) Name(s): [Full Name(s) of Seller(s)]
Seller(s) Signature(s): __________________________
Date: ___________________________
4. Compensation
Brokerage #1 agrees to compensate Brokerage #2 for conducting the open house in accordance with the following terms:
- The agreed compensation amount or percentage is: [Insert Amount or Percentage].
- Payment will be made upon the successful completion of the open house and any required documentation.
5. Listing Agreement
Brokerage #1 represents and warrants that it is the listing brokerage for the Property and has obtained the necessary authorization from the Seller(s) to allow Brokerage #2 to conduct the open house.
6. No Authority to Bind
Brokerage #2 acknowledges that it does not have the authority to bind Brokerage #1 or the Seller(s) to any contracts or agreements regarding the sale of the Property. Brokerage #2 may not enter into any agreements, make any representations, or take actions on behalf of the Seller(s) without the prior written consent of Brokerage #1.
7. Compliance with Laws and Regulations
Brokerage #2 agrees to comply with all applicable laws, regulations, and ethical guidelines, including but not limited to the Trust in Real Estate Services Act, 2002 (TRESA), the Code of Ethics, other applicable Reugulations, and any other rules and policies set forth by the Real Estate Council of Ontario (RECO) or any other relevant authority.
8. Indemnification
Brokerage #2 agrees to indemnify and hold harmless Brokerage #1 from any claims, liabilities, damages, or expenses arising out of Brokerage #2’s actions or omissions while conducting the open house, except in cases of negligence or intentional misconduct by Brokerage #1.
9. Termination
This Agreement may be terminated by either party with written notice to the other party, subject to any outstanding obligations. Upon termination, Brokerage #2 shall cease all activities related to the open house and return any materials or documents provided by Brokerage #1.
10. Confidentiality
Brokerage #2 agrees to maintain the confidentiality of all confidential information obtained during the course of this Agreement, including but not limited to the terms of the listing agreement and any details regarding the Seller(s) or potential buyers.
11. Miscellaneous
- Entire Agreement: This Agreement constitutes the entire understanding between the parties regarding the subject matter hereof and supersedes any prior discussions or agreements.
- Amendment: Any amendment or modification to this Agreement must be in writing and signed by both parties.
- Governing Law: This Agreement shall be governed by the laws of the Province of Ontario.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
Brokerage #1
Signature: __________________________
Name: _____________________________
Title: _____________________________
Date: _____________________________
Brokerage #2
Signature: __________________________
Name: _____________________________
Title: _____________________________
Date: _____________________________
Seller(s)
Signature(s): __________________________
Name(s): _____________________________
Date: _____________________________
The Seller’s Consent section is included and requires the seller’s signature as confirmation. This ensures that the seller is aware of and agrees to the arrangement where Brokerage #2 conducts the open house.
COMMENT
That was an example. On the issue of compensation, there may in fact be none. Brokerage #2 conducts the Open House, since it wishes to attract buyers for future business, In effect, they are quite willing to do this for free.
Please feel freee to add any other duties or obligations that you wish. This is simply an example.
Brian Madigan LL.B., Broker