This is the Multiple Representation paragraph:
“3. MULTIPLE REPRESENTATION: The Seller hereby acknowledges that the Listing Brokerage may be entering into buyer representation agreements with buyers who may be interested in purchasing the Seller’s Property. In the event that the Listing Brokerage has entered into or enters into a buyer representation agreement with a prospective buyer for the Seller’s Property, the Listing Brokerage will require the Seller’s written consent to represent both the Seller and the buyer for the transaction.
The Seller understands and acknowledges that the Listing Brokerage must be impartial when representing both the Seller and the buyer and equally protect the interests of the Seller and buyer. The Seller understands and acknowledges that when representing both the Seller and the buyer, the Listing Brokerage shall have a duty of full disclosure to both the Seller and the buyer.
However, the Seller further understands and acknowledges that the Listing Brokerage shall not disclose: • that the Seller may or will accept less than the listed price, unless otherwise instructed in writing by the Seller;
• that the buyer may or will pay more than the offered price, unless otherwise instructed in writing by the buyer;
• the motivation of or personal information about the Seller or buyer, unless otherwise instructed in writing by the party to which the information applies or unless failure to disclose would constitute fraudulent, unlawful or unethical practice;
• the price the buyer should offer or the price the Seller should accept; and
• the Listing Brokerage shall not disclose to the buyer the terms of any other offer, unless otherwise directed in writing by the Seller.
However, it is understood that factual market information about comparable properties and information known to the Listing Brokerage concerning potential uses for the property will be disclosed to both Seller and Buyer to assist them to come to their own conclusions. The Brokerage shall not be appointed or authorized to be agent for either the Seller or the buyer for the purpose of giving and receiving notices where the Brokerage represents both the Seller and the buyer (multiple representation) or where the buyer or the seller is a self-represented party.”
Review
Set out below and marked in bold and italics are those words that are inserted by me to assist in the review. They are not set out in the clause itself. Let’s look at that paragraph in a little more detail:
3. MULTIPLE REPRESENTATION:
Acknowledgement: Prospective Buyers
The Seller hereby acknowledges that the Listing Brokerage may be entering into buyer representation agreements
with buyers who may be interested in purchasing the Seller’s Property.
BRA in place
In the event that the Listing Brokerage has entered into or enters into a buyer representation agreement with a prospective buyer for the Seller’s Property,
Seller’s Consent Required
the Listing Brokerage will require the Seller’s written consent to represent both the Seller and the buyer for the transaction.
Conduct: Impartial
The Seller understands and acknowledges that the Listing Brokerage must be impartial
- when representing both the Seller and the buyer and
- equally protect the interests of the Seller and buyer.
Full Disclosure Required
The Seller understands and acknowledges that when representing both the Seller and the buyer, the Listing Brokerage
shall have a duty of full disclosure to both the Seller and the buyer.
Confidentiality Maintained
However, the Seller further understands and acknowledges that the Listing Brokerage shall not disclose:
• that the Seller may or will accept less than the listed price, unless otherwise instructed in writing by the Seller;
• that the buyer may or will pay more than the offered price, unless otherwise instructed in writing by the buyer;
• the motivation of or personal information about the Seller or buyer, unless otherwise instructed in writing by the party to which the information applies or unless failure to disclose would constitute fraudulent, unlawful or unethical practice;
• the price the buyer should offer or the price the Seller should accept; and
• the Listing Brokerage shall not disclose to the buyer the terms of any other offer, unless otherwise directed in writing by the Seller.
Exceptions
However, it is understood that
- factual market information about comparable properties and
- information known to the Listing Brokerage concerning potential uses for the property
will be disclosed to both Seller and Buyer to assist them to come to their own conclusions.
Notices: Delivery and Acceptance
The Brokerage shall not be appointed or authorized to be agent for either the Seller or the buyer for the purpose of giving and receiving notices where the Brokerage represents both the Seller and the buyer (multiple representation) or where the buyer or the seller is a self-represented party.”
COMMENT
In this section we are dealing with multiple representation. It should not occur by accident, however, sometimes it does. In the case of a specific real estate agent, if they have a Listing, then, they should avoid “signing up” the prospective Buyer to a BRA for that property until the Seller has actually granted permission.
With a larger Brokerage having some 500 agents, all basically working in the same general area, this can arise quite frequently. One agent has the Seller, and another agent has the Buyer and they both work for the same Brokerage.
In order to proceed, the Seller’s consent is required. That’s easy enough if it’s a different agent, but raises some issues if it’s the same agent.
The Brokerage is to act impartially and equally protect the interests of both the Seller and the Buyer in the same transaction, which includes the proposition of “full disclosure”. So, if the Seller has some information which they might otherwise have kept confidential, and that fact is known to the Seller’s agent, then, it must be disclosed to the Buyer. Why? There are no secrets! Consequently, a method which Buyers could utilize in order to obtain “more information” about a property would be to retain the Listing agent.
This arises in the case of Brokerage multiple representation situations. John Smith acts for the Seller and Mary Jones acts for the Buyer. They both work for ABC Brokerage.
Going forward, John Smith, Mary Jones and ABC Brokerage all act for the Seller and John Smith, Mary Jones and ABC Brokerage all act for the Buyer. Oftentimes, this issue is missed or simply overlooked.
Confidentiality is required when it comes to price, motivation and personal information. In addition, since TRESA and “open offers”, we now have an additional category in terms of disclosure of Offer contents. That is restricted to the contents of a “live competing” Offer.
This aspect of confidentiality does not extend to factual information which is “out there”. Nor, does it extend to potential uses, which can dramatically affect the value. The property is a working farm, but its real value lies in the fact that it may be developed for residential purposes, making it 20 times more valuable. This information, whatever it is, must be disclosed to both parties.
For the purposes of Notices, the Brokerage cannot give or receive them on behalf of the respective clients. They can deliver them, back and forth. The delivery times will be the times that the actual parties received their copies. So, the Brokerage may perform “courier services” in this regard. Otherwise, there would always be a question as to whether the agent was in possession of of the document for the Seller, or the Buyer. This provision is designed to eliminate that issue.
A frequent problem which arises is the fact that this information will be specified in an Offer. It’s automatically filled in by the software system being used or it was drafted for inclusion by a secretary at the office. That’s the first draft. That problem should be easily picked up by the real estate agent. If it’s not, it is a clear demonstration that this particular agent is not very careful.
Brian Madigan LL.B., Broker