Property Managers and Dual Agency

Fundamentally, at common law, there is no such thing as dual agency. To understand agency is to understand that there are certain fiduciary duties owed to the principal by the agent.

These duties include:

Disclosure
Obedience
Competence

Confidentiality

Accounting
Loyalty


To engage in a practice that permits or allows for another principal, such that there is an inherent conflict between the two is a fundamental breach of the agency arrangement.

It’s just wrong and the principal has remedies for breach of contract as against the agent.

Other agents go along with the rules. A lawyer will represent the plaintiff in a lawsuit, but not the plaintiff and the defendant in the same lawsuit. That would be rather absurd.

Having said this, the real estate industry has fostered the practice of dual agency and double-dipping for years. Now, it is called “multiple representation”. In fact, it’s an authorized practice for registrants under the Real Estate and Business Brokers Act.

However, that doesn’t change the basic rules.

It is sometimes claimed that a property manager might become an agent of another party in the following circumstances:

· A tenant may seek some additional concessions

· A new property owner may seek some confidential information

· A property manager discloses defects about the building to a prospective purchaser

· A property manager suggests that the owner might accept a lower rental amount than authorized to a prospective tenant.


In my view, the examples offered as situations wherein a property manager might find himself in a dual agency position, are incorrect. There is no permissible overriding legislation (like REBBA). These examples are all just breaches of the agency relationship.

Before getting too detailed, there are two occasions at common law where one party may represent two distinct parties. In one case, the agent is actually called a “broker”, and owes no fiduciary duties to either party. In the second case, the agent discloses the possibility of the second agency, and it is approved by the first principal. The second agency agreement is subservient to the first agency agreement.

This is not the case with the Real Estate and Business Brokers Act. Both agreements are to be on equal footing. There is no equivalent statutory authority in the case of property managers.

Hence, in my view the discussion of joint representation and dual agency is not appropriate. Those rules do apply to registrants under REBBA but not property managers generally.

Brian Madigan LL.B., Broker

www.OntarioRealEStateSource.com

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