Review: Designated Representative Listing
The actual Designated Representative Listing (Form 271) is really not that much different from the standard Brokerage Listing Agreement (Form 200).
We will examine the differences.
Title of the Document:
Listing Agreement
Seller Designated Representation Agreement
Authority to Offer for Sale
“DESIGNATED REPRESENTATIVE(S): …………………………………………………………………………………………………………… (Name of Salesperson/Broker/Broker of Record) …………………………………………………………………………………………………………… The Designated Representative will be providing services and representation to the Seller and the Brokerage provides services but not representation.”
There is one minor change when it comes to Schedule “A”:
“Schedule A, ………………………………………………………….. attached hereto forms part of this Agreement, of which Schedule A sets out the details with respect to the services, confidentiality and representation of the Brokerage and Designated Representative.”
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:
Role of Designated Representative
The Designated Representative will be providing
- services and
- representation
to the Seller and
Role of Brokerage
the Brokerage provides
- services
- but not representation
Schedule “A”
Schedule A, ………………………………………………………….. attached hereto forms part of this Agreement,
of which Schedule A sets out the details with respect to the
- services,
- confidentiality and
- representation
of the Brokerage and Designated Representative.
COMMENT
That was a very short provision. Other than the title itself , that one sentence, and the brief reference to Designated Representative in Schedule “A”, there were no other changes to the standard Form Listing Agreement.
This means that if you want changes, then it will be necessary to include them in Schedule “A”.
Representation
Under the paragraph dealing with representation is the following sentence:
“The Seller hereby appoints the Listing Brokerage as the Seller’s agent for the purpose of giving and receiving notices pursuant to any offer or agreement to purchase the Property.”
You might think that under the circumstances of Designated Representation, that it would in fact be the Designated Representative who would be appointed to fulfill this role? If you are in agreement with this change, then a provision to that effect can be added to Schedule “A”.
The following provision is also included in Form 271. It is identical to the Form 200 provision. It deals with multiple representation.
“MULTIPLE REPRESENTATION AND DESIGNATED REPRESENTATION
The Seller understands and acknowledges where both the Seller and buyer are represented by a designated representative of the Listing Brokerage, multiple representation will not result, unless that designated representative represents more than one client in the same trade, and will require consent in writing for such multiple representation. In the event of multiple representation and designated representation, the Brokerage duty of disclosure to both the seller and the buyer client is as more particularly set out in the agreement with the respective seller or buyer.”
We should have another look at the last sentence here:
“In the event of multiple representation and designated representation,
the Brokerage duty of disclosure
to both the seller and the buyer client is as more particularly set out
in the agreement with the respective seller or buyer.”
In this particular situation, it is really the Designated Representative’s role. It is their duty of disclosure to the respective parties which would seem to be paramount.
This is a matter to be addressed in Schedule “A”.
Referral of Enquiries
This paragraph contains the following:
“The Seller agrees that during the Listing Period, the Seller shall advise the Listing Brokerage immediately of all enquiries from any source whatsoever, and all offers to purchase submitted to the Seller shall be immediately submitted to the Listing Brokerage before the Seller accepts or rejects the same.”
The referrals here really should be directed to the Designated Representative rather than the Listing Brokerage. This is a matter related to representation. Should you wish to make that change, then it should appear in Schedule “A”.
Marketing
This paragraph contains the following:
“The Seller further agrees that the Listing Brokerage shall have sole and exclusive authority to make all advertising decisions relating to the marketing of the Property for sale during the Listing Period.”
Reasonably, a good number of marketing steps may very well be undertaken by the Brokerage, but, the Seller has really made a decision to retain the Designated Representative, rather than the Brokerage, so it is the Designated Representative who should be making those decisions. Should you wish to make that change, then it should appear in Schedule “A”.
Warranty
In this situation, the Seller has informed the Listing Brokerage through the Designated Representative. The Seller probably has no other connection with the Brokerage than through the Designated Representative.
Indemnification
This provision is broad enough to include the Designated Representative, however, it would seem reasonable to specifically include the Designated Representative. The fact that the reference was missing begs the question of whether perhaps it was intentional and therefore the Designated Representative was not to be included here.
Verification
This paragraph contains the following:
“The Seller hereby appoints the Listing Brokerage or the Listing Brokerage’s authorized representative as the Seller’s attorney to execute such documentation as may be necessary to effect obtaining any information as aforesaid.”
If the provision related to the Power of Attorney appointment is to remain in place, and really, there is no necessity for that, the Seller would surely prefer their own Designated Representative to take over that role rather than some random representative from the Brokerage.
The appointment of an “Attorney” involves agency which necessarily includes “representation”, and in this Listing, the Brokerage is not to provide that service under TRESA.
This provision should be deleted, or at the very least amended in Schedule “A”.
Market the Property
This paragraph contains the following:
“THE LISTING BROKERAGE
AGREES TO MARKET THE PROPERTY
ON BEHALF OF THE SELLER AND
REPRESENT THE SELLER
IN AN ENDEAVOUR TO OBTAIN A VALID OFFER TO PURCHASE THE PROPERTY ON THE TERMS SET OUT IN THIS AGREEMENT OR ON SUCH OTHER TERMS SATISFACTORY TO THE SELLER.”
Right at the outset, this Document said that the Designated Representative would provide “representation” and the Brokerage would provide services but “not representation”. Have a look at the section above dealing with the role of the Brokerage.
The result is that we are going to have to make some changes here in order to be consistent in this Listing Agreement and be compliant with TRESA. Again, some changes in Schedule “A” will be required.
Let’s see Ontario Regulation 235/23, s.5:
Contents of Written Agreements
13.4 (1) A brokerage shall not enter into a written agreement with a buyer or seller for the purpose of trading in real estate unless the following requirements are satisfied:
1. The agreement clearly, comprehensibly and prominently, sets out the following information:
v. The services that the brokerage will provide under the agreement and, in the case of a designated representation agreement, the fact that the brokerage will not provide representation.
The legislation clearly sets out “no representation”, yet the Listing Agreement says the contrary, namely that the Brokerage “will represent the Seller”. Obviously, an amendment will be required in Schedule “A”.
The TRESA legislation also specifies:
vi. In the case of a designated representation agreement,
A. the name of each designated representative under the agreement,
B. the services that the designated representative will provide under the agreement,
C. the duties of the brokerage under section 22.0.4, and
D. the duty of the designated representative under section 22.0.5.
Names of Designated Representatives
These names should all be specified, and in most cases, they usually are. If someone is not able to act, then the Brokerage may designate another with the Seller’s consent.
Services
The services provided by the Designated Representative should be outlined. So far, we simply have the concept of “representation” without the outline of the services. Yet, the Act, requires the services.
Brokerage Duties 22.0.4
These duties arise in a situation where the Brokerage has for example two agents, both of whom act independently for different parties, the Seller and the Buyer. There is no multiple representation in this situation, however, there are some specific duties for the Brokerage under TRESA:
“Duties of brokerage — designated representation agreement
22.0.4 If a brokerage enters into one or more designated representation agreements, the brokerage shall,
(a) protect each client’s confidential information, including ensuring that a designated representative does not disclose any confidential information of the designated representative’s client to any other broker or salesperson employed by the brokerage or other person, unless the disclosure is authorized by the client or required by law;
(b) treat the interests of all the brokerage’s clients that have entered into designated representation agreements in an objective and impartial manner;
(c) supervise every designated representative to ensure they fulfil their duties under the designated representation agreement; and
(d) in the event that a designated representative is not able to represent a client, designate a different broker or salesperson employed by the brokerage to be the designated representative for the client, if the client so agrees.”
The above points were not covered in the Listing Agreement, so, they will have to be added in Schedule “A”. Why? Simple answer: the Act requires it.
Designated Representative Duties 22.0.5
These duties imposed upon the Designated Representative are to be outlined in the Listing Agreement:
“Duty of designated representative
22.0.5 Every designated representative shall protect the confidential information of every client represented by the designated representative, including by not disclosing a client’s confidential information to any other broker or salesperson employed by the same brokerage or any other person, unless the disclosure is authorized by the client or required by law.”
The above points were not covered in the Listing Agreement, so, they will have to be added in Schedule “A”. Why? Simple answer: the Act requires it.
Schedule “A”
The following paragraph appears as an introduction:
“This Schedule to the Agreement, inter alia, sets out the details of the provision of services, confidentiality and representation by the Brokerage and Designated Representative, and subject to the terms of Clause 13 in the Agreement (Conflict or Discrepancy), is in addition to provision of services, confidentiality and representation set out in the Agreement.”
Examining that paragraph in a little more detail:
This Schedule to the Agreement,
inter alia, (latin: meaning among other things)
sets out the details of the provision of
- services,
- confidentiality and
- representation by
- the Brokerage and
- Designated Representative,
and subject to the terms of Clause 13 in the Agreement (Conflict or Discrepancy),
is in addition to provision of services, confidentiality and representation set out in the Agreement.
It would be extremely important to note that in this Listing Agreement, there is absolutely no representation by the Brokerage. That is the sole responsibility of the Designated Representative.
There are numerous changes that would make sense to the basic Brokerage Listing Agreement in favour of the Seller. Those changes should also take place here, in addition to the matters mentioned in this article.
Designated Representation Agreements: Do You Need Schedule “A”?
Question:
In your Schedule “A”s, do you delete the role of the Brokerage as a “representative” of the client?
Answer:
Let’s look at the standard form Listing Agreement for Designated Representation, that’s Form 271. It came out in early February 2024, several months after the introduction of TRESA, on 1 December 2023.
Statement #1
“The Designated Representative will be providing services and representation to the Seller and the Brokerage provides services but not representation.”
Statement #2
“Schedule A, ………………………………………………………….. attached hereto forms part of this Agreement, of which Schedule A sets out the details with respect to the services, confidentiality and representation of the Brokerage and Designated Representative.”
Statement #3
“The Seller hereby appoints the Listing Brokerage as the Seller’s agent for the purpose of giving and receiving notices pursuant to any offer or agreement to purchase the Property.”
Statement #4
“The Seller further agrees that the Listing Brokerage shall have sole and exclusive authority to make all advertising decisions relating to the marketing of the Property for sale during the Listing Period.”
Statement #5
“The Seller hereby appoints the Listing Brokerage or the Listing Brokerage’s authorized representative as the Seller’s attorney to execute such documentation as may be necessary to effect obtaining any information as aforesaid.”
Statement #6
“The Listing Brokerage agrees to … represent the Seller in an endeavour to obtain a valid Offer to purchase the property on the terms set out….”.
Review
The above statements are all contained in the Listing Form 271, and while some are accurate, others may be confusing, or are completely in accurate:
Statement #1 accurate
Statement #2 Schedule A is necessary
Statement #3 confusing
Statement #4 confusing
Statement #5 inaccurate
Statement #6 inaccurate
Let’s have a quick look at TRESA as it applies to this situation ins.13.4 (1) 1 v:
“…… in the case of a designated representation agreement, the fact that the brokerage will not provide representation.
That matter was covered in #1 with accuracy, however, 3, and 4 were confusing and 5 and 6 were inaccurate statements.
Since the document clearly contemplates a Schedule “A”, then that is where any confusing should be resolved.
Listing Agreements: Schedule “A” an Example
An issue that has arisen recently is the matter of referencing certain matters in a Listing Agreement. RECO said that you should have a Schedule “A”. OREA prepared a Schedule “A” but said that you only need it, if you are offering something extra, or taking something away.
In any event, in order to avoid problems going forward, why not simply include a Schedule “A”?
This is a quote from the RECO Information Guide:
“If you are a seller, an agent can:
• Advise you on market conditions and the best strategy to attract buyers and get the best price for your home
• Market or advertise your home, including arranging photographs, videos and virtual tours
• Provide referrals to other professionals you’ll need, like a lawyer or home staging company
• Arrange and attend home inspections and appraisals
• Arrange showings for interested buyers
• Advise you on how to handle competing offers, sharing the content of competing offers, and other aspects of the transaction
• Vet offers and potential buyers to ensure they can afford to buy your property
• Negotiate with buyers to achieve the best results, price, and terms, for you
• Guide you through paperwork and closing the transaction successfully”.
All of the above points are good. In some cases, they might not all apply. Let’s draft something up, generally, and leave out the casual language. Also, you won’t be including any cartoons.
Proposed Schedule “A” for Standard Listing Agreements
First, it should start off with either:
- The Brokerage shall, or
- The Designated Representative shall.
So, let’s look at the most common situation going forward which would read as follows:
Schedule “A”
The Designated Representative shall observe and comply with the fiduciary duties owed at common law, including disclosure, obedience, competence, confidentiality, accounting and loyalty, shall comply with the Code of Ethics under the Trust in Real Estate Services Act, 2002, including the observance of courteous, honest, and good faith conduct executed with integrity and shall endeavour to provide you with some or all of the following:
- Advise you on market conditions
- Keep you up to date with respect to changing market conditions
- Advise you concerning the best strategy to attract buyers and achieve the best price for your home
- Market or advertise your home, on MLS and various other internet formats
- Arrange photographs, videos and virtual tours, if advisable
- Provide recommendations and referrals to other professionals, as required
- Arrange and if advisable, attend home inspections and appraisals
- Arrange showings for prospective buyers
- Review offers
- Advise you on how to handle offers, multiple offers, and competing offers, including sharing various contents with others
- Advise you on various other aspects of the transaction
- Advise you about the risks associated with certain potential buyers to ensure their financial integrity
- Negotiate with buyers to achieve the best results, price, and terms, for you
- Assist you with the successful closing of the transaction.
COMMENT
The above Schedule is simply a suggestion for your consideration when it comes to representation, services and assistance. You might add or subtract various points in any given situation.
Also, be aware of the fact that matters related to “Termination” should also be part of your Schedule “A”.
Brian Madigan LL.B., Broker