Rule out Dual Agency in Ontario

The concept of dual agency in Ontario is largely focused upon one Sales Representative acting for both the Seller and the Buyer in the same deal.

By accident, since the Brokerage is the “legal agent” this occurs with some regularity in larger offices. Really, this is a technical issue since both the Seller and the Buyer likely have different Sales Representatives within the same office.

A quick and dirty solution had been to continue to treat the Seller as a Client and offer Customer Service to the Buyer. This way the same Sales Representative could handle “both ends” of the deal. This option would not be available if we eliminate Customer Service.

If we bring in Designated Agency, then both the Seller and the Buyer will have two separate people at the Brokerage. There will be no issues like accidentally revealing a secret since they both won’t be privy to the secret in the first place.

Designated Agency is the appointment by the Brokerage of a second Sales Representative at the office:

  • Sales Representative #1- owes full allegiance and fiduciary duties to the Seller
  • Sales Representative #2- owes full allegiance and fiduciary duties to the Buyer

It was Sales Representative #2 who was “designated” or “appointed” by the Brokerage to act for the Buyer. This took place because Sales Representative #1 was approached by the Buyer.

The Buyer receives “full service”, there is no step-down level being offered.

Also, when we had two Clients with one Sales Representative, there were several secrets which were to be maintained and the role switched from “negotiation” to “mediation”. These essentially dealt with the highest price the Buyer would offer, the lowest price the Seller would accept and the motivation of both parties.

This wasn’t fair to the Seller who retained Sales Representative Bob because of Bob’s prowess as a negotiator. Now, Bob has simply become a messenger. But, that was only before designated agency.

The concept of “multiple representation was introduced in Ontario to broaden the basket and include situations where Brokerage ABC acted for two competing Buyers in the same deal. Multiple Representation is the more expansive term applied to both situations in Ontario. Outside of Ontario “dual agency” covers both.

Really, this is only a technical conflict if it is at the Brokerage level, however, if it is one Sales Representative, this situation should fall under the Designated Agency rules.

The elimination of customer service combined with the introduction of designated agency would align with moist consumers’ views in the first place.

On rare occasions there may be an exception. Why couldn’t the same person in essence act for both parties? The difficulty here has been abuse of the system, not by the many, but by the few.

So, for the few, I would suggest that there be significant criteria required to break through the designated agency barrier. The second “client” would have to have known the Sales Representative for at least 5 years, have been a past “client” and specifically reject the ‘designated agent” proposed by the Brokerage.

This I appreciate will change the business model for some smaller Brokerages in rural areas. They will require a reciprocal arrangement with another Brokerage. This happens all the time in the legal business, so while it’s not the arrangement at the present time, once the new program is initiated, and reciprocity partners sought, it should work out. I would be inclined to try it out and make it work. With a few growing pains, it should be successful.

Brian Madigan LL.B., Broker

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