The new TRESA legislation deals with requirements of agreements.
Regulation 567/05 includes the following:
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:
With respect to termination it states:
“vii. The terms related to termination of the agreement, if any.”
So, that means it’s optional. If there’s no terms related to termination, then there’s nothing to say. However, since the issue is specifically identified in the legislation perhaps some reference would be advisable.
RECO Information Guide
This is drawn from the Guide concerning termination:
“Termination provisions
The agreement should list all circumstances when the agreement can be terminated. Review when the brokerage can terminate the agreement, and make sure you are aware of any penalties or costs that might apply in each case.
Two important circumstances to be aware of:
• Multiple representation: You do not have to agree to multiple representation, and your agreement should be clear about what happens in that situation. For example, the agreement could terminate completely, or you might be referred to another brokerage or designated representative for the specific transaction but otherwise remain under the agreement with the brokerage.
• Changing your designated representative: If you have entered a designated representation agreement, the brokerage cannot appoint a different designated representative unless you agree. The brokerage may ask to appoint someone else if, for example, your designated representative stops working with the brokerage, or is otherwise not available to provide the services and representation outlined in the agreement.”
OREA Termination Clauses
There are essentially three, being written both as the Buyer and the Seller.
Multiple Representation
Brokerage has right to appoint someone else, upon notice without Client’s consent.
Designated Representative Change of Employment
Brokerage has right to appoint someone else, without notice and without Client’s consent.
Client Refuses Representation
Brokerage has right to refer to another Brokerage, upon notice without Client’s consent, AND, the Client shall enter into a Representation Agreement upon the same terms as agreed, with the Replacement Brokerage.
The OREA Termination Clauses give lots of discretionary power to the Brokerage. It might be nice, but it is not authorized by TRESA and would appear to thwart Consumers’ rights.
RECO Guide and Multiple Representation
“Multiple representation is not permitted unless each of the clients involved agrees.
You should seek independent professional advice (for example, from your real estate lawyer) before proceeding.
The brokerage or your designated representative has a duty to promote and protect your best interests and avoid conflicts of interest. If your brokerage or designated representative enters into an agreement with another client who has an interest in the same property as you, this places both clients in multiple representation. Multiple representation introduces risks you and the other client should consider.
What to expect before you agree to multiple representation
The brokerage is required to provide you with a written disclosure that explains:
• how the brokerage’s duties or the designated representative’s duties to you will change;
• the differences in the services you will receive; and,
• any change to how much you pay the brokerage.
Until this information is disclosed in writing to all clients in the transaction, and they all agree in writing, the brokerage or designated representative cannot take any further steps on behalf of any of the clients.
Confidential information you provided to the brokerage or the designated representative when you were represented cannot be shared without your written consent.
You can refuse multiple representation
If you don’t agree, the brokerage or your designated representative is not allowed to proceed.
Ask the brokerage or real estate agent about alternatives to multiple representation. For example, if you are a buyer, the brokerage could refer you to another brokerage or another designated representative to help you make an offer on the property.
Agreeing to multiple representation significantly reduces what the brokerage and its agents can do for you, which could have consequences and costs.”
COMMENT
It would seem quite clear that RECO has not studied the OREA approach. They appear to say:
- Get legal assistance BEFORE
- Both parties MUST agree
- in WRITING
- DISCLOSURE takes place in the TRANSACTION
- Brokerage or Designated Representative CANNOT ACT
OREA Approach
Obviously, just get everything signed upfront, in advance, before anything happens. This way, the client will be stuck!
Brian Madigan LL.B., Broker