The definition of client under TRESA is as follows:
“1. (1) In the Act and the regulations,
“client” means,
(a) with respect to a brokerage and a trade in real estate, a person who, in the trade,
(i) receives services, including representation, from the brokerage under a brokerage representation agreement, or
(ii) receives services, but not representation, from the brokerage under a designated representation agreement, and
(b) with respect to a broker or salesperson and a trade in real estate, a person who, in the trade,
(i) receives services, including representation, from the brokerage that employs the broker or salesperson under a brokerage representation agreement with the brokerage, if the broker or salesperson provides services to the person under that agreement, or
(ii) receives services, including representation, from the broker or salesperson under a designated representation agreement with the brokerage that employs the broker or salesperson, if the broker or salesperson is a designated representative under that agreement;”
You will notice, that the first step in respect to having a “client” is also to have a “trade in real estate”.
That is also a defined term in the Act, and is as follows:
“trade” includes a disposition or acquisition of or transaction in real estate by sale, purchase, agreement for purchase and sale, exchange, option, lease, rental or otherwise and any offer or attempt to list real estate for the purpose of such a disposition, acquisition or transaction, and any act, advertisement, conduct or negotiation, directly or indirectly, in furtherance of any disposition, acquisition, transaction, offer or attempt, and the verb “trade” has a corresponding meaning;
So, before we really can understand the concept of a “client” under TRESA, we have to appreciate the term “trade”.
Let’s look at that definition a little more closely:
“trade” includes
- a disposition or acquisition of or transaction in real estate by sale, purchase, agreement for purchase and sale, exchange, option, lease, rental or otherwise and
- any offer or attempt to list real estate for the purpose of such a disposition, acquisition or transaction, and
- any act, advertisement, conduct or negotiation, directly or indirectly, in furtherance of any disposition, acquisition, transaction, offer or attempt,
and the verb “trade” has a corresponding meaning;
What this means is:
- doing a deal, either a purchase or a sale is a trade,
- offering or attempting is a trade, and
- indirect acts, ads, conduct or negotiations would also constitute a trade.
Obviously, that means that general discussions with various persons would be insufficient.
Specifically, however, attempting to list a property falls under the “trade” in real estate and elevates the prospective Seller to a “client” for the purposes of the Act.
This is important because even though you haven’t yet been successful in convincing the homeowner to become a Seller and sign a Listing Agreement, they are nevertheless, your client.
It is a little more troublesome to speculate on broader relationships with prospective Buyers in order to determine specifically when the relationship crosses over to a “client” relationship.
Let’s head back to the client definitions.
- Clients for Brokerages
Brokerage Representation Agreements
This is, of course, the old relationship before TRESA.
The client receives services, including representation, from the brokerage under a brokerage representation agreement, In this regard nothing has changed.
Designated Representation Agreements
The client receives services, but not representation, from the brokerage under a designated representation agreement.
Net Result
The person becomes a “client” of the Brokerage whether they receive:
- representation and services, or
- just services.
- Clients for Brokers and Sales Representatives
Brokerage Representation Agreements
This is the same concept as previously.
The client receives services, including representation, from the brokerage under a brokerage representation agreement, and, the actual broker or sales representative provides services.
Designated Representation Agreements
In addition, there is a new concept designated representation which is now permissible.
The client receives services, including representation, from broker or sales representative under a designated representation agreement, and, the actual brokerage provides services. (underlined portion is my addition)
Net Result
The person becomes a “client” of the Broker or Sales Representative whether they receive:
- representation and services, or
- representation without services.
Net Net Result
If you are a prospect and come close in conversation with a registrant, you have become a “client” if there is a trade in mind. Once you are a client, fiduciary duties apply right from the outset. The next step will be a Representation Agreement (RA) of some sort: 1) Brokerage Representation Agreement (BRA) or 2) Designated Representation Agreement (DRA).
Comments
You will likely have noticed that there appeared to be a few words missing. That’s true, but, the meaning still appears to be straightforward.
Brian Madigan LL.B., Broker