Under the new TRESA legislation, there are several contracts which are identified and defined.
Let’s have a look at Regulation 567/05:
“representation agreement” means a written, oral or implied agreement between a brokerage and a person under which the brokerage and the person agree that the person will receive services from the brokerage and will receive representation from either the brokerage or a designated representative, in respect of a trade in real estate;
Comment: The arrangement may be: 1) express or 2) implied. If it is express it may be either a) written or b) oral.
So, here there will be services provided by the Brokerage.
Representation is either going to be provided by the Brokerage or the designated representative.
“brokerage representation agreement” means a representation agreement between a brokerage and a client under which the brokerage and all of the brokers and salespersons employed by the brokerage provide services, including representation, to the client.
Comment: This is the same as it has been for years. Assuming a Brokerage has 300 registrants, then both the Brokerage and the 300 registrants, all provide both services AND representation to the client.
“buyer representation agreement” means a representation agreement between a brokerage and a buyer.
Comment: It seems odd that a BRA is a defined term, but a Seller Representation Agreement is not.
“designated representation agreement” means a representation agreement between a brokerage and a client under which the brokerage provides services to the client and designates one or more brokers or salespersons employed by the brokerage to represent the client to the exclusion of the brokerage and all of the other brokers and salespersons employed by the brokerage;
Comment: It’s important to appreciate that all contracts are with the Brokerage. There are no specific contracts directly with anyone else.
Here, we are dividing up:
Services will be provided by the Brokerage.
Representation will be provided by certain specified registrants at the Brokerage.
It is the Brokerage which will designate particular registrants to provide representation. The roles do not appear to be broken down. It would appear that is a “joint and several” appointment, meaning that either or both could act and have full authority at any given time.
Further, everyone else at the Brokerage (as well as the Brokerage itself) is left out of the loop. They are not providing “representation”.
13.3.1 A brokerage shall not enter into an agreement with a buyer or seller for the purposes of trading in real estate if the agreement does not include the provision of representation.
Comment: This is the actual agency appointment. There is nothing else. With agency comes the responsibility for the performance of the common law fiduciary duties.
So, all contracts with a Brokerage MUST include representation. The next decision is who is going to provide the “representation”.
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.
Comment: Just specifically what is the role of the Brokerage? What services are they providing? If it’s a DRA, then, the agreement must also clearly indicate that the Brokerage will not provide representation (that’s agency), and as a consequence be obligated to provide common law fiduciary duties.
vi. In the case of a designated representation agreement,
A. the name of each designated representative under the agreement,
Comment: Just the names, not the roles or any divided up responsibilities.
B. the services that the designated representative will provide under the agreement,
Comment: the specific services provided by all designated representatives.
C. the duties of the brokerage under section 22.0.4, and
D. the duty of the designated representative under section 22.0.5.
vii. The terms related to termination of the agreement, if any.
2. The expiry date is displayed prominently on the first page of the agreement.
3. The buyer or seller has initialled the agreement next to the expiry date.
(2) A brokerage shall ensure that an agreement referred to in subsection (1) contains only one date on which the agreement expires.
Seller representation agreements
13.5 (1) If a brokerage enters into a seller representation agreement with a seller and the agreement is not in writing, the brokerage shall, as soon as possible after entering the agreement and before any buyer makes an offer, reduce the agreement to writing, have it signed on behalf of the brokerage and provide it to the seller for signature.
(2) In this section,
“seller representation agreement” means a representation agreement between a brokerage and a seller, and includes a listing agreement.
Comment: At the outset, an agent may have an interested prospect, or the Seller may have an interested prospect. The agent agrees to take on the role of representation. That’s an oral agreement and MUST be reduced to writing, asap, but obviously no later than the time when an Offer is made. The SRA which might also be a Listing first has to be signed on behalf of the Brokerage and delivered to the Seller. The Seller, naturally, is under no obligation to sign it, but they have to receive it.
Buyer representation agreements
13.6 If a brokerage enters into a buyer representation agreement with a buyer and the agreement is not in writing, the brokerage shall, as soon as possible after entering the agreement and before the buyer makes an offer, reduce the agreement to writing, have it signed on behalf of the brokerage and provide it to the buyer for signature.
Comment: The BRA obligation is the same as the SRA obligation. The oral BRA exists, then, reduce it to writing, sign it on behalf of the Brokerage and deliver it the Buyer, all before the Offer.
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.
Comment: The role of the Brokerage if there is a DRA):
- Protect client’s confidential information
- Ensure that the confidential information is not provided by the Designated Representative (DR) to any other registrant in the Brokerage
- Treat the client objectively
- Treat the client impartially
- Supervise the DR
- If DR is unable to act, appoint a different registrant from the Brokerage as the new DR (with the client’s approval)
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.
Comment: The DR shall protect the client’s confidential information. First, no disclosure to other registrants at the office. Second, no disclosure to anyone else. In fact, if you have #2, why would you bother with #1. Also, the client could consent to the disclosure.
Properties that meet client’s criteria
22.4 If a brokerage has entered into a representation agreement with a buyer, a broker or salesperson who represents the buyer under the agreement shall inform the buyer of properties that meet the buyer’s criteria without having any regard to the amount of the remuneration, if any, to which the brokerage might be entitled.
Comment: This is rather unusual. First, the main purpose here was to focus upon suitable properties and not the agent’s commission. However, we are looking at a BRA. The first step is that the BRA will be with the Brokerage. I would then expect that the Brokerage would have corresponding duties etc. But, that’s not the case here. The Act immediately goes over to the “broker or salesperson who represents the buyer”. It is not a Designated Representation Agreement. It might be, it could be, but we are not quite there yet. So, this wording is somewhat puzzling.
Brian Madigan LL.B., Broker