Agency relationships

What is agency?

At law, agency is a specific relationship between two or more people. One person must authorize the other person to act on his/her behalf, and the other person must consent to do so. In other words, when you authorize a REALTOR to work for you in buying or selling a property and the REALTOR agrees, you and the REALTOR are in an agency relationship. As a member of the public, you are probably familiar with working with individual REALTORS. However, the agency relationship is actually between you and the REALTOR’s brokerage. The brokerage is the real estate company. Therefore, when you hire your agent, the law of agency says that you hire the entire brokerage. In Saskatchewan, REALTORS practice three different forms of agency. A brief description of each follows.

Seller’s agency

In Seller’s Agency, a real estate company represents only the interests of the Seller. Sellers typically hire a real estate company to sell their property by signing a “listing” agreement (now called the Exclusive Seller’s Brokerage Contract). This is the contract that establishes the formal agency relationship between the Seller and the real estate brokerage.

The Exclusive Seller’s Brokerage Contract will explain exactly what the Seller instructs the Seller’s Brokerage to do, what services the Seller’s Brokerage will provide to the Seller, who will pay for those services and what obligations the Seller will have.

A Seller’s Brokerage is expected to:

  • obey the Seller’s instructions on the Exclusive Seller’s Brokerage Contract.
  • represent the Seller’s best interests.
  • fully disclose known facts which might influence the Seller’s decisions.
  • maintain the confidentiality of personal and financial information discussed with the Seller even after the Exclusive Seller’s Brokerage Contract expires.
  • obey all lawful instructions of the Seller.
  • exercise reasonable care and diligence.

Buyer’s agency

In Buyer’s Agency, a real estate company represents only the interests of the Buyer. Buyer’s Agency can be established by working with a REALTOR or by a written contract between the Buyer and the Brokerage called an Exclusive Buyer’s Brokerage Contract.

The Exclusive Buyer’s Brokerage Contract will explain exactly what the Buyer instructs the Buyer’s Brokerage to do, what services the Buyer’s Brokerage will provide to the Buyer, who will pay for those services and what obligations the Buyer will have.

In Buyer’s Agency, it is the Buyer that can expect the REALTOR to:

  • obey the instructions on the Exclusive Buyer’s Brokerage Contract.
  • represent the Buyer’s best interests.
  • fully disclose known facts which might influence the Buyer’s decisions.
  • maintain the confidentiality of personal and financial information discussed with the Buyer even after the Buyer’s Brokerage Contract expires.
  • obey all lawful instructions of the Buyer.
  • exercise reasonable care and diligence.

Limited dual agency

Dual agencies occur when the same REALTOR acts for both the Buyer and the Seller on the sale of a property. It also occurs when different REALTORS work for the Buyer and Seller if those REALTORS are employed by the same real estate company even if they work at different branch offices.

When dual agency occurs, the Brokerage’s duties of confidentiality and loyalty to the Seller conflict with the same duties to the Buyer. Therefore, the Saskatchewan Real Estate Association has proposed certain rules and limitations to deal with dual agency situations. The limitations of dual agency are:

  • that the REALTOR will not disclose that the Buyer will pay a price or agree to terms other than those contained in the offer to purchase, or that the Seller will accept a price or terms other than those contained in the Exclusive Seller’s Brokerage Contract.
  • that the REALTOR will not disclose the motivation of the Buyer to buy or the Seller to sell unless authorized by the Buyer or Seller.
  • that the REALTOR will not represent the interest of either the Buyer or the Seller to the advantage of one over the other.
  • that the REALTOR will not disclose personal or financial information of either the Buyer or the Seller unless authorized in writing.
  • that the REALTOR shall disclose to the Buyer all material defects about the physical condition of the property known to the REALTOR.
  • that all “comparable” property information may be disclosed to both the Seller and the Buyer at any time.

The Brokerage shall disclose the dual agency to the Buyer immediately before preparing an offer (Contract of Purchase and Sale) on the property for signing by the Buyer. The Brokerage shall disclose to the Seller immediately before presenting that offer to the Seller for acceptance. The Brokerage shall not be obligated to disclose the dual agency before the time described above.

Please note that these agency guidelines are set forth by the Association of Saskatchewan REALTORS and are intended for REALTORS working in the province of Saskatchewan. They may not be applicable in other parts of Canada.