Across Canada, each Province handles dual agency differently. Some provinces allow it under certain circumstances, while others forbid it altogether. Whether you’re a real estate agent seeking a better understanding of the local regulations or a homebuyer about to enter into a dual agency agreement, it’s essential to be informed about how this complex situation is addressed in each Canadian Province.
Dual agency has come under siege in recent years, particularly in the British Columbia real estate market. In 2018, the Province tightened rules to restrict the practice and protect consumers from potential scams. In the same way, Ontario plans to revise its legislation to put additional limits to the controversial proceeding. To assist you, we’ve put up a summary of how each Province deals with dual agency and what it implies for homebuyers and sellers in the Canadian real estate market.
What Is Dual Agency In Real Estate?
Dual agency, also called dual representation or multiple representation, happens when one real estate agent (or in some cases two agents from the same brokerage) regulates the sale of a property on behalf of both the buyer and the seller. It is more typical for most real estate transactions to have separate agents from different firms working for each party. This prevents the conflict of interest that arises when an agent negotiates on both sides.
Dual Agency In British Columbia
British Columbia prohibited dual agency in 2018. However, there is an exception that real estate professionals may use in certain situations. The exemption allows real estate agents to give dual representation to clients in remote and underserved areas where it is impossible for them to be represented by different real estate professionals.
To determine if the exception applies to a specific transaction, the agent must consider if:
- There’s another real estate business or brokerage in the vicinity that could assist with the transaction.
- There are other real estate professionals nearby that can provide representation.
- It’s possible to drive or take public transportation to and from the home for sale.
- The transaction is urgent.
For additional guidance, British Columbia real estate agents may use the BCFSA’s Dealing with Conflicts of Interest Between Clients Flowchart to decide if the dual agency exemption applies in a specific case.
Before they can use the dual agency exemption, agents must give the clients a copy of the Disclosure of Risks Associated with Dual Agency form. They must also acknowledge that taking the role of a dual agent in a transaction restricts the services they can provide. The agent’s responsibilities in a dual agency agreement are:
- Loyalty: The agent must devote their efforts to both clients equally. They are not permitted to prioritize one client’s needs above the other.
- Avoid Conflicts of Interest: If further conflicts of interest develop, the agent must immediately inform both clients about them.
- Confidentiality: The agent may not discuss any confidential or personally sensitive information about one client with the other.
Dual Agency In Ontario
Ontario recognizes dual agency with the name of multiple representation, and the situation is described in various sections of the Province’s Real Estate Business Brokers Act (REBBA). For a Canadian real estate agent or brokerage, being involved in multiple representation entails acting as the representative of both the homebuyer and seller, or multiple prospective buyers in a single deal.
In all cases, before entering into an agreement of this nature, real estate professionals are required to satisfy the following conditions:
- Describe the services that are typically available to purchasers and sellers.
- Describe the services that will be offered, as well as any alternatives available to the prospective client or customer.
- Informing potential buyers and sellers about the possibility of multiple representation, including a description of the services the firm would provide in a multi-representation scenario.
- Make it clear to potential buyers and sellers that the brokerage cannot represent multiple clients in a transaction unless all the parts involved give written consent.
If a customer refuses to consent to multiple representation, the brokerage must allow one or more clients to select alternate representation with another firm or agency.
Ontario real estate, like British Columbia, is considering limiting dual agency by revising the Real Estate Business Brokers Act (REBBA). The idea is to include bigger fines for unethical real estate practitioners and regulate the matter, trying to mitigate the potential effects on rural communities and commercial sales, where buyers and sellers often have legal counsel of their own.
Dual Agency In Alberta
What is known as a dual agency in most of Canada, in Alberta is called designated agency and is regulated by the Province’s Real Estate Services Act. Designated agency is a type of representation between real estate agents and their clients that intends to reduce the chance of a conflict of interests when someone tries to sell or purchase homes for sale in Alberta.
According to the Act, both the buyer and seller may be represented by the same brokerage firm; however each party must deal with their own agent. Ideally, agents shouldn’t share the same geographical location.
Additionally, Alberta’s Real Estate Services Act contemplates the transaction brokerage service, in which a brokerage or real estate professional serves the buyer and the seller in a transaction without advocating or acting in the best interest of either party.
In Alberta’s real estate market, both the buyer and seller must acknowledge that they are aware and consent to allow agents from the same real estate company to represent them by signing an agreement.
Dual Agency In Manitoba
In Manitoba real estate, dual agency is called limited joint representation. It occurs when one real estate salesperson represents the seller and buyer in a single negotiation or when two agents from the same brokerage are involved in the same transaction. In that scenario, a conflict of interests is inevitable.
For that reason, and according to the Manitoba Securities Commission, the brokerage can only continue with the dual representation if both parties are aware of its impact on the process and sign a written consent to move forward with it.
The buyer and the seller must sign an Acknowledgement of Limited Joint Representation. That acknowledgement will state the agreed parameters of the agency, as well as any limitations.
When both parties agree to limited joint representation, the salesperson’s and their business’ involvement in both parties’ deals is restricted by the obligation for fairness and impartiality, which prevents the firm from prioritizing either party’s interests.
Dual Agency In Saskatchewan
The Saskatchewan REALTORS® Association (SRA) regulates the Province’s dual agency to ensure that the agent involved is fair and impartial on both the seller and buyer sides. Both parties must sign a disclaimer acknowledging their dual-agency relationship.
SRA’s regulations forbid dual agents from disclosing how much the buyer is prepared to pay or the amount the seller is willing to accept outside of what’s stated in the offer. A dual agent is also prohibited from disclosing the contracting parties’ reasons for purchase or sale unless both clients authorize the disclosure. In addition, the agent is required by law to report any faults with the home for sale, and any financial details released must be shared with both the buyer and the seller.
Dual Agency In Quebec
Dual agency is permitted in Quebec, but there are no specific rules for who must be notified about it. The only particular instruction that either a seller or buyer has is to include the agent’s name, and the brokerage on the listing sheet.
Even though there’s no direct mention of dual agency in Quebec’s Real Estate Brokerage Act, the regulation does require agents to behave ethically and be as neutral as possible when conducting business in the Quebec real estate market. The legal text states that “A license holder must avoid any situation of conflict of interest; if the situation cannot be avoided, the holder must disclose it in writing to all parties concerned without delay.”
Dual agency in Newfoundland & Labrador
In Newfoundland & Labrador, dual agency is presently permitted as long as all parties are made aware of the dual representation as soon as feasible. To be fair to the dual agency process, agents in the Newfoundland and Labrador real estate market should:
- Treat both parties equally.
- Avoid revealing information that might be advantageous for one side or the other.
- To obtain written consent from both parties before proceeding.
Despite that, in a review of the Real Estate Trading Act conducted by NL’s local government, 60% of NL residents said they would like to see dual agency banned. While only 10% of real estate agents agreed with the ban, 49% think more disclosure requirements are needed.
In a document of its own about the same topic, The Newfoundland and Labrador Association of REALTORS® (NLAR) stated, “Consumers are generally not being harmed by dual agency or exclusive listings.” NLAR advised the government not to impose a ban but recommended stronger disclosure requirements.
Dual agency in Prince Edward Island
Dual agency is allowed in the Maritime Province of Prince Edward Island like it is in many other Canadian Provinces. According to the Prince Edward Island Real Estate Association (PEIREA), both the buyer and seller must be aware of the dual agency relationship and agree to it in writing.
Dual Agency New Brunswick
In New Brunswick, a real estate licensee can represent the seller, the buyer, or both. When they represent both, it is considered a dual agency situation and the parties must give their express permission. The New Brunswick Real Estate Association (NBREA) provides a standard agreement that agents and brokerages may use for this purpose.
The agreement should be clear and use understandable language, expressing the specific terms and conditions of the transaction in dual agency conditions. Both parties must sign the dual agency agreement after its potential impact has been addressed, including how it will affect the agent’s duties and responsibilities to both sides of the deal.
Should I Avoid Dual Agency In Canada?
It’s probably better to avoid dual agency in order to safeguard your money and get the most out of a real estate transaction. However, if you decide to work with a dual agent or with two agents that work for the same brokerage, always be cautious about who is representing your interests. According to the rules throughout Canada, you can choose to continue using that agency or agent or seek alternative representation to avoid a potential conflict of interest. That’s especially important in Canada’s record-breaking housing market.
