Agency and Transaction Brokerage
in Nova Scotia
Below is a sometimes very confusing explanation
of agency. You as a buyer or a seller are used to describing the real
estate salesperson that you are working with as your "agent".
This means to you that you have an "Agency" relationship with
this person. Although this is true in many cases it is not true in all.
The real estate salesperson may choose to deal with you as a "Customer"
which means they have obligations to you but different than if they
were your agent. For example if you buy a house from a builder's salesperson
that has dealt with the builder for 10 years and has sold 50 homes a
year with this builder. The salesperson would not be able to deal with
you in an "agency relationship" so they would deal with you
as a "customer". This would also be true if you were buying
a condo in a project where all condos in the project were handled by
a salesperson. That salesperson would have to deal with you as a "customer".
This is confusing but to understand it you need to see the salesperson
as that a salesperson and the relationship as agency or customer.
Transaction Brokerage comes in to play when the buyer is buying
a property listed with either your salesperson or another salesperson
in the same brokerage. In this situation the salesperson is acting for
both parties and has to take more of a neutral role. For example the
salesperson cannot recommend a price for the buyer to offer or a price
for the seller to counter offer.
Although this is all a little confusing it isn't as complicated
as it appears. Read below carefully and you will have at least a basic
understanding of the relationship you may have with your salesperson.
Agency
Brokerage representatives may or may not have an agency relationship with
you. If you are a client then, there will be an agency relationship, if
you are a customer then there is not an agency relationship. As a client,
the brokerage representative and brokerage have a much higher level of
responsibility to you than if you are a customer. The following sections
give an explanation of agency and the obligations agents have to both
clients and customers.
Sellers or Buyers Agency
- with you as a client
Most sellers and buyers have agency relationship with the brokerage
representative they are using. When you are in an agency relationship
with a brokerage, the brokerage representative has the authority to
represent you in dealings with others. Brokerages and their representatives
are legally obligated to protect and promote the interests of their
principals (clients). Specifically, the brokerage representative has
the following duties:
- Undivided loyalty.
The brokerage representative must protect the principal's negotiating
position at all times, and disclose all known facts which may affect
or influence the principal's decision.
- To obey all lawful instructions
of the principal.
- An obligation to keep
the confidences of the principal.
- The exercise of reasonable
care and skill in performing all assigned duties.
- The duty to account
for all money and property placed in a brokerage representative's
hands while acting for the principal.
You can expect competent service
from your brokerage representative, knowing that the brokerage is bound
by ethics and the law to be honest and thorough in representing a buyer
or representing a property listed for sale. Both the buyer and seller
can be represented by their own brokerage representative in a single
transaction.
Transaction Brokerage -
with both the buyer and seller as a client
Transaction brokerage occurs when a brokerage representative or one
brokerage is representing both the buyer and seller in the same transaction.
Since the brokerage representative has promised a duty of confidentiality,
loyalty and full disclosure to both parties simultaneously, it is necessary
to limit these duties in this situation, if both parties consent.
If you find yourself involved
in a transaction brokerage relationship, before making or receiving
an offer, both you and the other party will be asked to consent in writing
to this new limited agency relationship.
This relationship involves
the following limitations:
- The brokerage representative
will deal with the Seller and the Buyer impartially;
- The brokerage representative
will have a duty of disclosure to both the Seller and the Buyer except
that,
- the brokerage representative
will not disclose that the Buyer is willing to pay a price or
agree to terms other than those contained in the Offer, or that
the Seller is willing to accept a price or terms other than those
contained in the Listing;
- the brokerage representative
will not disclose the motivation of the Buyer to buy or the Seller
to sell unless authorized by the Buyer or Seller;
- the brokerage representative
will not disclose personal information about either the Buyer
or the Seller unless authorized in writing;
- The brokerage representative
will disclose to the buyer defects about the physical condition of
the property known to the brokerage representative;
- The brokerage representative
may disclose all comparable property information to the Buyer and
the Seller at any time;
- the brokerage representative
will not be required to disclose to the Buyer or the Seller confidential
information obtained through any other existing or former agency relationship.
No Agency- with you as a
customer
You may also choose to use the services of a brokerage representative
without having any kind of agency relationship. This might occur, for
example, when you are being shown a property by the Seller's brokerage
representative.
The brokerage representative
you choose to work with in this manner has a legal and ethical duty
to provide you with accurate, honest answers to your questions and can
provide all these services:
- Explain real estate terms
and practices
- Provide and explain forms
used
- Assist you in screening and
viewing properties
- Inform you of lenders and
their policies
- Identify and estimate costs
involved in a transaction
- Assist you in establishing
your range of affordability
- Prepare offers or counter
offers at your direction
- Present all offers promptly
A brokerage representative
who is not your agent cannot:
- Recommend or suggest a price
- Negotiate on your behalf
- Inform you of their principal's
top/bottom line
- Disclose any confidential
information about their principal unless otherwise authorized
You should not provide a
brokerage representative who is not your agent with any information
that you would not provide directly to their principal.
All Buyers and Sellers, whether
in an agency relationship with a brokerage representative or not, will
be given an agency brochure and asked to sign an acknowledgement that
they have been provided this agency information and had an opportunity
to review it.
