Agency Flashcards
What is agency?
Agency is the relationship in which one person, the agent, is granted the authority to represent and act for another person, the principal, in dealings with others
Ideally, the agent relationship is created by a _____________ where the authority of the agent is clearly laid out
Written contract
Once an agency relationship has been created, as a agent under common law, you have a fiduciary obligation of loyalty to act in your client’s best interest and to put your client’s interest ahead of everything else
Word
Fiduciary Obligations include:
-The duty of confidentiality
-The duty to avoid conflicts of interest, and if one does arise, to disclose it
-The duty to obey all lawful instructions of the client-The duty to make full disclosure of all material information
What extends forever?
The duty of confidentiality
Brokerage agency models
Designated agency
Brokerage agency
Designated agency
The brokerage may designate one or more licensees engaged by the brokerage to provide the services on behalf of the brokerage
Brokerage agency
When a brokerage enters into a service relationship with a consumer where the brokerage is appointed as that clients’ agent, all licensees engaged by the brokerage assume the agency obligation of the brokerage in relation to that client
Sole agency
An agency relationship is created when the brokerage and the client agree that the brokerage will designate one or more licensees at the brokerage to provide real estate services as the designated agent for the client
This means that 2 licensees working at the same brokerage who are designated agents for different clients can represent a buyer and a seller in a transaction, or 2 buyers competing for the same property
Dual agency
Only permitted under specific circumstances
-When permitted, you represent both the buyer and the seller in the same transaction
When is dual agency permitted?
Remote locations that is underserved by licensees, and would be impracticable for the two parties to be represented by separate licenses
Teams
Individual team members are unable to operate as designated agents apart from each other
If half the team is on the sellers side and the other half is on the buyers side this is dual agency
When the brokerage only represents one client in a particular transcation
the brokerage is the agent of that client
Brokerage agency is also the only brokerage model for brokerages that
deal in rental property management and strata management
No agency
Aka unrepresented party
A party not receiving agency representation in a real estate transaction
Still owed the duties of honesty and reasonable care and skill
A consumer who chooses to be an unrepresented party must be made aware of the risks
There are forms created to help explain the risks
The limited trading services that you may offer to an unrepresented party include
Providing general market information, contracts, and other relevant documents
Assisting the unrepresented party to complete a contract (without providing advise on appropriate terms)
Presenting the offers and counter-offers to or from the unrepresented party
How an agency relationship is created
i) Agency by way of a written service agreement
Most often created expressly between an agent and a principal
Primary method is through a service agreement, such as a listing agreement or buyers agency exclusive contract
Expressly
An agreement is made, either in writing or orally, between the agent and the principal
Clients can include
Individuals or entities, such as corporations, trusts, partnerships, funds, and unincorporated associations or organizations
How an agency relationship is created
Agency by the way of a written service agreement
The brokerage is to provide trading services to an owner of real estate in relation to the offering of that real estate for sale or other disposition
The brokerage is to provide rental property management services to an owner of rental real estate
The brokerage is to provide strata management services to a strata corporation
How an agency relationship is created
Agency by way of oral agreement
You cannot waive the requirement for a written agreement
How an agency relationship is created
Agency by way of an implied agreement
If you are acting on behalf of a person who is not otherwise represented, your actions may lead the party believing that you were acting as their licensee
Can be found to exist even if you did not intend for it to be created
DORTS Form
Disclosure requirements and the Use of Disclosure of Representation in Trading Services Form
Disclosure requirements and the Use of Disclosure of Representation in Trading Services Rules
Disclosure must be made early and may be ongoing
Disclosure can come in many forms
Some in writing, some by the BCFSA, and some have no method of delivery outlined in RESA
Using the Disclosure of Representation in Trading Services Form
When dealing with a consumer, whether or not an agency agreement, you must fully disclose, in writing, the tole and nature of the services you will be providing
To comply with RESA, you should begin by discussing
the agency relationship with the consumer by using the agency relationship using the DORTS form
When must the Disclosure of Representation in trading services from be provided?
Prior to providing trading services to or on behalf of a party to trade in real estate and the disclosure must be made using this form
Key purpose of Disclosure of Representation in trading services from
To explain to the consumer the difference between being a client and being an unrepresented party in a trade in real estate
The form highlights the key agency fiduciary duties that a licensees owes to a client
If they are unrepresented
You will not be representing the client and you will not owe them any special legal duties
When does the client not have to present this form?
As long as the client does not solicit or collect personal information such as their motivation, financial qualifications, or needs in respect of real estate
Restriction on dual agency and the exemptions
Restriction on dual agency and the exemptions
In BC, Dual agency is restricted
In BC, Dual agency is restricted
Exemption to dual agency
In remote and underserved locations where it is impracticable for the parties to be represented by different licensees
Dual agency definition
The agency of representation, by the brokerage, of clients who have conflicting interests in respect of a trade in real estate
Parties who have conflicting interest in a given trade in real estate include
-buyer and a seller
-lessor and lessee
-Assignor and an assignee
-2 or more buyers, lessees or assignees who are interested in the same property
Disclosure of Risks Associated with Dual Agency Form
Disclosure of Risks Associated with Dual Agency Form
When must you have the Disclosure of Risks Associated with Dual Agency Form signed?
Prior / before providing any trading services to the parties
And it must be signed by your managing broker
What else is needed beyond the Disclosure of Risks Associated with Dual Agency Form
A written agreement of dual agency with each party to whom the dual agency services will be provided
Requires the consent of both parties
Unrepresented Parties
Unrepresented Parties
What is an unrepresented party?
Any party that does not have an agency relationship with a licensee acting in their best interest, in that transaction
Steps you must take before treating a consumer as a unrepresented party
1st: You need to have a discussion with your client about dealing with the unrepresented party and seek your clients consent to proceed
If your client consents to you proceeding with the unrepresented party then under the Real Estate Services Rules (RESA) you will need to
-Inform the consumer of the risks of being unrepresented in real estate transactions
-Disclose the limits to the services as a licensee can provide to an unrepresented party
-Advise the consumer to seek independent professional advise
You are required to disclose the risks associated with being an unrepresented party when you are acting for another party in the trade
This helps ensures consumers can make informed decisions about whether to be represented by a licensee in a real estate transaction
Using the Disclosure of Risks to Unrepresented Parties Form
A required form you cannot alter or change
Termination of an Agency Relationship
Termination of an Agency Relationship
How to terminate agency
If is a voluntary relationship that is built around mutual consent
Either party can terminate the relationship at will
One terminated,
Any authority for the licensee to act on the the behalf of the principle will be revoked
3 ways in which the agency relationship (and authority) can be terminated
1) Express termination
2) Termination by conduct
3) Operation of law
1) Express termination
The principal or agent can terminate the relationship expressly, orally, or in writing
Sometimes known as the revocation of agency authority
2) Termination by conduct
An act of the principal that is inconsistent with the continuation of authority can terminate the agency relationship
3) Operation of law
Through a provision within the agency contract (if one exists), or the death, incapability, or bankruptcy of either the principle or the agent
Risks after termination
Even thought the agency relationship is terminated, both you and your client may still be bound to certain conduct
Many agency relationships are created by express contract
Therefore, if an agency relationship is terminated in any way that is not permitted by the contract, the terminating party may still be liable for damages
Confidentially and Privacy
Confidentially and Privacy
Confidentiality and the Real Estate Services Rules
Confidential information means any information about a client that is not available to the public
Examples: Clients finances, personal situation, motivations or needs
How to give confidential information to third parties
You must gather the consent of your client and its best in writing
Information can be revealed if the client gives the licensee the express permission to do so
Maintaining client confidentiality includes
Ensuring sensitive documents are not shared or accessible to other licensees
Privacy an tenants
In BC, an individuals information and privacy rights are protected by law
PIPA defines personal information about an identifiable individuals, such as
-Name
-Date of birth
-Income
-Physical characteristics
In most circumstances, you must obtain an individuals consent to
Collect and use their personal information
