By: Rita Garami

Buyer Representation Agreements - Who is representing Who ...

Tags: Buyer Representation Agreement, Real Estate Agent, Client vs Customer, Toronto Real Estate



Question: What types of representations out there for Buyers in Ontario? 

When it comes to just about every kind of contract, signing on the dotted line makes us all a little bit nervous.

When selling a home, most people are aware they sign a Listing Agreement with a REALTOR®. There is, however, an agreement that REALTORS® ask their home buyers to sign.

The Real Estate Council of Ontario (RECO), a public agency formed to protect consumers and regulate the industry, introduced guiding principles mandating that REALTORS® ask their buyers to sign a Written Representation Agreement at the earliest possible time.

When choosing representation, home buyers have the option to sign either a Buyer Representation Agreement or a Buyer Customer Service Agreement. 
Buyer Representation Agreement ( B.R.A )

The Buyer Representation Agreement ( B.R.A ) signifies that for a designated period of time, the buyer has engaged a specific REALTOR® firm to work exclusively on his or her behalf at finding a property. The agreement confirms the REALTOR®’s commitment to make his or her best efforts for the buyer.

The Buyer Representation Agreement in plain language. ( pdf version )

Real Estate and Business Brokers, Act 2002 clearly distinguishes between a client and a customer. A customer is someone who has entered into some form of service agreement with a brokerage but is not represented by that brokerage. A customer relationship might arise when a buyer seeks selected brokerage services to facilitate a transaction, while not wanting advice from the salesperson or broker during the process. A customer must be clearly differentiated from a client. 

By signing the Buyer Customer Service Agreement the buyer acknowledges the Broker has provided him/her with written information explaining agency relationships including Seller Representation, Buyer Representation, Multiple Representation and Customer Service. 

Examples of buyer's represented as a customer.

1. A buyer calls the listings brokerage and ask for the representative to show the property, but do not enter into a Buyer Representation Agreement. In this case the Brokerage and their representatives are working for the seller's best interest pursuant to the representation agreement created with the Agreement of the Purchase and Sale document.

2. A buyer calls a REALTOR®. to show a property that is not listed by the REALTOR® brokerage and the buyer does not enter into the Buyer Representation Agreement with the brokerage. In this case the REALTOR® is working as a Sub-Agent for the seller and representing the sellers best interest pursuant to the representation agreement created with the Agreement of the Purchase and Sale document.

In both cases the salesperson or broker has fiduciary duties to the seller/client and must act in that client's best interests. To do so, the brokerage representatives performs certain fiduciary responsibilities. While difficult to precisely define, most real estate texts highlight six fiduciary duties: accounting, competence, confidentiality, good faith/full disclosure, loyalty and obedience. In both cases the buyer/customer, while not owed fiduciary duties, must be dealt with fairly, honestly and with integrity.