Agency Law in BC
THE AGENCY RELATIONSHIP
Realtors work within a legal relationship called agency. The agency relationship exists between you, the principal, and your agent, the company under which the individual salesperson is representing you, is licensed. The essence of the agency relationship is that the agent has the authority to represent the principal in dealings with others.
Agents and their salespeople are legally obligated to protect and promote the interests their principals as they would their own.
Specifically, the agent has the following duties:
- Undivided loyalty: The agent 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 an agent's hands while acting for the principal.
You can expect competent service from your agent, knowing that the company is bound by ethics and the law to be honest and thorough in representing a property listed for sale. Both buyer and seller can be represented by their own agents in a single transaction.
DUAL AGENCY:
Dual agency occurs when a real estate agent is representing both buyer and seller in the same transaction. Since the agent 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 dual agency 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:
A. The Agent will deal with the Buyer and the Seller
impartially;
B. The Agent will have a duty of disclosure to both the Buyer and the Seller except that;
· The Agent 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 Agent will not disclose the motivation of the Buyer to buy or the Seller to sell unless authorized by the Buyer or the Seller;
· The Agent will not disclose personal information about either the Buyer or the Seller unless authorized in writing;
C. The Agent will disclose to the Buyer defects about the physical condition of the Property known to the Agent.
WHEN THERE IS NO AGENCY RELATIONSHIP:
You may also choose to use the services of a REALTOR without having any kind of agency relationship. This might occur, for example, when you are being shown a property by the seller's agent.
The REALTOR 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
YOUR RESPONSIBILITIES AS A BUYER OR SELLER:
As a buyer or a seller, you should:
- Carefully read all documents and understand what you are signing.
- If you need special or expert advice, seek other professionals such as lawyers, notaries, accountants, home inspectors, contractors, engineers and surveyors.
DEFINITIONS:
The Agent:
is the real estate company under which the individual salesperson who is representing you is licensed.
Realtor:
is often used interchangeably with Licensee, Real Estate Agent or Salesperson and in B.C. is licensed under the Real Estate Act. A REALTOR can use the term REALTOR if he/she belongs to a local board or association that enforces a strict code of ethics.
The Buyer:
is often referred to as the Purchaser.
The Seller:
is often referred to as the Vendor.
The Principal:
is someone who has engaged an Agent to act for and on his or her behalf either to buy or sell a home.
This information has been designed to explain various types of agency relationships and to help you understand what it all means. If you are still unclear about these concepts, feel free to contact me for a complete guide to WORKING WITH A REAL ESTATE AGENT! Or talk to legal counsel.
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