Transition to Designated Agency

British Columbia is seen by the organized real estate profession in Canada as a leader in all aspects of the industry, from professionalism to regulation to practice models. Our reputation continues to grow as BC moves toward the first truly province wide implementation of designated agency in Canada on June 1, 2012. In advance of this changeover, it is useful to look back on the roots of this system as they relate to the evolving models of agency used in the province.

In 1994, the real estate profession in BC, and elsewhere across Canada, adopted the assumed buyer agency system. Under assumed buyer agency, the brokerage became the agent of the buyer or seller they represented, and its REALTORS® assumed the same agency obligations.

To address the obvious conflicts that arise when a REALTOR® acts for two clients with opposite interests in a transaction, the system of limited dual agency was also established. In limited dual agency, the seller and buyer agree to the brokerage acting as the agent of both parties—with certain limitations.

Because the brokerage’s agency duties cannot be simultaneously fulfilled for each client, the buyer, seller and brokerage agree that the agency duties (loyalty, confidentiality and disclosure) will be limited. The limitations require the brokerage and its REALTORS® to treat the buyer and seller impartially, and to disclose all material information to both except information related to price, motivation and personal information.

A key feature of the limited dual agency system is that it does not differentiate between (1) a single REALTOR® representing both parties, and (2) two REALTORS® who separately represent the buyer and seller, and who both work for the same brokerage. The brokerage is obliged to treat both parties impartially, and so are all of the REALTORS® in the brokerage. However, over the years, it became apparent that REALTORS® in the second scenario were acting as if they were sole agents for the seller and buyer rather than limited dual agents of both. While this practice is inconsistent with the system of limited dual agency, it is widely accepted by both the profession and the public–which underpins the current adoption of designated agency.

The essence of designated agency is that the brokerage assumes contractual—not agency—duties to the buyer or the seller who engages it. The brokerage agrees to appoint one of its REALTORS® to be the “Designated Agent” for that client, and agrees to appoint other REALTORS® to be designated agents of all other buyers and sellers. The REALTOR® who is appointed to be the designated agent of the individual buyer or seller treats them as their sole client and that designated agent—rather than the brokerage—provides them with the agency duties of loyalty, confidentiality and disclosure. Under this system, none of the brokerage’s other REALTORS® owe any agency duties to the buyer or seller.

It should be noted that the system of designated agency is merely a modification of the system of limited dual agency. It does not affect the system of assumed buyer agency and only impacts transactions where the brokerage and its REALTORS® act for more than one party to the transaction. It is designed to reflect the current commercial practice being followed by brokerages, REALTORS® and the public and little or no change in the day to day practice of REALTORS® is expected.

The implementation plan has so far included a very successful pilot project in Victoria, feedback sessions with Victoria Real Estate Board brokers and the introduction of free broker and REALTOR® workshops across BC with both face to face and webinar formats. It is expected that the provincial changeover will go smoothly. BCREA would like to thank the Real Estate Council of BC and The Real Estate Foundation of BC for their generous financial assistance in support of an effective and smooth move to designated agency in the province. For more information, visit http://web.bcrea.bc.ca/da/

 

 

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