Transferring Brokerages: Practice Tip
| August 01, 2019
Advice from your Real Estate Practice Advisor, Kristian Tzenov
Transferring brokerages can be an ordinary and natural step in an industry professional’s career.
An industry professional may decide to transfer between brokerages for many reasons, such as moving to a new community, gaining new experience, leaving a tense work environment, or opening one’s own brokerage.
Regardless of the reasons behind your decision to transfer brokerages, you are expected to comply with the Real Estate Act, Rules, and Regulations at all times. This can seem tricky, especially with your active service agreements or even trades in progress. How can you complete a negotiation when your service agreement is with one brokerage, but you’ve transferred to another? Are they still your clients? Can you just take your clients with you?
If you follow the legislation, and understand that they are not YOUR clients, they are the brokerage’s clients, everything becomes clear.
So, what should you do?
To avoid confusion when transferring brokerages, and to ensure consumer confidence in the industry, you—as a licensed industry professional—must:
- only trade in the name of the brokerage with which you are registeredIn other words, the professional must trade in the name of their current brokerage, even if they intend to transfer to another brokerage immediately or in the near future.When you do transfer brokerages, your clients and their service agreements do not transfer with you. They are the brokerage’s clients.
- have the permission of your current brokerage before approaching clients about transferring brokeragesYou must also ensure the client understands with whom they are entering into a contract at the time of signing by having the parties clearly written on the contract.
If your clients agree to work with you at your new brokerage, your brokerage will need to agree to end the client’s current service agreement, and the clients must enter into new service agreements with your new brokerage. You CANNOT simply change the brokerage name on your existing service agreements.
Written service agreements and contracts must all clearly indicate the legal agent involved in the contract with the consumer.
All pertinent agent information, including the brokerage, must be on the documents at the time of signing. This means you cannot have your clients sign service agreements with the brokerage portion left blank in anticipation of you transferring brokerages.
What about my client’s deposit?
For active deals with clients who agree to move to your new brokerage, money held in trust must be dealt with. If clients moving to your new brokerage have deposits being held in trust by your current brokerage, you must arrange for those deposits to be transferred to your new brokerage’s trust account, the other party’s brokerage’s trust account, or somewhere else as directed and agreed to, in writing, by the clients.
Above all, you are required to act honestly in all dealings where you are representing the real estate industry in Alberta. Acting with honesty and integrity builds both consumer confidence in, and cooperation with, the industry.