Service Agreement - Buyers Working with Common Law Brokerages
Purpose: This bulletin explains exclusive and non-exclusive buyer representation agreements. Guidance is provided regarding mandatory content and minimum requirements.
This bulletin applies to the real estate brokers, associate brokers and associates.
Are written Buyer Representation Agreements mandatory?
Yes. Effective July 1, 2014, all industry professionals trading in residential real estate must have a written service agreement with all clients.
What is the difference between an exclusive and a non-exclusive buyer representation agreement?
In an exclusive buyer representation agreement, the buyer agrees to only use the services of that brokerage to represent and assist them in purchasing a property.
In a non-exclusive buyer representation agreement the buyer may use the services of multiple brokerages at the same time. The buyer can enter into multiple non-exclusive buyer representation agreements.
Does a written service agreement have to be an exclusive right to represent?
No. The type of representation needs the consent of the buyer and brokerage. Consumers should make an informed choice about the type of relationship they wish to have with a real estate professional. They should also understand the implications of the options available to them. Additionally, real estate professionals should have a clear understanding of their obligations.
When a client agrees to enter into a written service agreement, are there specific forms I must use when representing a buyer?
The answer to this question will depend on two factors:
- will you be representing a buyer who is interested in a residential property?
- will you be entering into an exclusive buyer representation relationship?
If the answer to BOTH of these questions is “yes”, the agreement must contain the mandatory content as contained in RECA’s Exclusive Buyer Representation Agreement. That Agreement is on RECA’s website under Industry Professional Tools.
If the service agreement does not relate to residential real estate OR is non-exclusive, you are not required to use the mandatory content. However, written agreements must meet the minimum requirements of the Real Estate Act Rules (Rules). RECA’s sample non-exclusive buyer representation agreement is on RECA’s website.
Can a brokerage change the mandatory content in an Exclusive Buyer Representation Agreement?
The industry professional must not directly or indirectly change this mandatory content. In addition to the mandatory content, additional content may be included. This added content must not alter the meaning or effect of the mandatory content and must not alter the obligations or requirements of industry professionals. At the request of a client, industry professionals may amend the forms by having the parties agree to and initial the changes. If a different form is used, the form must contain the mandatory content.
Practice tip for Non-Exclusive Buyer Representation Agreements
Industry professionals may use the forms posted on RECA’s website under Industry Professional Tools. These forms meet the minimum standards as set out in the Rules.
Alternatively, a brokerage may decide to develop its own non-exclusive buyer representation agreement. Brokerages may include additional terms and/or clauses as appropriate for their chosen business model and the needs of the consumers they represent. These agreements must meet the minimum standards as set out in the Rules.
- Real Estate Act - section 1(1)(w.1)
- Real Estate Act Rules – sections 43(2), s.44(1), s.48, s.5(1)(2)(3), s.56, s.58, s.60.1, Schedule 1