Agency Relationships in Alberta Real Estate

As a member of the public who is simply making an inquiry on a property to purchase, you are deemed to be a “customer” of the brokerage.  As you have not agreed to become a client of the brokerage, the real estate practitioner is not in a position to express any opinion or give advice , and may only  provide you with factual information which will assist you in making an informed decision in order to  facilitate a real estate transaction. 

As a customer, you are deemed to have the necessary skill and knowledge required to be able to instruct your agent as to the terms and conditions of a real estate purchase, since by law he is not in a position to give you any direction, or make recommendations in this regard.  Suffice to say if you have no written agreement you are a Customer, not a client of the brokerage. As such the agent is not legally obligated to act in your best interest in order to facilitate a sale, but must still act honestly, exercise reasonable care, hold money in trust, and comply with the Real Estate Act of Alberta – as they relate to their dealings with you.

A client relationship carries a much higher level of protection for the consumer.   As a client, you are entitled to certain rights and obligations, such as the agent advocating on your behalf with respect to a transaction and subsequent negotiations, which cannot be extended to customers.  As a client, your industry member will also have certain benefits and fiduciary obligations and duties to you.  There is a major differences between facilitation and advocacy.

Written service agreements will clarify the type of relationship they have with you as early on in the relationship as possible, to ensure that there is no misunderstanding as to the type of relationship you wish to have with your agent.  If you have indicated that you do not wish to enter into a written Representation Agreement, you should not expect to receive any services which are normally extended only to clients such as receiving any advice or opinions. At some point if you wish any services normally provided to clients only,  a customer will have to enter into a Representation Agreement and become a client of the brokerage.

Effective February 4th, 2014, Written Service Agreements for both sellers and buyers are mandatory by real estate industry members who are representing “clients” of  Designated Agency brokerages.  These written agreements, referred to as Representation Agreements clearly outline the role which exists between the member and the public.

The video below was created by the Real Estate Council of Alberta and explains the difference between the two types of relationships.  They explain that while a written  “Customer” Status Acknowledgment (not to be confused with Client Representation Agreement) is not mandatory, it is highly recommended.  This does not change their requirement for the agent to obtain a written Client Representation Agreement.

Types of Agency Relationships

Real Estate agents who do not enter into a discussion about agency relationships, and the type of relationship that you would like to have with them, as well as what type of service they are providing, as soon as possible when there is any hint of a continuing relationship may be doing you a disservice.   While the agent may be able to “skirt” the issue for a while, consumers who have not clarified their relationship status as soon as possible may have little protection later on.

This is not to suggest that one must enter into a Representation agreement based on a request to view a single property(s).  If the relationship goes much beyond that however, or if the customer requires any opinion, advocacy, direction or judgment from the Agent, the need to enter into  a written Representation Agreement would be indicated.  Many REALTORS® no longer even show properties without first having conducted a buyer interview and entering into a representation agreement.

Given the broad diversity and sheer number of Real Estate Agents, some agents not entirely versed on the topic or lacking the confidence or communications skills required to approach the subject, may prefer to defer the topic until the very last moment.   This may be at the time an offer is being penned, or worse, later, saying that it is required for the file.  In these cases, it would be very difficult to prove later on, what type of relationship you had with your agent since it was not clarified at the onset, and the timing will be very suspect.

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