Reminder of representation rules

Some brokers are regularly calling Info OACIQ stating that they “represent both parties to the transaction” and wish to better understand the representation rules.

NOTE: Since June 10, 2022, double representation in the residential real estate field is prohibited. Unless there is an applicable exception, as a broker, you cannot represent both the seller and the buyer (or the lessee and the lessor) in the same transaction.

Who do you represent?

A broker represents the party to whom he is bound by a brokerage contract. If the broker is bound by a brokerage contract to sell, he represents the seller and must protect and promote his client’s interests while providing fair treatment to all other parties engaged in the transaction.

What is a fair treatment? To properly inform and advise the other party, i.e., the buyer if a brokerage contract to sell is signed. The seller’s broker may advise him to include the usual clauses regarding inspection and financing in his promise to purchase, but may not disclose any confidential or strategic information to him, for instance the fact that the seller is in the process of divorcing and would be willing to accept a promise to purchase at a lower price.

When a broker is not bound by a written brokerage contract, he cannot represent a party. Section 26 of the Real Estate Brokerage Act states that any verbal brokerage contract is void (this change is in force since June 10, 2022).  For instance, if a buyer asks a broker to assist him in looking for a property without signing a brokerage contract, the broker must explain that he does not represent him.  The  broker representing the buyer (signed a brokerage contract with the buyer) must also provide fair treatment to the seller, i.e., to properly inform and advise him, but cannot disclose to him, for instance, the highest price that the buyer is willing to pay because this is confidential or strategic information.