Suggested best practices for teamwork

More and more brokers are joining forces to offer their services under the “Team” formula. This is not simply a matter of co-listing, but rather a team structure in which each member plays a role. Practising real estate brokerage as part of a team requires a measure of vigilance to ensure that all the real estate brokers involved abide by their ethical obligations.

Here is an overview of the best practices arising from the Real estate Brokerage Act (REBA) and applicable regulations that the OACIQ suggests that you put forward to avoid situations of non-compliance with your ethical obligations, including the following:

• Protecting and promoting your clients’ interests (15 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising [RBR])
• Acting loyally toward your client (21 REBA)
• Protecting the client's personal, confidential and strategic information (15, 31 à 34, 88 RBR)
• Avoiding conflicts of interest (2 RBR)
• Providing all explanations necessary to understand and assess the services rendered by the licensee (78 RBR)
• Avoiding confusion in representations and advertising (113 RBR)

Applying legislation and regulations in a team context

Each licensee is responsible for complying with his ethical obligations, including those mentioned above, even when working as part of a team. Therefore, in accordance with the REBA and its regulations:

1. A team is made up of at least two licensees (a single person cannot form a team) (78 and 113 RBR)
2. A team is a sub-group of estate brokers belonging to the same agency (11 REBA, 78 and 113 RBR)
3. Only OACIQ licensees can be members of a team. Employees, assistants or other business partners who are not OACIQ licence holders must not lead others to believe that they are authorized to practise real estate brokerage (124 REBA)
4. Team members are all tied to the same real estate agency–a team cannot be made up of members from different real estate agencies (11 REBA)
5. Team members may belong to only one team at a time (78 and 113 RBR)

Informing clients

Under the regulation (78 RBR), the broker should provide all explanations required for understanding and assessing the services he renders, such as:

• The fact that he works as part of a team
• His role within the team and that of his teammates
• The fact that remuneration is shared among team members from the remuneration provided for in the brokerage contract (36, 38, 40 RBR)
• The status of the brokerage contract in the event of changes in the composition of the team depending on the circumstances (24 to 26 RBR)

Representation of the parties

1. The members of a team collectively represent the team’s clients (e.g. if a brokerage contract is signed by the team with a seller, all the team members will be representing the seller), this is what is usually offered as services and benefits to consumers.
2. Under the prohibition on placing oneself in a conflict of interest (2 RBR) and case law, members of the same team may not represent the buyer and the seller in the same transaction if, for instance, they have received strategic or confidential information about the seller or if they are otherwise disloyal to the seller who has signed a brokerage contract with the team, since they are placing themselves in a conflict of interest, which is prohibited.
3. And what about double representation? The rule prohibiting double representation applies under section 29.1 of REBA.) whether or not you work as part of a team. However, if the ethical obligations are respected, including the fact that the member of the team wishing to represent the buyer has not received strategic or confidential information about the seller, double representation would exceptionally be permitted with the buyer's written consent (17 RBR). Standard clause 1.15 NOTICE REGARDING THE EXCEPTION APPLICABLE IN A SITUATION OF DOUBLE REPRESENTATION was designed for this purpose.
   
   IMPORTANT : Remember that each licensee is responsible for complying with his ethical obligations, mentioned above. Using the exception to the double representation ban set out in section 17 of RBR, in the context of a team, is a risk factor that should not be overlooked. The real estate broker must not have received any strategic or confidential information about the seller, must not be disloyal to the seller who has signed a brokerage contract with the team, and therefore must not place himself in a conflict of interest.
4. When a buyer does not wish to be represented, the members of a team will then treat that buyer fairly (14 and 15 RBR).

Team name ads

 5. The agency’s name must predominate over the team’s name in all forms of representation and advertising (113 RBR).

Brokerage contract

In the "Team" formula, the agency is represented not by a single broker, but by a team as a whole, which must be expressly mentioned in the brokerage contract.

Here are the important things to keep in mind:

• It is the agency name and the establishment address that must be indicated in the first section of the brokerage contract ("Identification of the parties")
• In addition, in the "represented by" section, the team’s name and the licence number of the agency representative and team leader must be indicated
• In the section "carrying on activities within the following business corporation," it is necessary to check and indicate the name of the business corporation, if applicable
• Under the "Signatures" section of the brokerage contract form, the agency representative and team leader must affix his electronic signature
• Alternatively, the team leader could give power of attorney¹ to other team members to represent him in the signing of the brokerage contract. It should be noted, however, that the other obligations and duties of the team leader and team members under the regulations are not diminished or altered by such a power of attorney; they remain the same

POWER OF ATTORNEY - TEAM CONTRACT

I, the undersigned, [name of agency representative and TEAM leader], [address], hereby designate [name of licence holder – team member] [licence number], [address], as my mandatary.

I hereby give my mandatary the power to sign and/or amend the real estate brokerage contracts identified with the name of the team ______________________.

I understand that, despite the signing of this power of attorney, I remain responsible for my obligations and duties under the Real Estate Brokerage Act and its regulations. The obligations and duties of other team members are in no way changed or reduced as a result of this power of attorney.

This power of attorney expires on ____________________

Signed in [city], on _____________________

_______________________________________________

[Name of agency representative and team leader]

[Licence number]

Duty to inform the client: respective responsibilities of team members

The client dealing with a team needs to know what responsibilities each member has.  It is essential to ensure that the client fully understands the specifics of how the team he will be dealing with operates before signing the brokerage contract. (78 RBR)

When communicating with many team members, the client may wonder who he should consult for information or advice. It is therefore crucial to clarify each member’s role at the outset. Providing the client with a brochure or a link to a website that describes the roles and duties of each team member is a good practice when signing the brokerage contract.

For example, here are some tasks that can be performed by either one of the team members:

• The initial exchange with the client
• The market value analysis
• The signing of the brokerage contract
• The taking of measurements and photos
• The showings and post-showing reports
• The drafting of a promise to purchase with the buyer and
• negotiations

It is all the more important to properly inform the client when he chooses to do business with a team because of the identity of a particular member within the team (e.g. family relationship, friend, reference, etc.). Indeed, the client must be well aware of the consequences that could result from the member’s departure or cessation of activities. Being well informed helps avoid possible imbroglios and misunderstandings and allows for a better understanding of the respective obligations.

As stated in the Regulation respecting brokerage requirements, professional conduct of brokers and advertising (c. C-73.2, r.1), should a change be affecting the agency or the signatory of the contract (team leader), the client must be formally notified in writing.² This would not apply in case a team member, who has not signed the brokerage contract, changes agency or status.

Remember that the notice must expressly state:

• The client's right to continue doing business with the agency or team leader who is now acting on his own account or for a new agency or
• The client's right to terminate the brokerage contract

Team - seller's broker

In the "Team" formula, the entire team represents the seller. This is what is usually offered as services and benefits to the seller Since the licensee represents the party to which he is bound by brokerage contract, if the name of a team member appears on the brokerage contract to sell, in a brochure or on the team's promotional website as a contact person for the seller, this team member cannot act as the buyer’s broker for the immovable concerned. As for the team members, the rule prohibiting double representation applies under section 29.1 of REBA, whether or not they work as part of a team. If the ethical obligations are respected, including the fact that the member of the team wishing to represent the buyer has not received strategic or confidential information about the seller, double representation would exceptionally be permitted with the buyer's written consent (17 RBR). Standard clause 1.15 NOTICE REGARDING THE EXCEPTION APPLICABLE IN A SITUATION OF DOUBLE REPRESENTATION was designed for this purpose.

IMPORTANT : Remember that each licensee is responsible for complying with his ethical obligations mentioned above. Using the exception to the double representation ban set out in section 17 of RBR, in the context of a team, is a risk factor that should not be overlooked. The real estate broker must not have received any strategic or confidential information about the seller, must not be disloyal to the seller who has signed a brokerage contract with the team, and therefore must not place himself in a conflict of interest.

But can a team member draft a promise to purchase for the buyer? Yes, just like a broker working alone. In this situation, the Act stipulates that the broker has an obligation to inform the buyer that he does not represent him, that he represents the seller but will provide fair treatment to the buyer. The buyer who is not bound by a brokerage contract remains free to deal with a broker of his choice at all times.

Duties of team members

Confidentiality

Whether they are representing the seller or the buyer, team members who have access to confidential and strategic information about the client must respect this confidentiality.

Putting a property on the market

Remember that the broker must, when his client wishes to use an information listing service for an immovable, list the immovable with this service without delay. It is forbidden to start putting the property on the market before listing it on the information listing service.

In the case of the Brokerage contract – Sale, this means that team members will have to wait for this dissemination before taking any steps with potential buyers.

Real-time information sharing  

A team’s structure must allow for the same information to be disseminated without delay to each team member where required. This is to ensure uniform sharing of information between the team members and the parties to the transaction.

This information must be entered on the appropriate documents and kept, as required, in the agency’s records, books and registers. This practice helps avoid errors. Let us take the example of a property for sale for which, following building inspection, a defect is discovered and added to the previously completed Declarations by the seller of the immovable form. If, in the meantime, another team member drafts a promise to purchase using the previous version of the Declarations by the seller of the immovable form, the file will not be compliant.

The use of a “collaborative space” accessible to all team members can be an effective solution since it provides real-time access to new information about a property. In addition, to avoid any problems, the information must be easily accessible and promptly relayed to other team members and to the other party's broker.  It should be noted that this approach limits the possibility for a team broker to consider applying the double representation exception because of the confidential information shared.

Obligations toward collaborators – appoint a contact person

There is some confusion when it comes time to presenting a Promise to purchase on a team listing. Brokers often wonder which team member they should contact. The team leader? The broker whose name appears on the listing? The broker who confirmed the visit or the one who opened the door?

It is good practice to include the name of a contact person for the team in the publication on the information listing service. This way, the buyer's broker will know exactly to whom he should send his request, whether it is a request for a visit or for the presentation of a Promise to purchase, for example.

Conclusion

Although teamwork is a business model for many brokers, it is crucial that the parties (seller and buyer) be clear at all times as to who represents whom, and that a party who is not represented be informed of that fact. All brokers involved remain bound by their ethical obligations, and the jurisprudence confirmed that the team model cannot be invoked as an excuse for shirking one’s responsibilities. In other words, brokers must choose their partners with great care, as the latter’s errors could have an impact on their own careers.

¹ The power of attorney must comply with the general rules relating to the mandate in the Civil Code of Québec (s. 2130 and following). The mandator may revoke his power of attorney before the end date indicated therein. He must then consider notifying the third parties and stakeholders concerned to prevent them from continuing to deal with the mandatary (s. 2181 C.C.Q.). You may use the document suggested by the OACIQ or your own template as long as all essential information is included.
² In accordance with sections 24 and following of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising (c. C-73.2, r. 1)