EXCLUSIVE REPRESENTATION
This form of Agency is fast becoming the norm in virtually all of the real estate transactions in our North American Society because of the rise in popularity of consumerism and simply a more savvy public. Time was, when both listing and selling real estate Agents primarily represented the interests of the owners of property because the Listing contract was the only binding document related to the transaction.
Can you believe that the majority Buyers of real estate had little or no representation unless it was through the personal integrity of the individual Agents they were dealing with at the time?
There has always been a duty of care in dealing with customers that is fundamental in the industry, but the legal duty had always been to the seller.
It is a comment on the prevailing professionalism of the industry through that time to say that for decades real estate traded hands efficiently and profitably for both buyers and sellers under the system where whoever paid the commission was the principal to whom the Agent(s) owed their loyalty and fiduciary duty.
The only obligation any particular Agent had to a any buyer was called a "duty of care'. Legally there was nothing in the Law that tied the Agents to any formal legal responsibility.
Today, all of the real estate Association's "Code of Ethics" clearly state that not only is any member of the public dealing in Real Estate entitled to a choice of representation but in all cases the Agency's who are involved in the transaction must disclose whom they are working for and have written acknowledgement by all of the parties prior to presentation of any offers.
DUTIES
The agent is considered in law to represent the principal and to bring the principal into legal relationships with other parties. The needs of individuals are so complex that, to a large extent, such needs are fulfilled not by their own efforts but by the efforts of others on their behalf. If someone acts on behalf of another, he/she is considered in law to be an extension of that person. The law governing relations between these individuals and other persons is referred to as the law of agency.
Agents owe principals (e.g., clients) their primary allegiance, including such duties as good faith and full disclosure, competence, obedience, and accounting. Classifications and terminology regarding these duties, generally fall under the term fiduciary responsibilities and vary somewhat in printed materials. Fiduciary duties are best explained as follows:
Disclosure
The agent must disclose to his/her principal any information relevant to the transaction in which the agent has been engaged to assist. This includes any facts affecting the value or desirability of the property and all known relevant and material information.
Competence
The agent must exercise a degree of competence when representing his/her principal such as would be expected from an average person in that occupation or profession. In all agency relationships, the law sees the agent as an extension of the principal. Thus, the principal is liable for the agent’s actions. Therefore, the agent will be under a duty to use superior skill and knowledge while pursuing the principal’s affairs. An agent who claims to be a specialist must exercise competence in that specialty.
Obedience
An agent is obligated to obey the principal’s lawful and reasonable instructions, even if the agent doesn’t agree with them.
Accountability
An agent is obligated to account for all monies or property entrusted to his/her care that belongs to the principal, i.e., safeguard any money or documents relative to the principal’s transactions or affairs.
Confidentiality
An agent must not use information acquired as the principal’s agent for any purpose that is likely to cause the principal harm or to interfere with the principal’s business, now or in the future. The duty of confidentiality should not be confused with a real estate professional’s responsibility to disclose known material facts about the property to non-principals. The obligation to disclose such facts, including defects, is based on the professional’s duty to treat all persons fairly and honestly.
Loyalty
The most important duty an agent has toward the principal is loyalty. The agent must place the interests of the principal above all else except the law in carrying out his/her functions as an agent.
Agents owe third parties (e.g., customers) the ethical duty to be honest, the legal duty not to misrepresent, and the responsibility to exercise due care when answering inquiries or giving information. In real estate, the agency relationship can be established between the agent and either the buyer or the seller. The relationship can arise out of an agreement either expressed or implied, or written or oral. Agency relationships should be in writing and real estate brokerages should ensure that all activities fall within the limits of that authority. Agency will be implied when agents treat customers as principals (clients), even though no written agreement/contract exists.
Ask yourself if your last Agent measured up to these standards.
How to CREATE / TERMINATE an Agency.
For more in-depth discussion on choosing an Agent go to Duties Of A Realtor
Back to Top ofc Agency 1o1
|
