Agency. Who is your Agent working for?

• "Agency" is a well-established concept in our lives, backed by common law. Sometimes it's described as the 'principal-agent' relationship.
• An agency relationship exists when one party takes on a fiduciary responsibility for acting on behalf of another.
• Fiduciary means that loyalty, care, good faith, and putting the principal's (or client's) interests above the agent's is required

In practice, this shows up everywhere: lawyers & clients, financial planners & clients, CEO/directors of companies & shareholders, and even to some degree with doctors & patients. One of the most common examples is the relationship between real estate agents and their clients.

In the context of real estate in British Columbia, real estate sales and marketing are heavily regulated, and the BC Financial Services Authority (BCFSA) is charged with administering, regulating, and interpreting legislation for real estate sales in BC.

To help clarify these relationships, BCFSA has produced several standard forms to explain agency and how a licensee's (REALTOR®) roles, responsibilities, and duties vary depending on whether you're a client (agency relationship) or a non-client (no agency relationship).

The form 'Your Relationship with a Real Estate Professional' (https://drive.google.com/file/d/1zJJHGaLjDUW9hXWN8t4YgCqQKWtbRQmG/view?usp=sharing), previously called 'Disclosure of Representation in Trading Services' (and was often referenced as DORT), does a good job on the first page of explaining the differences between being a client and a non-client.

Loyalty (only acting in the client's best interests), Full disclosure (must tell you everything they know), Avoid conflicts of interest, Confidentiality (must not reveal private information like motivation for buying or selling or minimum or maximum prices).

By contrast, in a non-client situation, the licensee does not owe any special legal duties. There is no duty to loyalty, no duty to full disclosure, no duty to avoid conflicts, and no confidentiality (they must share any information you tell them with their clients in the transaction).

• Representing you as my client
• NOT representing you as a client

There is a line for the licensee to sign and date when the disclosure form was discussed and presented, and then there are boxes at the bottom of the page for the clients or non-clients to initial and acknowledge that they received the disclosure form.

A major regulatory shift happened in June 2018 (shortly after I became licensed), when BC effectively eliminated the practice of limited dual agency, where a REALTOR® could act for both a buyer and seller in the same transaction (there are narrow exemptions allowing for dual agency for very rural or specialized properties).

• Dual agency is still allowed in Alberta and some other jurisdictions.
• The most common example of dual agency would be when the listing agent for a property also represents a buyer for the same property.

What this means today: In most situations in BC, buyers and sellers will each have separate REALTORS®, and each side will be involved in a client relationship with their representative. Additionally, in the case of a real estate team, if one team member forms an agency relationship with a client, then all agents that are part of that team are deemed to be in an agency relationship with that client.

Given these regulations, it is uncommon to have potential buyers be treated as non-clients (also known as an "unrepresented party"). What is more common is that a listing agent may refer a potential buyer over to an independent agent able to provide full agency as a buyer's agent (or the buyer may already know another agent they want to work with).

• An agent is representing buyers, and they submit an offer on a for sale by owner property (in that case, the sellers would be unrepresented).
• An agent has a commercial property listed, and a savvy investor (who is being advised by lawyers and accountants) wants to submit an offer directly with the listing agent.

In those rare cases involving a non-client, the agent can follow lawful instructions and provide limited services (but no advice) to the consumer while fully representing the other party.

The bottom line: Understanding the concept of agency and the roles and responsibilities a real estate professional has with consumers is important.The advice and guidance given by BCFSA is that the "Your Relationship with a Real Estate Professional" form should be provided to a consumer very early on, and some managing brokers and lawyers have suggested almost immediately upon first meeting someone.

Here's the reality: Handing someone a disclosure form and trying to explain the legal concept of agency upon first meeting someone is frankly, awkward.

It isn't how sales or human interactions usually work.

Beyond that, from my experience, it can also be complicated, it is difficult to know right away if there is going to be a real estate relationship.

For instance, in some cases, people might be interested in my listing, which would be a conflict position, so it makes much more sense to refer these people over to an independent buyer's agent. But we might not know that right away. In other scenarios, people might interview multiple agents for a potential listing, and even if we are not successful in getting the listing, by not entering into an agency relationship immediately, we are still free to represent a potential buyer and try to sell the property when it is listed.

I don't believe in jumping in and out of agency, and I take the agency requirements seriously.

My approach: Let's review the information on agency and have a conversation about whether we are a good fit and want to work together!