What is Multiple Representation
Have you ever been in a Multiple Representation situation? Multiple Representation can occur when a brokerage represents more than one party to a trade. Typically, the brokerage represents the buyer and seller in the same trade, but can also represent more than one buyer.
Proposed Changes Due to Conflict of Interest
Because of concerns raised in 2017 involving a few agents who abused the practice of multiple representation, the government is proposing changes to the rules. Under consideration is the development of new regulations to hopefully minimize the potential for conflicts of interest that can arise when a brokerage represents more than one client in a real estate trade.
Designated Agency is Under Consideration
The government’s proposal is to replace multiple representation with what’s called Designated Representation. In this scenario “a different broker or salesperson,” from the same brokerage, “would have to be designated to represent each client to” the same trade. To explain, if a broker or salesperson is representing the seller and the buyer, the buyer would have to be designated to work with another salesperson from that office. The listing salesperson cannot represent both or vice versa.
Exceptions : Government is proposing the following exemptions to the requirement for designated representation:
In commercial transactions in which clients are represented by their respective lawyers, and
In Longstanding Relationships: When a buyer and seller both have a longstanding relationship with the broker or salesperson and want to continue working with the same broker or salesperson. Conditions are to be specified to allow for such circumstances.
The exceptions Would Change Relationships
So when the parties are exempt from designated representation, the buyer and seller would no longer be clients of the broker. The broker/salesperson role would change from one of “representing each party to facilitating the trade.”
Facilitator Responsibilities Would Also Change
As a facilitator, the broker/salesperson cannot “advocate or provide advice to any of the parties” as under client representation. The salesperson would only be able to “provide certain neutral services, such as facilitating information exchange between the parties, preparing offers and counter-offers at the party’s direction.”
Informed Consent Needed: For a salesperson to represent more than one party, informed consent would be required, as well as confidentiality.
Whether this will solve the problem remains to be seen. The thought of removing consent can also become an issue.
Google REBBA Consultation Paper for full report on proposed changes to the Real Estate & Business Brokers Act, Ontario.