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Professional Standards Manual

Notice of Change: Information in this manual will be changing when new rules about disclosures and dual agency take effect on June 15, 2018. Please check back for up-to-date information about agency and disclosure obligations. Learn more about the new rules.

Trading Services

1. Practice Standards

(b) Agency - View Entire Section

(X) Duty of Disclosure by a Limited Dual Agent

Limitations to a licensee’s usual duties and obligations may be agreed to that permit the licensee to represent clients who have conflicting interests. As noted above, under section 3-3.1 of the Rules, this agreement must either be in a written service agreement, such as a Limited Dual Agency Agreement, or preceded by written disclosure. The agreement must indicate the duties that have been modified and how they have been modified, and the duties that have been made inapplicable.

When acting as a limited dual agent for a buyer and a seller, the licensee’s duty of full disclosure is modified to allow the licensee to keep information in three areas confidential:

  • the price or other terms a client is willing to accept or pay (other than what is contained in the offer);
  • the motivation of either client; and
  • either client’s personal information.

The licensee is also required to deal impartially with both clients, and must disclose to the buyer any known material latent defects affecting the property (see section 5-13 of the Rules).

Licensees entering into limited dual agency contracts with clients often do so by using the Limited Dual Agency Agreement made available by their real estate board. In order to avoid potential misunderstandings, and prior to acting as a limited dual agent, licensees should review with each party the limitations placed on a licensee’s usual duties by this contract.

In cases where a licensee is acting as a limited dual agent in a situation other than for a buyer and a seller, the limitations with respect to disclosure by the licensee will change. For example, where the licensee is both the strata manager and the listing agent, the limitation may be that the licensee will not disclose the personal or otherwise confidential information about either the strata corporation or a strata lot owner unless authorized in writing. Similarly, when a licensee is both the agent for the seller and the mortgage broker for the buyer, the limitation may be that the licensee will not disclose any personal information to the seller about the buyer.

An important point for brokerages and their related licensees to keep in mind is that their clients must agree to the limitations placed on a licensee’s usual duties before the licensee acts as a limited dual agent.

Additionally, licensees must keep in mind that the limited dual agent is still the agent of both parties and, subject to the limitations agreed to by the clients, must ensure that full disclosure respecting the subject matter of the contract is made to both clients. In addition, any action taken by the licensee in regard to the trade must be consented to by both parties.

As a limited dual agent, a licensee who is acting on behalf of both clients should remember the key elements to correct conduct as a limited dual agent:

  • impartiality;
  • disclosure; and
  • consent.

Limited dual agents have a duty to treat the buyer and the seller impartially, and other than the exceptions set out in the Limited Dual Agency Agreement, they must disclose everything material to both the buyer and the seller.

Remember, the test of what is material is an objective one and if such information is not disclosed, the licensee may face disciplinary and/or civil action.

One of the leading cases regarding disclosure is the decision of the B.C. Court of Appeal in Ocean City Realty v. A&M Holdings Ltd.

In that case, the Court of Appeal stated that:

The duty of disclosure is not confined to these instances where the agent has gained an advantage in the transaction or where the information might affect the value of the property or where a conflict of interest exists. The agent certainly has a duty of full disclosure in such circumstances, they are commonly occurring circumstances which require full disclosure by the agent. However, they are not exhaustive.

The obligation of the agent to make full disclosure extends beyond these three categories and includes ‘‘everything known to him respecting the subject matter of the contract which would be likely to influence the conduct of his principal, or … which would be likely to operate on a principal’s judgment’’. In such cases, the agent’s failure to inform the principal would be material non-disclosure.

The Court of Appeal emphasized that an agent cannot arbitrarily decide what would likely influence the conduct of their principal and thus avoid the consequence of non-disclosure. If the information pertains to the transaction with respect to which an agent is engaged, any concern or doubt that the agent may have can readily be resolved by disclosure of the facts to their principal.