Use of Dual Agency Exemption

Purpose

This guideline will help you understand when and how to use the exemption to the prohibition on dual agency.

If a real estate professional represents two or more clients with competing interests in the same real estate transaction, they are providing dual agency. This includes representing:

• both the seller and the buyer;
• both the landlord and the tenant;
• both the assignor and the assignee;
• two or more buyers, tenants or assignees.

To learn more about conflicts of interest, see RECBC’s information on addressing conflicts of interest with multiple clients.

Practice Guidelines

If you have any questions you should talk to your managing broker, contact a RECBC professional standards advisor and/or get legal advice.

1. Determine if the dual agency exemption applies

In British Columbia, dual agency is prohibited, but there is an exemption that real estate professionals can use in certain situations. Real estate professionals can use the exemption and provide dual agency to clients in remote and underserved locations where it is impracticable for the parties to be represented by different real estate professionals. By using the exemption in these situations, real estate professionals can provide their clients with limited representation when they would otherwise have to be unrepresented.

If you are faced with a conflict when acting for multiple clients in a remote area of BC, your first step must be to consider whether you can use the dual agency exemption.

To decide if the exemption applies to a specific transaction, ask yourself the following questions:

• Are there other real estate professionals and brokerages operating near the property that could provide representation?
  You should try to identify other real estate professionals in the local area who may be available to represent a party in the transaction. You could, for example, try to contact other real estate professionals in your brokerage or other brokerages in the local area to ask if they are available. You may also suggest that your client contact other real estate professionals. For niche properties, you may also want to consider who might have appropriate knowledge.
• Are there real estate professionals in other nearby communities who could provide representation?
  If you cannot identify other real estate professionals in the local area, you should try to identify real estate professionals in other nearby communities who may be available to represent a party in the transaction.
  You may also suggest that your client contact other real estate professionals in nearby communities. When identifying the range of other communities where you might find other real estate professionals, you should consider how far they are located from the property and whether it is likely they would be able to visit the property in person or otherwise be knowledgeable about it.
• Is it feasible to travel to and from the property?
  Does it require significant travel time or special travel arrangements (e.g. by boat or plane charter) to reach the property? You should consider whether public roads or other public access is available. Other travel considerations, such as weather or seasonal factors (e.g. a public road that is closed in winter) may also be relevant.
• Is the transaction urgent?
  Your client may be under time constraints that make the transaction urgent (e.g. access to financing, limited availability) and may limit the ability to involve another real estate professional. You should distinguish urgency from the convenience of completing a transaction quickly.

These questions can help you decide whether you are in a situation in which you can use the dual agency exemption. This list is not exhaustive. You should use your professional judgement to identify other factors that may be relevant, depending on the details of the specific transaction. You can use RECBC’s Dealing with Conflicts of Interest Between Clients Flowchart to help determine whether the dual agency exemption applies in your situation.

If you are not sure whether a specific transaction meets the requirements for the dual agency exemption, speak to your managing broker. You can also contact a RECBC professional standards advisor or ask a lawyer for advice.

Learn more about the steps to take before providing dual agency. Find the Disclosure of Risks Associated with Dual Agency form.

2. Understand your duties in dual agency

As a real estate professional, when you represent clients with competing interests in the same transaction, you can only provide limited duties to both parties. In a dual agency agreement your duties are limited as follows:

Duty of loyalty: You must deal with both clients impartially. You cannot prefer one client’s interests over the other client’s interest. For example, you cannot advise one client on how to negotiate or draft favourable terms.

Duty to avoid conflicts of interest: You must avoid any further conflicts of interest. If further conflicts of interest arise, you must disclose the conflicts to both clients.

Duty of confidentiality: You cannot disclose confidential or personal information about one client to the other client, such as what the other client will pay (or accept) or their motivation, unless you have written permission to do so.

Before you may act under the dual agency exemption you must provide your clients with the Disclosure of Risks Associated with Dual Agency form. Then you must modify your duties to your clients by entering into a dual agency agreement.

If you have questions about the limits to your duties as a dual agent, talk to your managing broker. You can also contact a RECBC professional standards advisor or ask a lawyer for advice.

Managing Broker Considerations

Every brokerage should have policies and procedures on addressing conflicts of interest between clients, including how to use the dual agency exemption.

Before a real estate professional provides dual agency to clients, their managing broker must provide a signed brokerage statement explaining how the transaction meets the requirements for the exemption. Managing brokers should consider the factors described in this guideline when deciding if the exemption applies to a transaction. If unsure, contact a RECBC professional standards advisor for information or ask a lawyer for advice.

The signed brokerage statement, including the managing broker’s detailed rationale, must be given to the client as part of the mandatory Disclosure of Risks Associated with Dual Agency. These sections must be completed before the disclosure is given to the client.

Managing brokers must promptly collect the disclosure from the designated agent, after both clients sign it. They must also send a copy to [email protected] as soon as possible. RECBC collects the forms to track exemption usage statistics and to develop practice guidance for real estate professionals. You will receive only an auto-response acknowledgment of receipt. Managing brokers must keep a copy of the signed disclosure in their brokerage records.

Applicable sections of RESA/Regulation/Rules/Bylaws

Section 3-2(2), Rules [Associate broker and representative responsibilities]

Section 3-3(i), Rules [Duty to take reasonable steps to avoid conflicts of interest]

Section 3-3(j), Rules [Duty to promptly and fully disclose conflicts to clients]

Section 3-3.1, Rules [Modification of duties]

Section 5-16, Rules [Restriction on dual agency in trading services]

Section 5-17, Rules [Dual agency in underserved remote locations]

Section 5-18, Rules [Addressing conflicts of interest when acting for multiple clients]

Definitions

Agency: a type of relationship where the agent has the authority to represent and act for the consumer in dealing with others

Client: in relation to a real estate professional, the principal who has engaged the real estate professional to provide real estate services to or on behalf of the principal

Conflict of interest: a situation where there is a substantial risk that the agent’s representation of a client would be negatively affected by the agent’s own interests or by the agent’s duties to another current client, a former client, or a third party

Confidential Information: any information about a client that is not available to the public. That can include the client’s finances, personal situation, motivations or needs

Dual agency: the representation by the brokerage, in respect of a trade in real estate, of the following:

1. both the seller and the buyer as clients;
2. both the lessor and the lessee as clients;
3. both the assignor and the assignee as clients;
4. 2 or more buyers, lessees or assignees, as clients who have conflicting interests in respect of the trade in real estate;

Unrepresented party (non-client): in respect of a trade in real estate, a party to the trade in real estate who is not a client of a real estate professional for the trade in real estate.