Representation Agreement vs. Buyer Customer Service Agreement

Under Ontario regulations, if you are buying or selling, real estate salespeople are required to inform you of the available types of services that can be offered. They are required to do so as soon as practically possible. Salespeople are further obligated to obtain a written acknowledgement that the various services have been explained and disclosed. For this purpose salespeople typically use a form in Ontario called The Agency Relationship. This form reviews:

1. Seller and Buyer Representation 2. Multiple Representation, 3. Customer Service and 4. Sub-Agency

As a next step, the salesperson must attempt to obtain a signed Representation Agreement or a Customer Service Agreement.

Most buyers and sellers prefer the Representation Agreement; they want the client relationship, due to its more extensive brokerage obligations. In short, the brokerage will protect and advocate a client’s interests, give advice and disclose all pertinent information available about the other party to a transaction.

In return the client agrees to work exclusively with the brokerage through the salesperson. Written seller listing agreements create an exclusive client relationship and most sellers have little trouble understanding this.

A Buyer Agreement also creates a client relationship with the brokerage. The client agrees to work exclusively with and buy through the Brokerage for an agreed upon period of time. Some buyers don’t fully understand the exclusive nature of this client relationship and this can sometimes lead to complications.

What if you sign a Buyer Customer Service Agreement or prefer to sign nothing (a rare occurrence)? In either case you are a customer, not a client. You’ll be treated fairly and honestly but are not owed the more extensive fiduciary duties reserved for clients.

A customer can become a client if the salesperson, through words or actions, creates what is called an Implied Client Relationship. A salesperson has a duty to give a customer complete and accurate information.

Yet once a salesperson gives a customer advice he creates an implied client relationship, which carries greater obligations. A salesperson, for example, can give you the customer information about sales similar to the home you are interested in. But if he advises you on the home’s value he has gone beyond the customer obligations and has created an implied client relationship.