Written Service Agreements for Consumers
Buyer Representation Agreement
(For Use In Common Law Brokerges)
As of July 1, 2014, Rule 43 of the Real Estate Council of Alberta requires that all industry members who establish a client relationship when trading in residential real estate, use a written service agreement, such as the Exclusive Buyer Representation Agreement (EBRA), to establish client relationships. Written service agreements help ensure the role of an industry professional is clear, and when clients are better informed, there is less confusion.
Written service agreements help industry professionals clearly and confidently communicate with clients about:
- The relationship between the parties.
- The services to be provided by the brokerage.
- The obligations and responsibilities of the parties.
- Consent for collection, use and distribution of personal information of the client.
- Method of calculation of remuneration or how the industry professional will be compensated.
Negotiating the terms of your contract.
Consumers can negotiate the specific terms of the written service agreement they sign, in fact, you should never sign an agreement that has terms with which you don’t agree or do not understand. These are:
- The duration of the agreement.
- Whether it’s an exclusive or non-exclusive agreement.
- The remuneration (if any).
- Services to be provided.
- Clauses for early termination of the agreement.
Terminating your Agreement
All written service agreements must contain provisions for ending the agreement, though the specific clauses are negotiable between the client and the real estate professional.
Maybe, for example, you want to include a clause in the agreement that says it will end automatically if you lose your job. These are discussions you need to have with your real estate professional.
Parties to a written service agreement can terminate the agreement early, but the non-terminating party may be entitled to damages, costs incurred or other agreed upon remuneration.
If you’re thinking about terminating your agreement early because of the conduct of your real estate professional, the best thing you can do is discuss your concerns with your real estate professional, and/or the professional’s broker. If you still aren’t happy with the situation, talk to a lawyer to determine whether you can terminate the agreement for cause and what the consequences may be if the brokerage does not agree.
Working with more than one real estate professional
If you’re a buyer who doesn’t want to commit to working with a single real estate professional/brokerage, you have the option of a non-exclusive agreement.
In a non-exclusive buyer representation agreement, you, as the buyer, may use the services of multiple brokerages at the same time. You can enter into multiple non-exclusive buyer representation agreements.
In an exclusive buyer representation agreement, you, as the buyer, agree to only use the services of that brokerage to represent and assist you in purchasing a property.
Buyer representation agreements contain blank spaces for the buyer to fill their search criteria – indicating the property type and the market area. The market area could be as specific as a single street or neighbourhood, or it could cover an entire city. It’s up to a buyer to accurately describe and indicate the type of property you want to buy.
If you want to work with more than one real estate professional as a client, you will have to sign a buyer representation agreement with each – just make sure that you’re signing non-exclusive agreements, and that the terms of the search criteria don’t overlap. You could have an exclusive agreement for your search for a two bedroom condo in Northwest Edmonton for under $300 000, but any other exclusive agreement with other real estate professionals need to be for different property criteria or in a market area.
Some real estate professionals may not be wiling to enter into a non-exclusive agreement with a buyer client and that is their choice, but this does not mean that you have to deal with them.
Amending an existing agreement – transaction brokerage
You may encounter a situation where you need to amend your existing buyer representation agreement because the services your real estate professional can provide is changing. This is what happens when you want to make an offer on a home and real estate professional is also representing the seller. Now what?
Your real estate professional will represent you with the option to proceed in transaction brokerage. Transaction brokerage is a model of concurrent representation, which allows an industry professional to work with a seller and buyer in the same transaction. In transaction brokerage, the real estate professional becomes a facilitator and treats the buyer and seller in an even-handed, objective and impartial manner. The real estate professional will no longer be able to provide advice to you or the seller, but can facilitate a transaction between the two parties.
If you don’t want to proceed with transaction brokerage because you prefer to work with a real estate professional who will act solely in your best interests, your real estate professional will give you the option of ending your buyer representation agreement. You can then have a different real estate professional represent you.
In either of these cases, you need to amend your buyer representation agreement to reflect the change in relationship. Transaction brokerage has its own documents and if you’re going to be the client of a different real estate professional completely, you will sign a new buyer representation agreement with them.
Buying or selling a home without a real estate professional
Consumers who want to buy or sell homes on their own behalf – without hiring a licensed real estate professional to assist them – are free to do so. Consumers are not required to use the services of a licensed real estate professional when buying or selling property, but they do have more protection and safeguards available to them if they hire a licensed professional to assist them in their home purchase or sale.