What is it?

Designated representation permits a brokerage to have multiple clients in a single
transaction, but each must be represented by a different salesperson or broker,
(“designated representatives”). The brokerage is obliged to have processes in place to
ensure that client information is not exchanged between designated representatives.
Designated representatives provide services exclusively to one client in a transaction. The representatives within the brokerage are to be treated the same as representatives from other brokerages. This assists in addressing conflicts of interest.

Why do we need it?

Regardless of the personal integrity of the registrant, an inherent conflict of interest arises when an individual registrant represents more than one party to a transaction, particularly where they are acting for the seller and one or more buyers. A seller representative should be seeking the highest price for the seller they are representing. A buyer representative should be attempting to obtain the property for their buyer at the lowest 4 of 18 possible prices. In RECO’s (Real Estate Council of Ontario) view, it is not possible for one individual to do both at the same time in a single transaction.

RECO provided preliminary recommendations for REBBA reforms to the Minister of
Government and Consumer Services in January 2017. Those recommendations followed a November 4, 2016, CBC Marketplace segment about situations in which Ontario real
estate registrants were allegedly trying to benefit from multiple representation (collection of both the seller and buyer commissions) by manipulating transactions to the detriment of consumers. RECO publicly condemned the conduct of the registrants and committed to developing recommendations to address the practices in question.

In its January 2017 letter to the Minister, RECO recommended that a conflict of interest
provision be added to REBBA, akin to what is in place for Ontario lawyers; that a system
of designated representation be introduced providing for separate representation of clients within a brokerage with appropriate exceptions; that there be standardized mandatory disclosure set or approved by RECO; and that RECO’s enforcement and compliance provisions be reviewed and stakeholders engaged on possible new and enhanced compliance and enforcement provisions.

What will it Look like?

Designated representation permits a brokerage to have multiple clients in a single
transaction, but each must be represented by a different salesperson or broker,
(“designated representatives”). The brokerage is obliged to have processes in place to
ensure that client information is not exchanged between designated representatives.
Designated representatives provide services exclusively to one client in a transaction. The representatives within the brokerage are to be treated the same as representatives from other brokerages. This assists in addressing conflicts of interest.

Will it Happen?

Designated representation will happen in some form.  Will it be the form discussed in this article?  Only time will tell.  The factors that may cause change are complex and include a consumer’s right to choice.  What is your choice?

Stay tuned for the update!

Douglas Pritchard, sales representative DIRECT: 613-558-6683

RE/MAX Affiliates realty ltd., brokerage OFFICE: 613-825-8683

About The Author

Leave a Reply

Your email address will not be published.