Getting Started

Before we can represent you and start helping you find buyers or properties, there are some administrative matters that are now required by law for us to go over with you. 

So please take a few minutes to read and acknowledge the below information.

This will help us speed us the process, so we can focus our energy on the more important part of the buying or selling process.

The information are for buyers and sellers.

Real Estate Council Alberta

Real estate professionals have a regulatory requirement to present and discuss this Guide with you.

Understanding the legal relationship with your real estate professional

Buying or selling a property is probably one of the most important financial decisions you'll make. This Guide explains the different relationships you can have with a real estate professional. Each has its own legal meaning and responsibilities, so it's important to understand them. A real estate professional must give you this Guide and discuss it with you.

What this Guide explains

There are 3 kinds of relationships you can have with a real estate professional.

1. A real estate brokerage* can act as your agent. This is called a common law agency relationship and it includes all brokerage real estate professionals and staff. ie. All the members in the brokerage works as a team to work for you.
2. An individual real estate professional can act as your agent. This is called a designated agency relationship.
3. You can be a customer to a real estate professional.

The Guide also explains what happens when the buyer and seller have the same agent.

* A brokerage is the organization your industry professional works for.

Choosing to have an agent (also called an agency relationship)

An agent is someone who acts on your behalf with your permission. If the agent is an individual, the agency relationship is between the individual and you. If the agent is a brokerage, the agency relationship is between the brokerage and you. When you appoint an agent, you'll be asked to sign a written agreement that explains both the agent's responsibilities and yours.

An agent’s responsibilities to you

A sole agent acts for either the buyer or the seller in a trade or possible trade, and has a duty to protect that client's interests. In this relationship, the real estate professional has the highest level of legal responsibility to you. These responsibilities include:

1. Undivided loyalty.  The agent must act only in your best interests and put them above their own and those of other people. The agent must avoid conflicts of interest and must protect your negotiating position at all times.
2. Confidentiality.  The agent must keep information confidential, even after your relationship ends. Confidential information includes your personal information, information about the property, and information about the transaction (except information the law says must be disclosed or information you agree to disclose).
3. Full disclosure.  The agent must tell you, in writing, about the services they will provide. They must also tell you everything they know that might affect your relationship or influence your decision in a transaction, even if they don't think it's important. This includes any conflicts of interest, for example when they act (or are planning to act) on behalf of any other person in a transaction. The only information they can't give you is confidential information from another agency relationship.
4. Obedience.  The agent must obey all your lawful, reasonable, and ordinary instructions. If you insist on something unlawful, the agent must refuse and consider ending your relationship and the agreement.
5. Full accounting. The agent must account for all money and property they receive while acting on your behalf. Everything a client puts in the care of an agent - for example, money, keys, or documents - is returned when the agreement ends.

Your responsibilities to the agent

YOU MUST:

• give the agent any information or facts that could affect the transaction or their ability to act as your agent.
• pay the fees you've agreed to pay your agent. Your written agreement will list these fees.
• pay the agent's expenses as outlined in your agreement.

Having a customer relationship with your real estate professional

You can choose to represent yourself in a purchase or sale when a real estate professional represents the other party. In this case, you have a customer relationship with the real estate professional. They can't give you the services they give when acting as your agent, but they can help make the purchase or sale happen. For example, they may agree to give you statistics or the names of appraisers, mortgage brokers, or other service providers. They may also help you complete standard forms. When a real estate professional works with you as a customer, they have a responsibility to act honestly, use reasonable care and skill, and make sure any information they give is correct.

CONFLICTS OF INTEREST - WHAT HAPPENS WHEN THE SAME AGENT REPRESENTS THE BUYER AND SELLER

In some cases, the same real estate professional or brokerage represents both the buyer and the seller. The people involved can decided to handle this several ways:

1. Either the buyer or the seller can get a different agent.
2. The buyer or the seller can stay with the same real estate professional, but in a customer relationship. The professional can give information and help without acting as an agent. See having a customer relationship with your real estate professional.
3. The agent can help facilitate the transaction, without acting in the interest of either side. This means the professional has reduced agency responsibilities to the buyer and seller. All parties must understand and agree to this change of relationship in writing, before either side presents or accepts the initial offer on the property.

WORKING ON THE TRANSACTION, NOT FOR ONE SIDE OR THE OTHER

When the agent facilitates the transaction, their responsibilities are to:

• be impartial in dealing with both sides
• not give confidential advice, support only one side, or use judgment or discretion that benefits one side over the other
• give both sides real estate statistics and information, including comparable property information from listing services and local databases
• give you agreements of purchase and sale, lease, and other relevant documents, according to your instructions
• promptly give you all offers and counter-offers to and from the other side, even if there is already a contract to buy or sell the property
• pass on all information to you that the other side wants you to know
• keep you informed of progress
• do anything else to serve bother sides, as long as the agreement with each side allows it

Making an informed choice about your relationships

Your real estate professional must explain the responsibilities and limits of these relationships to you. To review:

• A real estate brokerage can act as your agent.
• An individual real estate professional can act as your agent.
• You can be a customer to a real estate professional.
• In a conflict of interest when the buyer and seller have the same agent, a real estate professional can facilitate a transaction between two sides with their permission.

The Real Estate Council of Alberta is the standards-setting, governing body for real estate, mortgage brokerage, property management and real estate appraisal professionals.

Real Estate Council of Alberta 350, 4954 Richard Rd. SW Calgary, AB T3E 6L1. 1(888) 425-2754. info@reca.ca. www.reca.ca.

Call us to discuss it now.

780.800.9939

Signing that you've read and understood this Guide

Are you a seller?

If you are a seller, please also read the Discussion Guide.

Exclusive Seller Representation Agreement

(For use in Common Law Brokerage)

Overview

As of July 1, 2014, Rule 43 of the Real Estate Council of Alberta requires that all industry members use a written service agreement, such as the Exclusive Seller Representation Agreement (ESRA) (formerly called a listing contract), to establish client relationships. The following key discussion points will help you ensure your clients understand the ESRA.

To assist your discussion, specific clauses in the ESRA are included in brackets. Further understanding of the form can be found in the ESRA Explanatory Form.

IMPORTANT:

When you, the seller, sign the ESRA,  the seller will acknowledge that the seller have read it and have had the opportunity for independent advice. The seller shall not sign an agreement that wasn't read. The seller can download the ESRA in advance here, before the meeting so the seller can read it and prepare questions for us to answer.

Discuss the Benefits of a Written Service Agreement

Why a Written Agreement?

ritten details of services offered and the rights and obligations of the parties help to reduce confusion and misunderstanding. The ESRA provides clear terms that strengthen and clarify the relationship. Review the document with the seller client and explain that their signature means they have read and agreed to its terms and that they have had the opportunity to obtain independent advice.

Discuss Roles

The ESRA sets out the roles of the brokerage, the Realtor® and the seller.

• Ensure the seller has reviewed RECA's Consumer Relationships Guide (17.1(b)).
• Review the brokerage responsibilities (2.1 and 3).
• Review the details of any other services offered (4.2).
• Include a discussion of how you will handle conflicts of interest (8).
• Measure the client that their personal information will be protected (10.5 and 11.2).
• Review the seller's responsibilities and representations (5 and 6) and discuss the importance of open communication between both of you (5.1(c)).
• Discuss the seller's responsibility to advise you of offers made or received (5.2 and 11.1).
• Review the indemnification clause. Here, the seller agrees to pay for claims or lawsuits against the Brokerage and its representatives as a result of their reliance on the seller's information (12).

The Property and MLS® Services

Know the property and describe it properly.

• Confirm address and legal description (1.1). Check the title and tax notices.
• Discuss attached and unattached goods and carefully detail what the seller wishes to be included and what is not included (1.1).
• For Condominium and Country Residential, ensure proper schedules are attached and the appropriate box is ticked (1.1).
• Discuss the price to be asked and advise the seller to obtain advice about GST (1.2).
• Discuss the requirement and importance of getting a current RPR (5.1(a)).
• Clearly discuss material latent defects and the seller's requirement to disclose them (13).
• Discuss the benefit of the MLS® system and the requirements for listing on the system (4.1).
• Advice how the listing and sales information will be used (10).

Discuss The Fee

Sellers usually know there will be a fee. They must understand how the fee works.

• Describe your fee and how it will be shared with the buyer's brokerage (9.1 and 9.2).
• Detail when the fee must be paid, including the circumstances where the buyer was introduced during the term of the ESRA (9.3) and where the buyer forfeits (9.8).
• Describe when the fee is not payable (9.6).
• Describe what deposit funds are and how they will be handled by your brokerage. Explain how the deposit may be applied toward the fee (9.4).
• Expense reimbursement requires agreement on the expense items and how you will substantiate them (9.7).
• Explain the brokerage's right to encumber the property for money owed under the ESRA (9.9 and 9.10).
• Review the types of other fees that may be paid and your responsibility to disclose and obtain your client's consent (9.11).

Contract Details

Pay attention to the details - a contract must be clear and complete.

• Discuss how and when the agreement will end (2.2 and 15).
• Accurately describe the parties, both Brokerage and the Seller (18 and page 1).
• Number the agreement in the upper right. Ensure this number is included on any schedules, addendum or attachments, so that it is clear those documents relate to this agreement.
• Ensure additional terms are clearly stated (14). Claire that any terms not included do not form a part of the ESRA (16.5) and any changes or attachments to it must be initialed (16.1 and 16.2).
• Explain the methods for document delivery and communication and the risks involved (18.2).
• Review the section on electronic signatures (18.3).
• After you have reviewed the contract, obtain initials on the bottom of each page and have it properly dated, signed and witnessed in the Signature section.
• Provide the Seller with a copy and obtain their initials to confirm you have done this.

Disclaimer: AREA's Discussion Guides are intended to assist Alberta REALTORS® in developing client relationships. They should not be relied upon for legal advice. REALTOR® are responsible to ensure their activities comply with the Real Estate Act and Rules, their local board rules and the policies of their brokerage.

Feb/2014

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