Number 446, May 2011
"LIMITED DUAL AGENCY OR NO AGENCY" THERE IS A DIFFERENCE
A recent case illustrates the pitfalls awaiting brokerages and REALTORS® when choosing to act as a limited dual agent.1
A couple engaged a brokerage and
REALTOR® to assist them in the purchase
of a house (the Grandview property). The
Contract of Purchase and Sale for the Grandview
property was subject to the sale of
their existing house (the Carter property).
The Contract of Purchase and Sale also
contained a clause enabling the seller to
require the couple to remove all of the
subjects in the event the seller received
another bona fide offer. After the acceptance
of their conditional offer to purchase,
the couple listed the Carter property with
the same brokerage and REALTOR® that
represented them in the acquisition of
the Grandview property.
The REALTOR® was approached by an
unrepresented prospective buyer who was
interested in purchasing the Carter property.
The REALTOR® had the prospective buyer
sign a Limited Dual Agency Agreement and
then prepared an offer to purchase the
Carter property. The offer was delivered to
the couple together with the Limited Dual
Agency Agreement. The couple signed the
Limited Dual Agency Agreement, as well
as accepted the offer.
For unrelated reasons, the sale did not complete and the Carter property was eventually purchased by another buyer represented by the brokerage. Upon closing, the couple withheld a portion of the brokerage's commission alleging, among other things, a breach of fiduciary duty by the brokerage and the REALTOR®.
The court found that the REALTOR® had
acted as a limited dual agent in preparing
the offer to purchase before the concept of
limited dual agency had been discussed with
the couple and before they had consented
to the brokerage and REALTOR® acting as
limited dual agents. The court concluded
that the REALTOR® should have obtained
the informed consent of the seller prior to
the preparation of the offer. This breach
resulted in the brokerage's claim for
commission being reduced by half.
Interestingly, the REALTOR® attempted to
claim, at trial, that he did not act as the
agent of the prospective buyer in preparing
the offer to purchase and that the Limited
Dual Agency Agreement was entered into
"out of an abundance of caution." The court
understandably rejected that argument
given the wording of the Limited Dual
Agency Agreement in which the brokerage
acknowledged that it was the agent for
both the seller and the buyer.
In addition to the court's finding as to the
timing of obtaining the seller's consent to
limited dual agency, this case further
illustrates the practical challenges
associated with limited dual agency.
case, limited dual agency could have been
avoided as the buyer was unrepresented
when the REALTOR® was first approached.
The brokerage and REALTOR® could have
declined to provide agency representation
to the buyer and continued to act as the
sole agent of the seller. Given the submissions
of the REALTOR® at trial, it is possible
that is what was intended.
entering into the Limited Dual Agency
Agreement, the brokerage and the
REALTOR® became the agent for the buyer
as well as the seller. This fundamentally
changed the legal relationship the brokerage
and REALTOR® had with both the buyer
and the seller.
Licensees must be aware of the difference
between, and the implications of, acting as
a limited dual agent for an unrepresented
buyer and not providing agency
representation to that buyer.
Bull, Housser & Tupper LLP
| ||1. || Homelife Glenayre Realty Chilliwack Ltd. v. Williams, 2010 BCPC File No. C6297.
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