Agency should be first and foremost on the mind of every licensee.
You can be the agent for the seller, or the buyer, or offer no agency. But the oft-forgotten and scariest form of agency is implied agency — where in your words or conduct an agency relationship is formed with an unrepresented party to a deal (often a buyer).
The biggest danger of implied agency is that you may be found to be an agent without even knowing it. During the time you’re deemed to be an implied agent, you owe that consumer the same fiduciary duties as you owe a client — disclosure, confidentiality and loyalty. Even scarier… you can be found to have breached those same duties when you didn’t even know you owed them!
The best way to avoid implied agency is to stay in your lane and not go beyond the very limited assistance you can provide to an unrepresented party in a transaction.
Resources to help you avoid implied agency
The consumer information section of BCFSA’s Disclosure of Risks to Unrepresented Party form entitled “Not a client? Know the Risks” sets out a checklist of what a licensee can and cannot do in providing that limited assistance:
“This real estate professional can only provide you very limited services. Because this real estate professional must be loyal to their client and work in their client’s interest, they can only give you limited assistance.
They cannot:
-
- ✗ give you advice on an appropriate price
- ✗ give you advice about any terms and conditions to include in a contract
- ✗ negotiate on your behalf
- ✗ share any of their client’s confidential information with you, like:
- their minimum/maximum price
- their reason for buying/selling/leasing.
- ✗ protect your confidential information
They can:
-
- ✓ share general information and real estate statistics
- ✓ show a property and provide factual information about the property
- ✓ provide you with standard real estate forms and contracts
- ✓ fill out a standard real estate contract
- ✓ communicate your messages and present your offers to their client”
The Disclosure of Risks to Unrepresented Party form is intended to avoid problems in communication and implied agency by ensuring the consumer:
- is aware of the risks of being unrepresented in a real estate deal
- knows the limits of any assistance you can offer them
- is advised to seek professional advice and consult another licensee.
Avoid trouble by staying in your lane
When you are already acting for someone in a transaction — typically a seller in these scenarios — you need to be careful dealing with unrepresented parties. Before providing any information to those consumers, you must make disclosures as well as provide the required disclosure forms. Most importantly, you must not go beyond your limited role in your dealings with unrepresented parties: doing so is a recipe for becoming an implied agent.
One common risky scenario occurs when you’re acting for a seller and an unrepresented buyer asks you for help beyond the limited assistance you can offer them. Let’s say the buyer wants your advice on what subject clauses they should include in their offer. If you provide this advice, you may have become an implied agent for that buyer.
An even more risky scenario is when you’re acting for a seller at the same time as you’re assisting a buyer who wants to see and potentially buy your listing. Even when you’ve provided your clients with the “Resolving conflicts of interest between clients: Understanding your options” form and obtained a signed “Agreement Regarding Conflict of Interest Between Clients” allowing you to continue to act for one client, this is a difficult position to be in and raises the risks of potential implied agency and conflict allegations.
Acting for the continuing client while armed with confidential information from the released client that you cannot share or use can be tricky.
Avoiding implied agency: A how-to guide
Beyond common sense, the best ways to avoid finding yourself in an implied agency situation are by:
- Discussing the nature of the relationship with unrepresented parties from the beginning
- Discussing, disclosing and documenting the relationship using the BCFSA Disclosure of Risks to an Unrepresented Party form before providing any assistance
- Ensuring your activities stay within the limited range of assistance that you can provide an unrepresented party
- Ensuring you recommend all unpresented parties seek their own representation from another licensee.
Stay safe and use common sense. When it comes to agency, never forget who you act for.
