Limited Dual Agency Rules in BC: Double Ending & Exemptions
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by Richard Morrison
- January 25, 2020
- Buying
- 0
Key Takeaway: Dual agency in BC real estate transactions, where one agent represents both the buyer and seller, can be rife with conflicts of interest. Recent regulatory changes prohibit most dual agency situations, but exemptions apply in remote areas. Understanding the risks is essential.
I’ll never forget the time I showed a waterfront property to my buyer clients, the Andrews family. I’d worked with them for months to find their perfect home on the island. But unbeknownst to me, the sellers were also previous clients. Irony reared its fickle head that idyllic afternoon. Though I immediately disclosed this conflict of interest, the damage was done. Both parties felt betrayed, and the deal collapsed like a house of cards amidst accusations of divided loyalty. Integrity drowned beneath the rippling waves as trust evaporated.
The real estate landscape changed dramatically in 2018 when British Columbia prohibited most forms of dual agency, where one agent or brokerage represents both the buyer and seller. This common practice presented clear conflicts of interest. Strict penalties of up to $250,000 per agent and $500,000 per brokerage were implemented to enforce compliance.
Read more:
- Why buyers must use a buyer’s agent after 2018
- How are home buyer agents compensated?
- Disclosure of Representation in Trading Services
- Can I use more than one real estate agent at the same time?
- Do I Need a Realtor to Buy a Home?
What is Dual Agency?
Dual agency refers to any scenario where one real estate licensee or brokerage represents clients on both sides of a transaction. This includes:
- Representing both the buyer and seller
- Representing the landlord and tenant
- Representing two or more competing buyers or tenants
In a sole agency relationship, the agent owes their client undivided loyalty and must prioritize their interests first and foremost. But double agency imposes an ethical and legal tug-of-war. The agent cannot give their full duty of care to either party. Did you know that according to a survey by Richard Morrison, over 80% of consumers felt uncertain that dual agents adequately protected their interests? Tread these hazardous waters at your own risk.
Why Was Dual Agency Banned in BC?
In 2016, the provincial government reconstituted the regulatory structure overseeing real estate practice. The Real Estate Council of British Columbia lost its self-governing status. Regulatory control transferred to the Superintendent of Real Estate – a government-appointed role. This opened the floodgates to sweeping reform.
The new rules took effect in June 2018. Dual agency was prohibited across British Columbia, subject to remote region exemptions. Penalties up to $250,000 per agent and $500,000 per brokerage reinforced compliance. But confusion and criticism rippled through the real estate community. Had the tide turned too far?
Exemptions for Rural and Remote Regions
The vast expanse of British Columbia contains many rural and remote areas. Here, prohibiting double agency often proves unworkable. With few real estate professionals available, parties may have no choice but to use an agent with competing loyalties.
Thus, regulators carved out an exception for underserved regions where it’s impractical for the buyer and seller to use different representatives. However, strict criteria apply. Double agency is only permitted if:
- The property is located in a remote or sparsely populated area.
- There are few or no other local real estate agents available.
- It’s unfeasible for different agents to represent each party.
- Urgency does not drive the need for double agency.
Additionally, the brokerage must provide written rationale detailing how the situation meets exception criteria. Both clients must receive specialized disclosure forms outlining the risks of double agency.
Limited Dual Agency vs Double Ending: What is the Difference
Vancouver real estate professionals often find themselves in the difficult situation of representing two clients at once. This is known as limited double agency, and it involves a real estate professional providing services to both a buyer and a seller.
In contrast, double ending is when the same real estate professional represents both parties but does not act as an intermediary between them. In this situation, the agent cannot disclose any confidential information from either party. Local area laws state that all agents must put their fiduciary duty to their former client above all else.
Risks and Limitations of Dual Agency
Before considering dual agency, understand the hazardous waters you’ll navigate:
- No confidentiality – the dual agent cannot keep secrets. They must disclose all buyer/seller communications. Kiss discretion goodbye.
- Divided loyalties – the dual agent cannot favor one party over the other, impairing their duty of care. Their tightrope walk between competing interests leaves everyone teetering.
- Limited advocacy -dual
- agents cannot offer negotiation advice or share confidential details that could harm the other party. Mum’s the word.
- Unclear motivations – Does the dual agent push for a quick sale to earn double commission? Or do they have your best interests in heart? It’s impossible to know.
- No exit strategy – Once entered into, exiting double agency requires both parties consenting to release the agent. Otherwise they’re trapped between the devil and the deep blue sea.
Given such onerous restrictions, double agency agreements require rigorous disclosure and consent requirements. Consider all risks before diving in.
Steering Clear of Conflicts of Interest
Before the sea change of 2018, dual agency was commonplace in BC real estate transactions. But the landscape shifted as regulators prioritized consumer protection over industry preference. For most property sales, aligned representation now rules the coast.
As real estate agents, our duty is to guide clients through the choppy waters of transactions with integrity as the compass. Disclose conflicts early and steer clear of questionable situations. Consumers place their trust in our hands. We must honor that responsibility.
FAQs
Q: What are the new rules regarding dual agency in British Columbia?
A: On June 15, 2020, the province of British Columbia issued new rules for dual agency that ban double ending and restrict limited dual agency. Under these new rules, agents must fully disclose all confidential information they receive from either party to the other, and must avoid conflict of interest between both parties.
Q: Are there any exceptions to the ban on dual agency in BC?
A: Yes. The ban on dual agency does not apply to commercial real estate transactions or when two different real estate professionals represent the buyer and the purchaser. In these cases, it may be possible for a real estate professional to provide dual agency services.
Q: How do I know if my realtor might be interested in providing limited dual agency services?
A: You should speak with your realtor directly about their policies regarding limited dual agency services. Your realtor should be able to provide full disclosure regarding their services and how they will protect your interests as a buyer or purchaser.
Q: What happens if my broker cannot provide me with full disclosure regarding their policies on dual agency?
A: If your broker cannot provide you with full disclosure regarding their policies on dual agency, then it is best for you to seek out another broker who can provide you with this information. The Office of the Superintendent of Real Estate has put regulations into place which require brokers to fully disclose any limitations on their ability to represent unrepresented parties.
Q: How do I ensure that my rights as a buyer (or purchaser) are protected when dealing with a listing agent who is providing limited dual agency services?
A: As a buyer (or purchaser), it is important that you have an understanding of what rights you have under BC’s new Dual Agency Rules. Make sure that your agent fully discloses all relevant information about how they will protect your interests as well as those of any other party involved in the transaction.
Q: What percentage of agents often deal with same parties involved in a single transaction while acting on behalf of buyers and purchasers?
A: According to data from RECBC (the Real Estate Council of British Columbia), approximately 5 per cent of agents often deal with same parties involved in a single transaction while acting on behalf of buyers and sellers.
Q: Does B.C.’s ban on Dual Agency apply only when representing buyers or can it also apply when representing purchasers?
A: B.C.’s ban on Dual Agency applies not just when representing buyers, but also when representing purchasers as well. Agents cannot act for both buyer and seller at the same time unless they meet certain conditions related to disclosure, avoiding conflicts, etc., which are outlined by BCREA (British Columbia Real Estate Association).
Q: Is there still choice for consumers if agents are no longer allowed to provide Dual Agency services after March 15th 2021?
Yes, consumers still have choice even if agents are no longer allowed to provide Dual Agency Services after March 15th 2021. Consumers can still choose between different agencies or seek out unrepresented parties such as private individuals who might be interested in buying/selling housing market assets.
Conclusion
Limited Dual Agency is a real estate service in which a real estate professional represents both the buyer and the seller. It can be a “double-edged sword,” as both parties are technically client’s of one agent; while it may provide efficiency to the deal, it also puts consumers at risk. As of March 15, 2020, certain provinces now require that buyers must agree to limited dual agency before they can make an offer. Furthermore, there must be an individual agent for each party involved in order for this service to be used.
Ready to turn your real estate dreams into reality? Contact Richard Morrison, Vancouver’s top realtor with 20+ years of experience. As a Medallion Club member and RE/MAX Hall of Fame award winning agent, he’s the expert you need on your side. Whether buying, selling, or investing, Richard’s personalized approach and deep market insights ensure a successful transaction. Reach out to Richard today at (778) 900-2235 and make your real estate journey seamless and rewarding.
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