1. The Agency Relationships
CHAPTER 13 & 14
The Agency Relationships

2. Agency
Relationship between a salesperson and client is referred to as master/servant relationship
An official agent is always a brokerage
Agency = relationship between client and brokerage
Salesperson is always intermediately
Client is a Master, we are a Servant
We deal with two kinds of people
Customer
Client
Everyone is a customer but only someone who has signed an agency agreement is a client
Brokers/salespersons deal with clients and customers

3. Agent’s Duties Regulatory duties: Fiduciary duties = COGA:
We owe general, fiduciary and regulatory duties to clients
We only owe regulatory duties to customers
Regulatory duties:
Due care
Ethical treatment
Duty to disclose material facts (which impact customer) – full disclosure is the most important duty
Fiduciary duties = COGA:
Competency and confidentiality
Obedience
Good and faithful
Accountability and loyalty

4. Agent’s Duties
Law is the most important duty, followed by loyalty followed by COGA
Nothing is more important than client duties except the law
Loyalty is most important duty after legal duties
Following this is COGA

5. Client’s Duties Indemnification Remuneration
Clients are responsible for any loss to their property as long as we are acting within granted authority
We are not liable unless we are acting unlawfully
Remuneration
We are entitled to remuneration for the work we do

6. Creation of Agency There are 5 ways to create agency Express Agreement
Written agreement (more common) created immediately between broker/salesperson once signed/executed
Oral agreement would be a customer. There is no signed agreement.
Ratification
Agency initially created verbally but agreed in writing (ratified) at a later point
For instance, unauthorized salesperson shows house and drafts offer. The seller may ratify the offer even though they did not authorize the salesperson earlier

7. Creation of Agency Estoppels Conduct
This occurs when the client (principal) acts in such a way that the third-party believes that another party (the agent) has authority to act on behalf of the principal
E.g. A seller suggests to a prospective buyer that a brokerage has authority to negotiate and sign an Agreement of Purchase on their behalf when in reality the brokerage house and seller have no agency agreement
It commonly occurs when an old client or customer refers a new customer to you, who may believe that you are representing them

8. Creation of Agency Implied authority applies to all four relationships
Operation of law
This typically applies through some kind of necessity, i.e. when an emergency like a foreclosure occurs
Implied authority applies to all four relationships
Express agencies must be specifically stated or written down, but implied authority can be derived from existing facts and circumstances
E.g. Client and brokerage act in such a way to imply that they have an express agreement, even though no formal agreement between them actually exists

9. Creation of Agency Examples
If a salesperson goes to a customer and explains the agency, including how we get paid, if the customer wishes to become a client and signs an agreement, this becomes an express agreement
If customer says he wishes to buy a house, to show him a few houses after which he will sign for one, this is initially verbal and later written and so it is a ratification
If someone refers a customer to you and the customer tells prospective buyers of the property to negotiate through you, this is estoppels conduct
If customer comes to you saying bank has threatened to take their home, you list it immediately to prevent them from losing their equity and relationship created via operation of law
Implied can exist in any of the four kinds of creation if the agent, intermediately or principle act in a way to imply existence of agency agreement

10. Types of Agencies Multiple Representation (Dual Agency)
Occurs when two clients are represented by same brokerage
Co-operating Brokerage
Occurs when two clients are represented by two different brokerages
Single Agency (Single-representation)
When a client and customer are represented by same brokerage
This ensures maintaining of loyalty because only one party is involved in transaction
Multiple representation/dual agency creates problems because one brokerage represents both parties
Breach of loyalty happens when another’s interests are given preference over your client’s interests (clients duties are more important than anything except law)

11. Types of Agencies Sub-agency Unintended multiple representation
1 customer is represented by 1 brokerage while 1 client is represented by another brokerage
If your brokerage represents the customer, then your brokerage owes the other brokerage’s client general, fiduciary and regulatory obligations
Unintended multiple representation
This occurs when 2 customers are represented by the same brokerage

12. RECAP
X lists a property and a buyer from Y Realty submits an offer and signs customer agreement with Y Realty
X is listed, Y is customer
There are 2 brokerages, 1 client and 1 customer which means this is a sub-agency
If X works with both buyer and seller, it is an unintended dual agency and not a dual agency because we were not told if the person is a client or customer
In absence of knowledge of any written agreement, we assume that the person is a customer

13. Termination of Agency Mutual consent / release Revocation Expiry
Both parties agree to terminate the contract
Revocation
Either party may revoke the contract
You may be able to sue for revocation but specific performance of contract unlikely since court will not force buyer to buy or seller to sell
Expiry
The agency contract may expire if the contract was made to last only a fixed period of time

14. Termination of Agency Performance Impossibility
The purpose of the agency has been completed and the client has purchased or sold their property
Impossibility
Contract becomes impossible to performance – e.g. the house listed burns to the ground
Death/Mental Incapacity/Bankruptcy
Registration Cancellation
Brokerages terminated by RECO