Vancouverguy 76 in his post is in this instance is absolutely correct when he states there is no law compelling a consumer to execute a contract engaging the services of a real estate agent, the same as there is no law compelling a real estate agent to accept and act on behalf of a non-client.
There are of course laws relating to how the agent must treat and deal with the public in general and specifically his or her clients with stringent penalties imposed by the regulatory authorities via an administrative tribunal for a breach thereof.
Rather than to delve into the complex matter of agency law, I shall briefly state what I believe are the fundamental and key elements of any professional relationship, primarily whether it is a fiduciary relationship or a non-fiduciary relationship.
LIABILITY
A fiduciary relationship embodies and imposes upon the agent as a matter of the common law of agency the following duties: Loyalty, Obedience, Disclosure, Confidentiality, Reasonable Care and Diligence, and Accounting , together with all the various elements of each duty. An agent in a fiduciary relationship may be held legally and financially liable in the event he or she fails to fulfill all elements of their fiduciary duty to their client, and may result, depending upon the infraction, in prosecution by the regulatory authorities, by a crown attorney on behalf of the crown for a violation of the Provincial Offences Act and/or a violation of the Criminal Code of Canada. Further, the agent may be sued civilly for damages, all of which could involve insurmountable legal costs for the agent and which in most cases is not covered by his or her insurance.
RISK REDUCTION
Therefore, because of the extended liability connected with representing buyers in a fiduciary relationship, some agents prefer to reduce their risks of liability by choosing not to represent buyers, who are known to be the plaintiffs in the majority of litigated real estate actions, but to represent only the sellers, by acting as the sub-agents of the seller’s listing broker.
A non-fiduciary relationship on the other hand, imposes none of the aforementioned fiduciary duties upon the agent and therefore none of the corresponding liability other than to treat the consumer fairly and allows the agent’s to work “WITH†the consumer as a customer, as opposed to working “FOR†a consumer as a client in a fiduciary relationship. In essence, the consumer is without representation and is legally deemed to be self-represented.
INFORMED DECISION
In Ontario, and in order for a consumer to make an “informed decision†the governing Real Estate and Business Brokers Act, 2002 requires an agent to make full and timely disclosure in writing, of the various types of relationships agreements available, together with both the positive and negative factors of each type of relationship, thus enabling the consumer to make an informed decision with respect to whether or not he or she choses to engage the services of the real estate agent and the type of relationship they desire.
In the event the consumer declines to execute an acknowledgement that he or she has been so informed, or to recognize his or her status as a customer as opposed to being a client, a prudent agent would ensure that a registered “non-engagement letter†is mailed to the consumer without delay, the purpose of which is to confirm that the agent is not representing the consumer and to circumvent any future claims of an “Implied Agency Relationship†in which the agent breached his or her fiduciary duty to the consumer. Currently a “Customer Representation Agreement†is basically a formalized non-engagement letter.
Representation Agreement
Over the years, representation agreements have progressed from what was initially a “unilateral agreement of authority†binding only upon the client, namely the seller, to what are now "bilateral agreements" binding upon both client and agent.
Currently, Buyer Representation Agreements or Seller Representation Agreements are clear evidence of a fiduciary relationship between the parties.
Note that a consumer without documentary evidence would find it difficult to successfully sue an agent for an alleged breach of the agent’s fiduciary duty, without such documentary evidence. Further, as in all contracts, the parties can agree to the insertion of a “Termination Clause†by which either party may at their sole and absolute discretion and/or for a specified cause terminate the agreement without liability.
A consumer may wish to consider entering a binding bilateral Buyers Representation Agreement with an added "termination clause" and with the clear understanding that you will not only expect but will demand that the agent fulfill all his or her fiduciary duties to you.
Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information .
. But after a REASONABLE period of time... not after knowing the realtor for two minutes, and not after seven years of realtor-assisted searching! I'm using common sense here.