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What is A Designated Agency?

At Liv Real Estate, every change we make is to offer better value to our clients. When Liv Real Estate switched to a Designated Agency Brokerage in December 2013, we did so to serve our clients in the manner they expect. Essentially, Designated Agency means your agency relationship is with the individual agent, instead of the whole brokerage as it is under Common Law.

As a Liv Real Estate client, Designated Agency is beneficial because you're far less likely to end up in a conflict of interest, where you and the seller have the same representation.

Designated Agency VS. Common Law

Under Common Law, when one associate represents a buyer, and someone else in the same brokerage represents the sellers in the same transaction, there is a conflict of interest because of the concept in law of “deemed knowledge.” Deemed knowledge means that everyone in the brokerage knows everything about every property the brokerage has listed, as well as everything they knew about everyone's clients. This concept conflicts with the reality that REALTORS® want to protect their clients' interests, and also can't possibly know what everyone else in their brokerage knows.

Picture the follow scenario:

One XYZ Realty Associate had a property listed for sale, and two other XYZ Realty Associates wrote offers on the property for clients they were representing. Because XYZ Realty is a Common Law Brokerage, both buyers' agents had to make their clients customers in order to proceed, and the buyers could not have full representation. Under Designated Agency this conflict does not occur, and all three clients could have had full representation from different agents in our office.

Designated Agency F.A.Q.'s

Q. What is the biggest difference between a Designated Agency Brokerage and a Common Law Brokerage?

Under Common Law, if an associate writes an offer for a buyer on a home listed by another associate at the same brokerage, and neither client wants to be treated as a customer, then transaction brokerage applies (formerly known as dual agency). In the same situation under Designated Agency, both agents could fully represent their clients. In brokerages with hundreds of agents, this is a very common scenario.

Q. How do you know whether a Brokerage is Common Law or Designated Agency?

A. You won't, unless they tell you, you ask, or it is explained to you. When it comes time to complete contracts, the forms are different (they say "Common Law" or "Designated Agency" in the title). Otherwise the difference would only be noticed in situations where a representation conflict occurs (see above answer for the difference).

Q. Why aren’t all brokerages designated agency brokerages?

A. Not every brokerage can be for a variety of reasons. Size is one criteria.

Q. Is it better to use a Designated Agency brokerage?

A. If it we didn't believe it was better for our clients, we would not have made the change to Designated Agency. Again you would only notice a difference if a situation arose that there was a conflict in representing you and another party.

Q. Where can I find more information about Designated Agency?

A. www.RECA.ca

Q. What conflicts arise when a brokerage represents two parties in the same transaction?

A. Many conflicts can arise. Industry members owe clients the fiduciary duties of undivided loyalty, full disclosure and confidentiality. So if one associate owes their client those duties, and another associate in the same brokerage owes the same duties to another client in the same transaction, a conflict occurs in a Common Law brokerage. How can we both give full disclosure and confidentiality when we are both deemed to know everything about both clients? Under Designated Agency, I can't share any information about my clients with any other agents, so there is no "deemed knowledge," so we can each fully represent our clients.

Q. Can transaction brokerage (formerly known as dual agency) still occur in a Designated Agency brokerage?

A. Yes, but only when one agent represents different parties in a transaction. Under Common Law, transaction brokerage applies when one agent represents different parties, and when two agents for the same brokerage represent different parties in a transaction.