The Code of Ethics of the Canadian Real Estate Association requires its members to explain the nature of their relationship with all parties whom they contact in connection with a real estate transaction.

Before a Buyer or Seller enters into a discussion with a real estate salesperson or broker regarding a real estate transaction, the Buyer and the Seller should understand what type of relationship or agency representation they have with the real estate company.

The purpose of this document is to provide information about the various relationships which are available through real estate agents to persons who are considering the purchase, sale, exchange or rental of real estate.

The AGENT is the real estate company (the Broker), its branch offices and all of its salespeople.

The CLIENT is the party who contracts for an Agent to act on behalf of that party to assist with either the purchase, sale, exchange or rental of real estate.

The CUSTOMER is a person who receives services from another person's Agent.

There are two types of agency relationship: single agency and dual agency.

• Single agency exists when an agent exclusively represents either the Seller or the Buyer.
• Dual agency exists when the same agent represents both the Seller and Buyer in the same transaction.

The Seller (single agency) Under the Listing Agreement the listing broker and all its sales representatives act as the agent for the Seller, not the Buyer. The co-operating broker and all its sales representatives also owe loyalty and other duties to the Seller as sub-agents of the listing Broker.

The Buyer (single agency) Under its Agreement with the Buyer, the co-operating broker and all its sales representatives act as the agent for the Buyer. The co-operating broker and all its sales representatives owe loyalty and other duties to the Buyer, not the Seller, and are not sub-agents of the listing broker. The listing broker and all its sales associates continue to act as agent for the Seller.

Both Seller and Buyer (dual agency) Dual agency is permitted only when disclosed and with the knowledge and prior written consent of both parties. Disclosed dual agency limits the ability of the real estate company and its representatives to act on behalf of either party fully and exclusively.

Dual agency may create a conflict for the real estate company because the agent's duties of confidentiality, full disclosure, and total loyalty to one party may conflict with the same duties owed to the other party.

Generally, the listing and co-operating brokers are the agents of the Seller. Their fiduciary duties of loyalty and faithfulness are owed to their client, the Seller. While neither broker is the Buyer's agent, they are able to provide buyers with a variety of valuable market information and assistance in the decision making process.

For example, a real estate broker representing the Seller can:

• provide a buyer with information about available properties and sources of financing
• show available properties and describe their attributes and amenities to buyers
• assist buyers in submitting an Offer to Purchase

Both the Listing Broker and the Co-operating Broker are obligated by law to treat both buyer and seller honestly and fairly. They must:

• present all offers to the Seller promptly
• respond honestly and accurately to questions concerning the property

If you choose to have real estate broker represent you as your agent, you should:

• enter into a written contract with the real estate company which clearly establishes the  obligations of the parties
• ensure that the agreement specifies how your agent will be compensated