In the March issue of REM, Albert Teichner wrote:
“For risk management purposes, the Realtor gives ‘no agency’
to the consumer. Contrary to ‘single agency’, no master/servant relationship is
created and the buyers and sellers are not vicariously responsible for any
potential wrong doings of the licensee.”
Where does the risk shift (After all, risk cannot “disappear”)? The seller has the same duties to the buyer
that he had before – disclosure of latent defects, for instance. Truly, how often does vicarious
responsibility occur in a real estate salesperson/client relationship when the
salesperson unilaterally performs misdoing?
I understand that presently if a licensee did something wrong on his own,
such as misrepresent measurements, the licensee will get in trouble and the
licensee himself will be the prime target for a damage claim. Claimants can receive damages from the
licensee and do not need to pursue the client.
By the way, if you know of sample law cases where a Realtor
did misdoing on his own (either intentionally or by mistake) in a transaction
and the end result was the Realtor’s client paying the bulk of damages to the
claimant, I would love to see them – I’m quite interested in this topic.
— Your examples assumed a “double end” situation with the
buyer coming directly to the listing Realtor.
The public looks to Realtors for assistance with finding homes, and Buyer
Agents presently fulfill this role. I
doubt this activity will disappear anytime soon, and in the meantime the vast
majority of transactions will involve two Realtors – one for the buyer and one
for the seller.
In such a circumstance, how can you not help but have agency
imposed on the Realtors? It doesn’t make
sense that there would be two transaction brokers with each one happening to be
dealing primarily with a specific party to the transaction. Express or written agency may not be there,
but implied agency will be the end result.
— In my opinion it is impossible for a transaction broker
to remain unbiased and neutral in a real estate transaction. This is because of the way Realtors are paid –
upon the successful sale of the property.
The only way I see a transaction broker could remain truly neutral would
be if they were paid upon their services being retained. It would be much easier to remain neutral if
you knew you were getting paid for your service whether the home sold or
not. But this method of remuneration is
unrealistic – who would want to pay $15,000 + GST upfront to someone who has
yet to “perform”, or who may not perform at all?
— Who pays the fee?
Would the seller want to foot the entire bill for someone who isn’t even
representing his interests in the transaction?
I’m not sure if buyers would appreciate yet another bill on their
statement of adjustments in addition to property purchase tax, etc, too.
— Does the public want transaction brokers? Sellers want as high a price as possible for
their property. Buyers want to obtain
property at the lowest price possible.
Obviously an innately adversarial situation! I imagine many sellers would not be
interested in the services of a transaction broker (Developers/builders come to
mind) – sellers want to feel their Realtor is making them money with their service,
and they might feel better served by a Realtor who is solely representing their
interests. A Realtor acting as agent is obliged to present their client’s
position at the negotiating table in the most favourable light possible,
whereas a transaction broker required to remain neutral may be unable to
provide this service.
Michael Drouillard, R.I.(B.C.)
Associate Broker
Sutton Group – Medallion Realty
Vancouver
Albert Teichner replies: Thank you for reading my article in
REM and expressing an interest in Transaction Brokerage. It has always been the
case that under agency law, the master/principal was responsible for the
actions of the servant.
There are numerous court cases in which the clients were
found to be vicariously liable for misdeeds of their Realtors. Here are a few:
Brown v. Fritz, B.C. Supreme Court, 1993-07-27, Docket 6995
Betker v. Williams, B.C. Court of Appeal, 1991-12-18, Docket
CA010502
Pavenham Development Corp. v. Sladen, B.C. Supreme Court,
1997-09-11, Docket S5182
Johnstone v. Dame, B.C. Supreme Court, 1995-12-12, Docket
5094
