Dual Agency Transactions in Real Estate

In the legal profession lawyers are prevented from acting on both sides of the profession. This is because it is not possible to do the best for one client without sacrificing the interest of the other client. Yet in real estate the same ethical standards do not apply, and a realtor is legally permitted to be the mediator rather than an advocate in a dual agency or multi-representation scenario.

According to the Real Estate Council of Ontario (RECO) real estate agents are required to explain to clients what would happen in a multiple representation scenario at the time of signing the listing agreement. If the Realtor finds a buyer, both the buyer and seller must be informed in writing that the realtor is representing multiple parties. All parties must also consent in writing at that time. If one of their parties refuses to have dual representation then the agent must release one of their clients to seek representation with another brokerage.

Furthermore, the realtor must make this disclosure at the earliest available opportunity before the offer is made. RECO still requires realtors to operate fairly and ethically when engaging in dual agency transactions, but they do not have the obligation of protecting their customer’s best interests.

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