To many, the term - dual agency means that a REALTOR® represents both the buyer and the seller in the sale of the REALTOR's® listing. This is only partially true. Buyers and sellers, via representation agreements, become clients of a brokerage - the agent. You, as a client, are not solely linked to the REALTOR® with whom you are dealing because you have essentially hired all of the brokerage's REALTORS®. Dual agency comes into play when a brokerage represents two or more clients in the sale/lease of one property. As long as two or more buyers or, buyer and seller are represented by the same brokerage and not necessarily by the same REALTOR®, dual agency exists. To better reflect this, legislation renamed it multiple representation.
It is very important that you understand this before you sign any real estate agreement.
The common law of agency requires a REALTOR® to negotiate first and foremost in the client's best interest - that is - to the client's sole benefit. Legislation by which we are governed whitewashes this with the stipulation that where there is dual agency, the dual agent(s) must remain neutral so as not to favour the position of one client over the other. As a guideline, it prohibits us from providing certain agency rights our clients would be otherwise afforded.
In other words, dual agency clients cannot have the benefit of negotiation tactics and strategy - two very important reasons why you would hire a REALTOR®.
Let me put it in perspective. REALTORS® are required to know everything about the properties we sell; to disclose that which needs to be disclosed and to put the contract together as per our client's instructions and in their best interests. The terms contained within are a binding agreement that will often extend post-closing. Prior to closing, the contract goes to the respective lawyers who follow the contract in order to close the deal. This contract is what they will act on for their clients and, any issues with possession when challenged in court will revolve around the contract - our wordings.
Let it be known - the courts object to dual agency and even our codes of ethics guard against it. But none speak against it so eruditely as does the Law Society of Upper Canada...
Circa 2009 a prohibition against lawyers acting on behalf of both buyer and seller except in rare instances was issued. The position is that buyer vs seller issues arise at closing or thereafter and therefore the lawyer's hands must be clean of conflict of interest.
Since, it is deemed a potential issue for lawyers to represent both parties in an already agreed to contract, there is absolutely no plausible reason why REALTORS® penning the contract should consider their contribution to be on more solid ground.
There are many REALTORS® and buyers and sellers who don't see this as an issue. But! I do!
I did dual agency once, after coming out of the gate as a newly minted REALTOR® dead set against this practice, I relented 17 months later. I was listing representative, the deal even involved multiple offers where my buyer's offer prevailed fairly. The other two offers were also treated fairly and both buyer and seller clients were 'represented' neutrally. Closing took place as scheduled without changes to the agreement of purchase and sale and despite all this the exercise made me aware that: 1) at least one party will still expect you to take a side; 2) I didn't like the fact that when representing my clients my hands were tied because of protocol.
I felt special too - look at me, I sold one property and collected both commissions!
From that day forward I decided that I would not represent more than one party. I like my clients way too much to give them neutrality.
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