Co-Listings: What REALTORS® Should Consider When Co-listing a Property #530
CATEGORY: Legally Speaking
TAGS: Co-Listing Fiduciary Duties
Before entering into a co-listing agreement, there are some important items REALTORS® need to consider:
- Will a co-listing be beneficial or detrimental to the seller(s)?
- Which co-listing form is appropriate to use?
- Who do I owe my fiduciary duty to?
Will a co-listing be beneficial to the seller(s)?
Realtors have a duty to act in the best interest of their clients. Before entering into a co-listing agreement, Realtors should consider whether or not it is in the best interest of the seller(s) to have more than one agent list the property.
The answer to the question may depend on the size of the market and area of expertise of the Realtors. The prohibition on acting as a limited dual agent increases the potential for conflicts, and potentially the need to cease acting for the seller(s). By having more than one listing agent involved, the potential for conflicts with past or existing clients increases two-fold. This issue can be further exacerbated when working in a small market or a specialized segment of the market.
Alternatively, having more than one Realtor list a property may increase the marketing efforts and network of potential selling agents. Additionally, it may provide the seller(s) with differing perspectives and approaches to selling the property.
Which co-listing form is appropriate to use?
If multiple Realtors are going to be engaged to list a property, which co-listing form should be used? The British Columbia Real Estate Association (BCREA) recently released two forms for co-listings. The first form updates the existing Co-Listing form – Joint Representation, and the second form is a new form to deal with situations where sellers have opposing interests.
Co-Listing Form - Joint Representation
The first form, the updated Co-Listing Form - Joint Representation, should be used in situations where cooperating sellers are jointly engaging multiple brokerages and designated agents to list their property and represent them. This form should only be used where the sellers have aligned interests. The form can also be used if a sole seller (e.g., only one legal owner of a property) wishes to engage more than one listing agent.
Co-Listing Form - Separate Representation
The new Co-Listing Form – Separate Representation was developed to address situations where multiple sellers, with opposing interests, engage different brokerages and designated agents to represent their specific interest in a property sale. With this form of agreement, each designated agent is only engaged by their specific seller, and not all sellers of the property. It’s especially important to advise sellers to seek independent legal advice before entering into this form of agreement.
Who do I owe a fiduciary duty to?
With any co-listing situation, Realtors must be aware of who their duties, and specifically fiduciary duties, applies to.
Under a Co-Listing Form - Joint Representation, both agents owe their fiduciary duties to all the sellers involved for the property, and this fiduciary duties are jointly owed to the seller(s) by both designated agents.
Under a Co-Listing Form – Separate Representation, each designated agent owes their fiduciary duties to their specific client, however, both designated agents must act reasonably and cooperate with each other in connection to the co-listing. This is addressed in the form under section 1.A.:
…The parties agree to act reasonably and cooperate with each other in connection with the Co-Listing and the sale and marketing of the Property. Without limiting the foregoing, the Brokerages and the Sellers’ respective Designated Agents will promptly share all material information regarding the Property, the Co-Listing, the sale and marketing of the Property; however, the Brokerages and the Designated Agents will not disclose confidential information about their respective clients without prior consent from their clients.
This cooperation means both designated agents will promptly share all material information regarding the property, listing, marketing, and ultimately the sale of the property with each other. Despite the requirement to act reasonably and cooperate, it is important that the designated agents do not share confidential information regarding their respective clients with the other co-listing agent without the prior consent of their client(s).
Co-listings can create opportunities as well as questions for Realtors. Before entering into a co-listing agreement, agents should consider whether they are acting in the best interest of their client, what form of co-listing is appropriate and who they owe their fiduciary duty to.
Realtors should become familiar with the two new BCREA Co-Listing Forms and when to use them. Helpful information regarding the forms can be found in the Standard Forms toolkits linked below:
To access the Standard Forms toolkits, you must first login with your BCREA Access credentials and then click “Enrol” on each toolkit page.
To subscribe to receive BCREA publications such as this one, or to update your email address or current subscriptions, click here.
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