Implied Agency: If It Quacks Like a Duck, It May Be a Duck! #503
Implied agency is very much on the brain these days with the Superintendent of Real Estate's new rules on agency now in effect. Rule 5-10.1 requires that licensees use a new form from the Real Estate Council of British Columbia to disclose the risks faced by unrepresented parties, the limited assistance that licensees can provide them and to recommend that they seek independent professional advice. Licensees need to be aware that they can provide only very limited services to unrepresented consumers in a property transaction. Failure to take extreme care may result in claims of implied agency.
Implied agency is defined in the 20th Edition of Bowstead & Reynolds on Agency at p. 61:
Agreement between principal and agent may be implied in a case where one party has conducted himself towards the other in such a way that it is reasonable for that other to infer from that conduct assent to an agency relationship.
The danger in going beyond the very limited services that a licensee can offer to unrepresented parties in a transaction is that the consumer will argue that an implied agency relationship has been created. If an agency relationship is implied, the Court may impose on the licensee the same kind of duties and obligations that a licensee owes a client, including fiduciary duties of loyalty, disclosure and confidentiality.
In a recent decision in Siemens v. Howard,1 the Court of Appeal dealt with implied agency. A real estate licensee, H, lived across the street from the plaintiff, S. In December of 2013, S approached H and mentioned he was looking to purchase property to expand his chicken farm. H mentioned he was planning to purchase the abutting property to his lot for himself and adjust his lot lines to increase his 9.5 acre property to 10 acres. H suggested the remaining acquired lands might be suitable for S, who expressed interest and told H to keep him informed. S claimed that H was acting as his agent and purchased the property on his behalf.
The trial judge looked at the conduct of H and S to determine whether an implied agency relationship was created. Despite disputes in the evidence, she made a number of findings which supported her conclusion that H was not acting as agent for S. First, she found that although H introduced S to the property, both parties evidence stated that it was in the context of H acquiring the abutting property for himself. Second, there was no evidence that S instructed H on any terms of the four offers made for the property, including the price. Third, the trial judge noted that while H and S communicated with one another frequently by text and telephone, they did not speak at all during the time that H was submitting the final offers for the abutting property.
The Court of Appeal upheld the findings of the trial judge on the facts and on the conclusion that there was no implied agency. Despite the fact that there was no implied agency in this case, it serves as a reminder of the risks licensees face whenever they are dealing with someone who does not have their own representation.
Licensees must be cautious when dealing with parties with no agency who elect to proceed in a transaction as an unrepresented party. The starting point for licensees is to comply with Rule 5-10.1. Licensees dealing with unrepresented parties should understand their limitations, remind unrepresented parties of these limitations and avoid any conduct that might lead to implied agency such as providing advice or allowing an unrepresented person to share confidential information with them without warning that this information will be passed on to their client. Keeping a good record of all communications is good practice. Licensees offering the very limited services allowed to an unrepresented party must stick to only those services permitted.Chris Johnston
|1.||Siemens v. Howard, 2018 BCCA 197.|
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