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Tuesday, December 20, 2005

Agency in Alberta

If you are buying or selling real estate in Alberta this impacts you. The information below is taken from the website of the Real Estate Council of Alberta which is worth investigating by anyone working with a real estate professional in Alberta. If you have any questions or comments feel free to contact us or the Real Estate Council of Alberta

Agency: The Relationship Between Agent and Client

What Is Agency?
Agency is a legal concept and the root of all agent/client relationships. The law of agency describes agency as a relationship where one party (the agent) accepts responsibility for representing another party (the principal or client) in dealing with a third party.

Note: This article deals with the most common agency relationship. Information on dual agency is contained in a separate article.

In a real estate or mortgage transaction, agency applies to the relationship that exists between a brokerage and its client. While the person the client typically deals with is commonly referred to as an agent, the legal relationship is actually between the client and the brokerage. For example, the parties to a brokerage agreement to sell a property will be the brokerage and the owner. An agent employed by the brokerage will usually be authorized by the brokerage to enter into such contracts on its behalf.

How Are Agency Relationships Formed?
Agency relationships can be formed in two ways:

1. Express agencyIn express agency, the parties (brokerage and client) clearly express, in writing or orally, their intention to enter into an agency relationship and the agreed terms of that relationship.

Consumers can choose to enter into a written agreement with a brokerage (written express agency) or a verbal agreement (oral express agency).

Written express agency occurs when a consumer and brokerage enter into a written brokerage agreement contract. The contract authorizes the brokerage to represent the client in the necessary capacity and indicates the details of the relationship. In most situations a written agreement is preferred because it clearly establishes the formation of an agency relationship and offers better protection for both the consumer and the brokerage and its agents.

Express agency can also be created orally. For example, a buyer and brokerage may discuss their agency relationship and agree orally that the brokerage may seek out a suitable property and represent the buyer/client in a purchase.

This article is continued on the RECA website here.

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