3.2 Representation Models: Common Law Agency vs. Designated Agency
Key Takeaways
The brokerage is the agent in common law agency. Under designated agency the brokerage signs the service agreement and designates the agent in writing.
In common law agency the brokerage acts through its licensees. Opposing clients of that brokerage share an agent.
Rule 58.1 requires confidentiality procedures, communication of the procedures and express non-attribution terms in designated agency agreements.
Separate designated agents can represent opposing parties when required safeguards operate. Review any independent conflict with the broker.
Find the agent in the agreement
In common law agency, the client signs a service agreement with the brokerage, which acts as the agent. The brokerage delivers the service through its licensees and staff. When two associates in this model serve a seller and a buyer interested in the same property, both clients share a brokerage agent. Physical separation between the associates does not resolve the conflict.
In designated agency, the service agreement is still with the brokerage. The brokerage designates one or more of its licensees in writing as the client’s sole agent. Rule 58.1(1) applies the seller or buyer sole-agency duties in Rules 57 and 58 to those agents. Separate designated agents may represent opposite sides within the same brokerage when the required safeguards are in place. A different actual or apparent conflict still needs to be identified and addressed.
| Question | Common law agency | Designated agency |
|---|---|---|
| Who is the agent? | The brokerage. | The named licensee or licensees. |
| How is knowledge treated? | Information acquired by an associate for the brokerage in its agency work is treated as brokerage knowledge. Other associates' actual access remains subject to duties and office controls. | The written agreement provides that a designated agent’s knowledge is not attributed to the brokerage or other designated agents. Brokerage knowledge is not attributed to the designated agents. |
| When may a transaction brokerage conflict arise? | Both clients have the same brokerage agent and the buyer is interested in the seller’s property. | Both clients have the same designated agent and the buyer is interested in the seller’s property. |
| What does the brokerage do? | Delivers the client’s agency services and supervises its personnel. | Treats the seller’s and buyer’s interests even-handedly, ensures policy compliance, supervises service and protects information. |
Put the designated model into practice
Rule 58.1(2) requires procedures to protect confidences and govern how the brokerage and designated agents operate. The brokerage communicates the procedures to clients. Under Rule 58.1(3), the agreement covers designation of the parties’ sole agents, replacement when a designated agent ceases to be licensed with the brokerage, prior written client consent for appointment of another brokerage as a sub-agent, limited brokerage responsibilities, confidentiality and non-attribution of knowledge. Rule 44 applies to protected information. For example, restrict the opposing file’s access to appropriate personnel, supervise staff with access and avoid sending private negotiating information to the other designated agent.
A broker may review the transaction and give process and compliance guidance while maintaining those safeguards. If confidential information reaches the other agent, involve the broker, assess the conflict and any privacy incident, and determine whether the agents can continue. A second associate’s name on a file alone does not resolve information already shared.
Handle a change of designated agent
A designated buyer’s agent leaves the brokerage while an inspection deadline is approaching. Rule 58.1 requires the written agreement to provide for another brokerage licensee to be designated when the agent ceases to be licensed with that brokerage. Ask the broker to confirm the replacement, update the client’s written file and tell the client who will communicate about the deadline. Confirm which inspection instructions and documents the replacement needs. The broker should check who already acts for the seller and protect access to the buyer’s confidential terms. A handoff does not suspend a signed purchase deadline.
For example, the available replacement already represents the seller of the property the buyer wants. That raises the same-agent issue under Rule 59.1. Ask the broker to identify a different qualified designated agent or work through the applicable conflict and consent process before the same person acts on both sides. Distinguish the replacement appointment from authority to agree to a contract change. The client still gives instructions about a proposed extension.
Compare exclusivity and agency separately
Exclusivity governs whom the client agrees to engage for the defined services. Either agency model can use an exclusive residential buyer agreement. Under a non-exclusive buyer agreement, the client can generally engage more than one brokerage within the agreed terms. Check the scope, each remuneration trigger and any other existing agreement before acting. Rules 43 and 58.1 govern applicable written terms. Rule 60.1 and Schedule 1 supply mandatory form content when applicable, including the residential exclusive forms. RECA’s non-exclusive buyer guidance requires the Rule 43 minimums even when the exclusive form’s mandatory content does not apply.
Two associates work in different offices of the same common law brokerage. One acts for a seller, and the other acts for a buyer interested in that seller’s property. The first associate knows the seller’s private minimum. What follows?
Different office locations create separate legal agents for the transaction.
The same brokerage is agent for both clients. It must address the conflict and protect the seller’s private information.
The second associate can disclose the private minimum to the buyer because the associates act for one brokerage.
The seller’s agent can resolve the conflict by moving the listing documents to a different office.
A Calgary brokerage appointed two different designated agents in writing for a seller and an interested buyer. They follow the brokerage’s information barriers, and no other conflict exists. What may they do?
Continue to serve their respective clients as sole agents.
Treat both clients as customers and sign a joint acknowledgement.
Pool their private client instructions so both receive equal advice.
Sign a transaction brokerage agreement solely because they share a brokerage.
A designated buyer’s agent asks their broker how to document an inspection amendment. A separate designated agent in the brokerage represents the seller. How should the broker respond?
Give the seller’s agent the buyer’s maximum so that both agents can negotiate efficiently.
Take over both agencies and negotiate for each client.
Review the process and provide compliance guidance while safeguarding both files and leaving each agent to represent their own client.
Report a confirmed privacy breach solely because the buyer’s agent requested supervision.
Sections you finish are checked off in the contents.