GREATER TORONTO – Double-ending has been a trending term in recent months, perhaps triggered by a recent CBC Marketplace episode that caught several GTA real estate sales representatives bending (or outright breaking) rules around multiple-offer scenarios.
Here at GTA Real Estate News, we do our best to provide our readers with the knowledge to protect themselves from dubious real estate practices. With that goal in mind, here are a few of the most commonly-asked questions about multiple representation and double ending here in Ontario.
What does multiple representation mean, and is it legal in Ontario?
The law governing all real estate transactions and practices in Ontario is called the Real Estate Business Brokers Act, 2002 (REBBA) and is strictly enforced by the Real Estate Council of Ontario (RECO). REBBA does allow for multiple representation – an arrangement wherein one real estate brokerage represents both the seller and a buyer in the same transaction. (It may also be referred to as “dual agency.”)
In a fact sheet issued November 3, 2016, RECO reminded the public that multiple-representation arrangements are subject to several regulations of their own. For example:
- Multiple representation may only occur if both the parties (buyer and seller) provide their written consent.
- Upon entering into a multiple-representation scenario, the brokerage is obligated to provide each of the two clients with notice, and an explanation of the brokerage’s obligations.
- The client always has the right to not consent to multiple representation, and elect to get their own outside representation from another brokerage. They may also elect to be treated as a customer instead of as a client.
“It can be challenging to understand when a broker or salesperson has to share information and when they don’t,” the document notes. “Having someone dedicated to your interests could reduce misunderstandings, assumptions or guesswork.”
What does double-ending refer to?
Double-ending is an industry term that refers to a single agent receiving the commission from both “ends” of the transaction (buying and selling). It is possible to double-end any transaction, whether it is a result of a multiple-offer scenario or a single offer negotiation.
It is possible to double-end a deal even if the brokerage is not representing both parties. The brokerage can elect to only provide customer service to either party, but would still earn commission for both ends. The election for customer service is strictly a choice made between the brokerage providing the service, and the customer selecting what service they prefer or require.
Is real estate double-ending punishable in Ontario?
No. Double-ending is simply another term referring to a single agent being paid for both sides of the transaction.
However, due to the lucrative nature of double-ending, the principal concern is that this will lead to unethical or illegal practices from real estate agents – including such activities as providing “insider” information to their own buying client (in order for them to get a winning bid), lying about the number of offers registered, or simply failing to present all offers.
According to RECO’s deputy registrar Kelvin Kucey, any case of such activity, due to an agent wanting to double-end a deal, is considered a punishable infraction – with fines ranging from $3,000-$5,000 for the first offence, to as high as $25,000 for repeat offences.
“[Double-ending] is obviously is a concern, if that’s how they see that they are representing the interests of both sides of the trade,” Kucey explained in an interview with Marketplace’s Charlsie Agro.
“If there’s ever a concern about how a trade transpires, that’s what we’re here for. We find that there’s non-compliance with the rules, we will prosecute to the fullest extent of the law.”
OREA pushing for stricter enforcement
When it was broadcast, the CBC segment also caught the attention of the Ontario Real Estate Association (OREA), whose president Tim Hudak issued a statement calling for an adjustment of the Real Estate Business and Brokers Act, 2002 – and its accompanying Code of Ethics.
Critical to that adjustment would be stricter financial penalties – OREA has proposed doubling the maximum fine to $50,000 for individual realtors, and up to $100,000 for brokerages.
“Ontario’s nearly 67,000 Realtors are professionals who work every day to ensure the best outcomes for their clients and customers when purchasing a home for their family. Those that violate that trusting relationship are on their own,” said Hudak.
“While one Realtor working with or even representing both a buyer and seller is common across Canada, the practice must be done transparently, under tight rules and with expressed written consent.”
How can consumers report suspicious activity?
In Ontario, RECO is responsible for investigating any possible breaches of REBBA 2002, including the Code of Ethics and fiduciary duties to clients. When you file a complaint with RECO, it is also a part of the Council’s job to look it over, and determine whether any breach did in fact occur.
For more details about the timeline of RECO’s complaint process, or the types of complaints they are permitted to investigate, we recommend starting with a look at their helpful information page.
PLEASE NOTE: The above feature is meant to be used only as an introductory overview, and must not be regarded as legal advice or a substitute thereof. Because laws and regulations can be applied differently to different situations, it is highly recommended to speak with and consult your own legal counsel if you suspect you have been affected by improper real estate practices.