Multiple representation (dual agency)

Multiple representation arises when one brokerage, or one designated representative, has more than one client in the same trade. In a business sale that can mean acting for the seller and a buyer, or, as in RECO’s example, for the seller and two buyers. Sellers and buyers meet it when the broker who listed a business also works with the person buying it. For the wider picture of who does what, see how a business broker differs from an M&A advisor.

What Ontario’s regulator says

This entry covers Ontario only; check the rules where you are. Ontario’s Trust in Real Estate Services Act, 2002 defines “real estate” to include businesses, whether with or without premises. The Real Estate Council of Ontario (RECO) says in Bulletin 3.2 that a brokerage or designated representative is prohibited from representing more than one client in a trade unless:

• the brokerage makes the mandatory written disclosure;
• it makes best efforts to obtain an acknowledgement that the disclosure was received; and
• after receiving the disclosure, each existing or prospective client gives written consent.

What to ask

RECO says that in multiple representation none of the clients are fully represented, and that clients do not receive advice that might put their interests ahead of the other client, such as the price to offer or accept. It also says clients do not have to consent, and that the risks can be managed by different designated representatives within the brokerage or by using a different brokerage. Ask when the disclosure will be given, because RECO says the brokerage and its agents cannot take any further steps for any client until the disclosure is made and each client gives written consent. Ask, too, how the listing agreement deals with a client who says no.