Agency Relationships

What is an agency relationship in Ontario real estate?

An agency relationship is the legal and ethical structure that governs how a real estate registrant represents a party in a transaction. Once an agency relationship exists, the registrant owes the client a defined set of fiduciary duties — the highest duty of care recognized in Canadian law. Every transactional decision, disclosure, and document must be evaluated against those duties.

Under the Trust in Real Estate Services Act (TRESA), agency in Ontario real estate takes one of four named forms. The form determines what duties apply, who they're owed to, and what disclosures must be in writing.

The four forms of agency under TRESA

The fourth form — designated representation — was introduced under TRESA in late 2023 to address long-standing concerns about multiple representation. Designated representation lets two specific registrants within one brokerage each represent only one side of a transaction, avoiding the conflict where a single registrant tries to balance both clients.

Fiduciary duties owed to a client

When agency exists, the registrant owes the client all six of the following duties:

The mnemonic CLOAC + Competence (Confidentiality, Loyalty, Obedience, Accounting, Disclosure, Competence) captures all six. The Humber exam routinely tests scenarios where one specific duty is implicated — usually disclosure or confidentiality.

Duties owed to non-clients

A registrant who represents only one party still owes specific duties to the other side. Under TRESA, these limited duties include:

• Honest dealing — no misrepresentation, no concealment of material facts
• Disclosure of material latent defects that affect the property's value or use, even when not specifically asked
• Acknowledgment of agency — the non-client must be informed of who represents whom

The key distinction: a non-client gets honesty, but not loyalty. A seller's representative cannot lie to the buyer, but they're not required to negotiate the lowest possible price for the buyer.

Where this appears in your Humber program

Agency relationships are foundational throughout the program. Heaviest coverage is in Course 2: Residential Real Estate Transactions — the entire ethics module is structured around agency. They reappear in: - Simulation 1 — virtually every scenario tests agency in some form - Course 3 — agency in the context of condo and rural transactions - Course 4 — commercial agency, which has different industry-specific norms - Continuing education — TRESA's designated-representation reform is current CE content

A scenario the exam likes to test

A buyer signs a Buyer Representation Agreement with Brokerage X. Two weeks later, the buyer is interested in a property listed by Brokerage X (a different registrant). The exam typically asks: what form of agency now exists, and what disclosure is required?

The answer depends on the brokerage's chosen approach: - Multiple representation: both buyer and seller are clients of the same brokerage. Written, informed consent required from both, disclosing the limited duties each will receive (less than full loyalty/confidentiality due to the conflict). - Designated representation: the brokerage assigns one registrant to represent only the seller and a different registrant to represent only the buyer. Each gets full client-tier duties from their designated registrant. Written disclosure still required.

The wrong answer in this scenario is to claim no disclosure is needed — both forms require written acknowledgment.

Multiple representation: the most-tested topic

Multiple representation is the most-tested concept in the Code of Ethics module because it's the most common source of RECO discipline. The mandatory disclosures are:

1. Before working with the second client, written acknowledgment that multiple representation will exist
2. The duties that change — specifically that loyalty, confidentiality, and obedience cannot be fully owed to either party because of the conflict
3. The fact that the registrant cannot reveal one client's confidential information to the other (e.g., maximum price they'd pay, minimum price they'd accept)
4. Written, informed consent from both clients before the relationship is formed

Failure on any of these four steps is a near-automatic RECO complaint. Discipline summaries published by RECO show this category leading enforcement statistics every year.

Frequently asked questions

What are the four types of agency in Ontario real estate?

The four types under TRESA are: seller representation (registrant represents only the seller), buyer representation (registrant represents only the buyer), multiple representation (one registrant or one brokerage represents both buyer and seller in the same transaction), and designated representation (one brokerage represents both sides but assigns different individual registrants to each).

What duties does a registrant owe a client vs a non-client?

A client is owed all six fiduciary duties: loyalty, confidentiality, obedience, disclosure, competence, and accounting. A non-client (the other party in the transaction) is owed only honest dealing, disclosure of material latent defects, and acknowledgment of who the registrant represents. The key difference: clients receive loyalty; non-clients only receive honesty.

What is the difference between multiple representation and designated representation?

In multiple representation, the same registrant (or the same brokerage acting as a single agent) represents both buyer and seller. Loyalty and confidentiality cannot be fully owed to either party because of the conflict, so duties are limited and require written informed consent. In designated representation (introduced under TRESA in 2023), the brokerage assigns different registrants — one to each side — so each client receives full client-tier duties from their designated registrant.

Can a registrant represent two buyers competing for the same property?

Yes, but with mandatory disclosure. If two buyer-clients of the same registrant both make offers on the same listing, the registrant must inform both buyers in writing of the conflict and may need to either step back from one client or, if both consent, proceed with limited duties. Practically, most registrants refuse the second client to avoid the conflict. RECO has disciplined registrants who failed to disclose this conflict.

Practice this topic

ExamAce covers agency relationships extensively across Course 2 practice questions, with scenario-style problems that mirror the Simulation 1 format on multiple representation, designated representation, and the duties owed to non-clients.