Can I get out of a Buyer’s Representation Agreement?

The Buyer’s Representation Agreement (BRA) is the contract between buyer and brokerage that sets out the duties of each while the buyer looks for a property. Once the buyer decides to make an offer, a BRA must be signed under REBBA legislation, although it can take the form of a Buyer’s Customer Service Agreement where the agent is also acting for the seller. (More on that later.)

The BRA can be specific to a given transaction (eg. a specific address, or only condos, or only two storey homes in a certain neighborhood, etc.) or general, and cover the entire search area and all properties  the buyer might be interested in.

I’ve seen some  folks on social media say that one isn’t needed and that they’ve never signed one. That means they have probably had an agent show them around and then contacted the seller directly to make an offer, which is exactly the scenario the BRA is supposed to avoid. After all, who wants to work for free? I know I don’t.

Since the seller is paying the commission, the only real downside to having a BRA comes if you sign one as a buyer and then decide you aren’t comfortable with the agent. What can you do then?

First of all, remember when you sign the agreement that the terms are negotiated. You can restrict the location, the time, and even the type of property you are looking for. But once  you’ve done that,  if things aren’t working out, you have a few options. Here they are:

1) First of all, talk to your agent. As in most relationships, most times the issues are ones of communication. If you identify clearly what your concerns are, you may be able to work things out. If not, the agent may suggest referring you to another agent, or you or your agent may agree to sign a cancellation agreement. (Personally,  I wouldn’t want to work with someone who doesn’t want to work with me; the process is stressful enough. But sometimes I know just the right agent for the buyer within the brokerage.)

A cancellation agreement puts an end to the BRA, with the exception of the holdover period. That’s the time you both agreed in the BRA  after the agreement expires or is terminated where the agent will be paid a commission if you buy a property that  agent introduced you to, and  the seller refuses to pay the commission. So yes,  you’re on the hook, but that’s only fair.

2) If the agent is not responsive to your concerns, go to the brokerage directly: that’s who your contract is with, not your agent. The broker/manager may suggest re-assigning you to a different agent within the brokerage or that you all sign a cancellation agreement.

3) If that doesn’t work, you can always go to the local board (here in Ottawa, it’s the Ottawa Real Estate Board) and ask for their assistance, or the Real Estate Council of Ontario. An agent or brokerage that refuses to cancel a contract needs a good reason if the relationship has broken down. But I’d start with the broker first; the managers deal with these kinds of situations all the time. Ours, for example, has good common sense and lots of diplomatic skills; I’d trust him to find a fair resolution.

I heard of an agent who tried to charge a buyer for their time where there was no BRA; the broker found out and cancelled the invoice. Legally, the claim may be considered  “quantum meruit;” that is, that the work was done with an expectation of payment.

But once you have a signed BRA, I think the agent has given up any right to claim fees outside what was agreed to contractually. Even without one, there’s never any guarantee when you are showing a buyer properties that they will buy anything, so the quantum meruit claim in that situation is pretty weak.

The more interesting question is whether a realtor can sue for compensation if the buyer refuses to sign a BRA and then buys a property that the buyer was introduced to by that agent. I think they can. It’s another reason why it’s best to set out what the agreement is in writing, in a BRA, so that there are no nasty surprises. You don’t always need a written contract to be on the hook; this may be one of those times.

Finally, where the agent is acting for the seller as well as the buyer, the agreement that is signed with the buyer is not a BRA, but a Customer Service Agreement (CSA) which among other things, makes it clear that the agent’s first duty is to his or her client, the seller, and that the buyer is merely a customer. The duty is much lower than it is to a client which is why I personally think all buyers should have their own agents, but once that disclosure is made and the CSA is signed, a double-ended deal is perfectly legal.

The signed CSA is required before any offer is presented to the seller, but is usually restricted to that single transaction. A CSA also clarifies that this is now a multiple representation situation and that the agent is not able to disclose bottom lines or motivations to either party.

Personally, and I’m in a minority on this,  I don’t ask for a BRA from my clients: I only work with people I like and trust, and I don’t feel I need one.

But I know many agents who will only show a client a property or two and then insist on having  a BRA. If the buyer refuses to sign one, they thank them and move on to the next client. The buyer’s willingness to waste their time without making a commitment in return says everything about that buyer that they need to know.

 

 

 

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