Commercial Real Estate Agency, Customer Status and Conflicts in Alberta

1. Identify the relationship before sharing leverage

Ask who the professional and brokerage represent before disclosing motivation, urgency, financial capacity, price flexibility, competing alternatives or other confidential information. RECA's Rules require written disclosure of proposed services, other representation, conflicts and influential facts before eliciting confidential real estate information or as soon as possible after receiving it.

A preliminary factual conversation does not automatically define the relationship. Record the agreed role and obtain clarification when the same professional, team or brokerage has another interest in the anticipated transaction.

2. Understand client representation

A buyer or seller in an agency relationship is a client. The Rules describe seller-agent duties that include promoting the seller's interests, lawful instructions, loyalty, confidentiality, conflict disclosure, reasonable care, negotiation assistance, relevant facts and timely offers.

Buyer-agent duties include locating properties that meet the requirement, promoting the buyer's interests, loyalty, confidentiality, conflict disclosure, reasonable care, reasonable fact discovery, relevant facts, negotiation assistance and keeping the buyer informed. These duties remain subject to law and the actual agreement.

• Loyalty
• Confidentiality
• Lawful instructions
• Reasonable care and skill
• Relevant fact disclosure
• Negotiation advocacy

3. Distinguish a customer from a client

A customer has not engaged the licensee as an agent. Under RECA's customer-status provisions, the customer forgoes agency representation and fiduciary obligations; the brokerage cannot provide services requiring confidential advice, advocacy or discretion and judgment on the customer's behalf.

A customer can still receive specified factual and facilitation services, such as property statistics, forms prepared to the customer's instructions, presentation of offers and progress updates. That help should not be mistaken for strategic representation.

4. Ask whether the brokerage uses common-law or designated agency

In a common-law brokerage relationship, the brokerage is the agent. A conflict can arise when that brokerage represents both the seller and an interested buyer. In designated agency, the brokerage designates one or more individual licensees as the sole agent for a buyer or seller under a written agreement.

RECA's designated-agency rules require written agreements, confidentiality policies and defined limits on brokerage responsibility. Different designated agents within the same brokerage may represent opposite parties, while the brokerage treats their interests evenly and supervises compliance.

5. Recognize the conflict trigger

A conflict is not resolved by calling the transaction commercial or sophisticated. When the representation structure connects the same brokerage or designated agent to both sides, the conflict and available choices must be disclosed and the parties' informed direction recorded.

RECA's Rules prohibit providing services in a trade where the licensee has or will have a conflict without written and informed consent. A material change to an earlier disclosure must be disclosed immediately.

6. Understand transaction brokerage before agreeing

The Rules permit buyer, seller and brokerage to enter a written transaction brokerage agreement in defined conflict situations. The parties must have an opportunity to review the agreement and request more information before signing.

The brokerage then acts evenly, objectively and impartially and provides facilitation services without confidential advice, advocacy or judgment favouring one side. It does not simply continue full seller and buyer agency at the same time.

7. Compare the alternatives and protected information

If the parties do not choose transaction brokerage, the Rules describe alternatives that can include continuing representation of the first client while the other party becomes a customer or is referred to another brokerage, subject to the facts and agreements. Independent representation may be the preferred choice for a party needing advocacy.

Even in transaction brokerage, protected information includes a buyer's willingness to offer more, a seller's willingness to accept less, either party's motivation and confidential personal information unless informed written consent or another rule applies. The relationship change should not be treated as permission to release negotiation leverage.

8. Document the decision and keep legal advice separate

Keep the service agreement, relationship disclosure, conflict disclosure, written consent, any customer or transaction-brokerage agreement and later changes together. Confirm which professional is permitted to advise each party after the change and how confidential information will be protected.

The brokerage relationship does not replace independent legal advice on a purchase agreement, lease, conflict waiver or remedy. This guide summarizes current RECA source material for an educational work plan and is not legal advice or a conclusion about a specific relationship.