Overview: an in-depth guide to understanding Ontario’s Buyer Representation Agreement (BRA), including what it is, its benefits and risks, advice for buyers, and more.
The law first went into effect back in January 1, 1995, and was revamped on December 1, 2023.
So what is the Buyer Representation Agreement?
Why was it created? What are its advantages and disadvantages? And who does it help?
These are just some of the questions this blog will answer, starting with what it is…
What Is A Buyer Representation Agreement (BRA)?
According to WOWA:
A Buyer Representation Agreement (BRA) is a written contract between you and your real estate agent that confirms your business relationship. It is an important document that outlines the services your real estate agent provides and what your real estate agent expects from you.
So the BRA makes the relationship between a buyer and their agent official, and outlines their obligations towards each other.
This includes how long the buyer and agent will work together, what services the agent will provide, who will pay for expenses, the agent’s commission, and more.
There are actually two types of Buyer Representation Agreements.
The first is a Brokerage representation agreement.
Under this type of agreement, the buyer is represented by all agents in a brokerage, with one agent usually serving as a primary contact.
The second is a Designated representation agreement, which was introduced in Ontario on December 1, 2023.
With this type of agreement, usually one agent in a brokerage serves as the buyer’s designated representative, while all other agents must remain impartial.
One of the advantages of Designated representation is that it reduces the likelihood of multiple representation.
According to the Real Estate Council of Ontario (RECO):
Multiple representation means a designated representative or brokerage represents more than one client, with competing interests, in the same transaction.
So with Designated representation, a buyer is much more likely to be represented by one agent and brokerage, and the seller by another.
Things To Know About The BRA
That may not seem like an important distinction, but it is.
According to Real Estate Magazine:
This means the real estate agents exclusively represent you…and ensures your information is kept private from the seller. In turn, your brokerage must also share with you details of the seller’s financial position, the home’s true value and details regarding the commission split.
So signing a BRA confers client status on the buyer, which brings such benefits as exclusivity, privacy, and access to information.
Furthermore, signing a BRA doesn’t mean the buyer is legally obligated to buy a home.
It only means they agree to work with a brokerage and their agents for a fixed time period.
A BRA typically lasts 90 days, but buyers can opt for a longer time frame of 6 months or more.
A BRA can also be cancelled if a) both the buyer and agent agree to do so b) the contract includes a clause allowing it.
If the agent refuses the cancel the BRA, the buyer can ask the brokerage to do it.
If both the brokerage and agent refuse, the buyer can file a complaint with the Real Estate Council Of Ontario (RECO).
As a last resort, the buyer can take the matter to court.
Pros & Cons Of A Buyer Representation Agreement
The advantages of signing a BRA include:
- Peace of Mind: buyers can rest easy knowing agents are legally bound to serve their best interests
- Flexibility: buyers can negotiate all terms and conditions to their satisfaction before signing
- Clarity: a BRA lays out exactly what the buyer and agent expect from each other (e.g. services)
- Confidentiality: the agent and brokerage have to keep the buyer’s information private
- Access To Information: the brokerage is required to disclose information about the seller
- Cancellation Clause: if the buyer is unhappy with their agent, this provides an easy out
The risks of signing a BRA include:
- Legalese: some buyers may be reluctant to sign a contract they don’t understand
- Commission Terms: buyers must pay a commission if they purchase property before the contract expires
- Exclusivity: the buyer won’t be able to hire other agents (unless they have a cancellation clause)
- Indemnification Clause: the agent is not liable for undisclosed physical defects to a property
- Limited Buying Options: buyers can’t purchase a home through a private sale
Advice For Home Buyers
To prevent misunderstandings and ensure a smooth working relationship, always set a clear scope.
This means stating exactly what you want in an agent, and what they can expect from you.
For example, you may require an agent who works weekends, someone who speaks Cantonese, or someone who specializes in cottages.
Your BRA should also describe what you want in a property, including:
- Property type (e.g. house or condo)
- Number of bedrooms and bathrooms
- Location preference (e.g. downtown Toronto)
- Location requirements (e.g. 5-minute walk to a subway station)
The BRA should list all expenses, how much they cost, and who will pay for them.
Finally, buyers should always check to see if their contract includes a Holdover Clause.
A Holdover Clause sets out a time frame (usually 30-90 days) called the Holdover Period.
During this time, the agent designated in the BRA is entitled to a commission even after the contract expires.
[Assume] you enter into a buyer agreement that includes a 30-day holdover clause and the agent shows you a home before the expiry of the contract. If you buy the home after the expiry of the agreement, but during the holdover period, you might be obligated to pay the brokerage commission.
So carefully review the contract and negotiate a Holdover Period that works for you.
Buyer Representation Agreement Conclusion
It ensures the agent is committed to delivering the best services possible, guarantees the buyer’s privacy, and details exactly what the buyer and agent expect from each other.
Buyers can also negotiate every aspect of the agreement, including how long it will last, the specific services they want, and the ability to exit the contract when needed.
However, buyers should always pay attention to the cancellation clause and holdover period, negotiating terms that work for them.
In short: signing a BRA brings clarity, confidentiality and peace of mind.
Have questions about the Buyer Representation Agreement? Contact me below for answers.
Real Estate Broker
Living Realty Inc., Brokerage
m: 416.903.7032 p: 416.975.9889
a: 7 Hayden Street Toronto, M4Y 2P2
w: www.winslai.com e: [email protected]
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