What a Buyer Representation Agreement Commits You to Under TRESA

The short answer

A buyer representation agreement in Ontario is the contract that makes you a client of a real estate brokerage. RECO, the Real Estate Council of Ontario, says it should describe the duties owed to you and the services you will receive. It should also set out what you will pay and how long the agreement lasts and whether you can cancel it.

This post is about the buyer’s side of that contract. We cover who counts as a client and what you must be given before you sign. Then we cover what the agreement can limit and what you owe if the seller pays nothing toward your agent’s fee. The general fee mechanics are in our guide to real estate commission in Ontario, so we do not repeat them here.

This is general information, not legal advice. A real estate lawyer can review your actual agreement before you sign it.

Are you a client or a self-represented party?

Under the Trust in Real Estate Services Act, 2002 (TRESA) there are only two positions. RECO’s Bulletin 2.6 says that with respect to a trade in real estate a person is either a client of a brokerage or a self-represented party. The old “customer” category was removed from the legislation on December 1, 2023.

That matters for buyers because there is no middle category between the two. RECO says any agreement for services between a brokerage and a buyer is a representation agreement and the person receiving services is a client. This holds even when the service is narrow, such as preparing an offer for one property.

	Client of a brokerage	Self-represented party
Agreement with a brokerage	A representation agreement	None
Whose best interests the agent protects	Yours	The other side’s client
Advice on price and offer terms	Depends on the services set out in your agreement	Agents are prohibited from giving it
What you tell the agent	Confidential information is protected	Must be shared with the agent’s client
What you are given first	The RECO Information Guide	The guide plus a disclosure form

The self-represented column comes from RECO’s page on the risks of representing yourself and Bulletin 2.4. RECO defines a self-represented party as a person who is not a client of a brokerage. It adds that such a person is not receiving any services under an agreement with a brokerage.

What does RECO say about representing yourself?

RECO says very few buyers or sellers make this choice and that there are significant risks if you do not have the knowledge and expertise to handle the transaction. It recommends independent professional advice before you proceed.

If you choose this route RECO says it is your responsibility to look after your own best interests. That includes:

• making inquiries about zoning and permitted property use
• determining what you believe the property is worth
• determining how much you are willing to offer
• navigating competing offer situations
• deciding what terms to include in an agreement of purchase and sale
• preparing all documents

There is also a trap in talking to the seller’s agent. RECO says that agent has a legal obligation to act in the best interests of their own client and is obligated to share anything you tell them with that client. That includes your motivation for buying and the maximum price you are willing to offer. A seller’s agent must give you RECO’s Information and Disclosure to Self-represented Party form and walk you through it before providing any assistance.

You can change your mind. RECO says you can become a client of a brokerage at any point during the transaction.

What must you receive before you sign?

The RECO Information Guide. RECO’s page on the guide says it is the law for Ontario agents and brokerages to provide it before offering any services or assistance. RECO’s Bulletin 2.1 says agents are expected to provide it to a prospective client before an agreement is entered into with the brokerage.

The bulletin says the guide is meant to help you understand:

• the benefits of being a client
• the risks of being a self-represented party
• the duties brokerages and agents owe to clients
• what to look for in an agreement including remuneration arrangements
• what multiple representation is

Agents must also explain the guide, so you can ask questions about it. If anything in it is unclear, ask before you sign anything.

What can a buyer agreement limit?

More than most first time buyers expect. RECO says there is no standard set of services and that you choose the services that best meet your needs. Here are the buyer-specific terms to read closely.

Scope. RECO’s Bulletin 2.3 says a buyer agreement should identify whether services are for a specific property or a geographic area or a particular type of property. RECO gives an example of a buyer looking for both a city house and a cottage who wants different agents for each. In that case the scope should be clear in each agreement to avoid disputes about who you might have to pay if you buy.

Services. Do not assume a service is included. RECO says that if you need specific services they should be in the agreement or in a schedule to it.

Length. RECO says the expiry date must appear prominently on the first page and that there is no set time or standard term. An agreement can be in place for a day or a few weeks or months.

Type of representation. There are two kinds. Under a brokerage representation agreement the brokerage and all its agents represent you. Under a designated representation agreement one or more named agents represent you. RECO says designated representation was introduced in Ontario on December 1, 2023 and that it reduces the likelihood of multiple representation.

Who is named. Bulletin 2.2 says that while teams are not recognized under the legislation the same rules would apply to them. All agents who might have access to or discuss a client’s confidential information should be identified as designated representatives in the agreement. If you are working with a team, check whose names are in your agreement.

What about multiple representation?

Briefly, from the buyer’s view. RECO says multiple representation happens when a brokerage or designated representative acts for both the buyer and the seller or for two or more competing buyers on the same property. It is not permitted unless each client agrees. You do not have to agree. If you refuse, the brokerage or your designated representative is not allowed to proceed.

RECO says that if you do agree the brokerage cannot maintain undivided loyalty to you and cannot offer advice on the price you should offer or the terms to include. The brokerage must give you written disclosure first. Competing buyers on one property can also trigger it, so see how multiple offers work in Ontario. Our selling timeline explains the same choice from the seller’s side.

What do you owe if the seller pays nothing?

RECO’s page on signing a contract has a note aimed squarely at buyers. A seller might not offer any amount to cover the fees you owe to your brokerage under your agreement. This could affect the amount you are able to offer for a property. RECO adds that depending on your financial circumstances you may not be able to afford to buy a property when the seller does not agree to pay.

Your agreement needs to clearly indicate three things:

1. The amount you agree to pay your brokerage or how it will be calculated.
2. How that amount changes if the seller agrees to cover some or all of your brokerage fees.
3. How that amount changes if you consent to multiple representation.

The TRESA FAQs describe one route when a buyer cannot afford the fee. The buyer’s agent could negotiate for the seller to cover the buyer’s real estate fees using a remuneration clause in the agreement of purchase and sale. RECO says that agreement would be between the buyer and seller and not between the seller and the buyer’s brokerage.

For a first time buyer this belongs in the budget. Read it next to our guides to closing costs when buying in Markham and the deposit on a house in Ontario.

How do you end a buyer agreement early?

Look at the termination section before you sign. RECO says the agreement should list all circumstances when it can be terminated. You should review when the brokerage can terminate it and be aware of any penalties or costs that apply in each case.

The holdover clause also deserves attention. RECO says it may require you to pay brokerage fees for a purchase even when the transaction happens after the agreement expires. RECO’s example is a buyer agreement with a 30-day holdover clause where the agent showed the buyer a home before the contract expired. Buying that home during the holdover period might mean owing the commission. There is no minimum or set holdover period, so agree to the length before you sign. Our commission guide covers holdover clauses in more detail.

Checklist before you sign

RECO’s buyer’s checklist says to understand what you are signing, how long it will be in effect and what the different clauses mean. It suggests asking questions and seeking independent legal advice if you would like a second opinion. Use it with this list:

• Confirm you received and had explained the RECO Information Guide.
• Check the expiry date on the first page.
• Check the scope: property type and area and any named property.
• Confirm which services are included and write down any you expect.
• Read the fee section for what you pay if the seller offers nothing.
• Read the holdover clause and agree to its length.
• Read the termination section for penalties and costs.
• Confirm whether it is brokerage or designated representation and who is named.
• Ask what happens if multiple representation comes up.
• Have a real estate lawyer review it if anything is unclear.

For the wider picture see our buyer resources and the first time home buyer guide for Markham. If you would like to walk through an agreement before signing anything, contact us.