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Consumer Guide to Service Agreements

Consumer Guide to Service Agreements

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This FAQ outlines what is required when entering into a service agreement for the purchase or sale of a property, or a rental property management agreement or a strata management agreement. The allowance for electronic signatures are also discussed.

Am I allowed to waive the requirement for a written service agreement?

Service agreements are a great way to ensure that all parties to the agency relationship know what is expected of them, and what they are required to do during the relationship.

Without a written service agreement, it can be exceedingly difficult to ensure that all parties are doing what they agreed to do at the outset of the relationship. Should an issue arise, and you need to file a complaint, without a written service agreement it may be hard to prove that your real estate professional agreed to do something that you claim they did not do. While you can waive the requirement for a written service agreement, your real estate professional will likely ask you to put this instruction in writing.

What is the difference between a service agreement and a Disclosure of Representation in Trading Services?

The Disclosure of Representation in Trading Services is a mandatory disclosure document (not a contract) created by BCFSA that must be provided to you by a real estate professional before they can provide you any services that the Real Estate Services Act considers to be trading services. This includes listing your home or helping you as a buyer to find a new home. The document indicates whether or not you are going to be represented by the real estate professional, the duties and responsibilities of the real estate professional, and how you can file a complaint with BCFSA if necessary.

Service agreements (which are contracts) exist for all sectors of the real estate industry. They include listing contracts, buyer’s agency contracts, rental property management contracts and strata management agreements. These agreements are entered into once you and real estate professional agree that they are going to create an agency relationship and work together.

While all service agreements will require certain information like the names of the parties and the address of the property in question, depending on the type of services being offered (rental, strata or sales), your service agreement will also include mandatory content specific to that sector. This may include terms outlining whether a strata manager’s brokerage will hold trust funds in their own accounts etc.

What must a real estate sales service agreement include?

For real estate sales, the service agreement must also contain mandatory content including:

  • your name, your real estate professional’s name, and their brokerage name;
  • the address of the property being listed;
  • the date on which the service agreement begins and ends;
  • a general description the services being provided by the brokerage;
  • the amount of remuneration the real estate professional will earn and the circumstances in which it will be paid;
  • the amount of the total remuneration being paid to a cooperating brokerage if there is one;
  • if there is no cooperating brokerage, the amount to be retained by the brokerage; and
  • provisions around the disclosure of your personal information.

What must a rental property management service agreement include?

For rental property management, the agreement must include:

  • your name, your real estate professional’s name, and their brokerage name;
  • the address of the property being managed;
  • the date on which the service agreement begins and ends;
  • a general description the services being provided by the brokerage;
  • the amount of remuneration the real estate professional will earn and the circumstances in which it will be paid;
  • the circumstances in which you or the brokerage may terminate the service agreement;
  • the scope of authority granted to the brokerage to sign cheques or make disbursements for the client or enter into a contract on your behalf;
  • the timing, frequency, and nature of the accounting statements and other records the brokerage must provide to you, as the owner; and
  • a description of any records the brokerage will keep on your behalf.

What must a strata management service agreement include?

For strata management services, the agreement must include:

  • your name, your real estate professional’s name, and their brokerage name;
  • the address of the property being managed;
  • the date on which the service agreement begins and ends;
  • a general description the services being provided by the brokerage;
  • the amount of remuneration the real estate professional will earn and the circumstances in which it will be paid;
  • an indication of whether the brokerage will be holding on behalf of the strata corporation one or more of:
    • the contingency reserve funds;
    • operating funds;
    • special levy money; and
    • other monies.
  • the circumstances in which you or the brokerage may terminate the service agreement (aside from those circumstances outlined in the Strata Property Act);
  • any authority under RESA for the brokerage to transfer trust funds:
    • between brokerage trust accounts maintained under the Real Estate Services Rules for one or more strata corporations; or
    • to a pooled trust account for one or more strata corporations
  • the scope of authority granted to the brokerage to when acting on behalf of the strata corporation to:
    • sign cheques or make payments on behalf of the strata corporation;
    • enter into contracts on behalf of the strata corporation; and
    • invest money held by the brokerage on behalf of the strata corporation
  • the timing, frequency and nature of accounting statements and other records that must be provided to the strata corporation in addition to those required under the Real Estate Services Rules;
  • a description of the records to be kept by the brokerage in addition to those required under the Strata Property Act; and a provision respecting the use and disclosure of strata corporation information including personal information about owners who are members of the strata corporation.

What is a Buyer Agency Agreement and why would I want to enter into one?

Buyer agency agreements are less common contracts between buyers and their real estate professionals. These contracts serve to protect both you and the real estate professional by outlining what the real estate professional agrees to do for you. The contract may include provisions for how the real estate professional will get paid if the seller is not offering a cooperating commission, what area and types of properties you are looking for and can even include specific instructions from you such as a requirement that the real estate professional ask about deaths on a property, or any other stigma that impact your decision to buy a home.

Are electronic signatures permitted on contracts?

Yes. In BC, electronic signatures are valid on all types of contracts. This must not be confused, however, with an email signature at the bottom of the email. An electronic signature must be on the contract itself as would a signature written in ink. Your real estate professional will have programs that can be used to facilitate an electronic signature and it can be done on a phone tablet and many computers.