November 8th - 2004

Confirmation of Co-operation and Representation - the multi-purpose form

As the name suggests, OREA’s Confirmation of Co-operation and Representation form serves two purposes.

As the name suggests, OREA’s Confirmation of Co-operation and Representation form serves two purposes. The first is to confirm a listing broker’s agreement to co-operate and pay commission to a co-operating broker upon the sale of a particular property. This agreement between brokers is essential for properties that are either listed exclusively (not on MLS) or listed on a different real estate board's MLS system.

The second purpose is to disclose the agency role of the broker or brokers involved in the transaction. Clauses that detail the agency relationships are sometimes added to the agreement of purchase and sale. Since the brokers are not a party to the transaction, there is a strong argument that an agency clause should not appear in the offer but rather on a separate form. In addition, RECO's Rule 3 requires that:

At the earliest practical opportunity, but no later than when the Member Accepts an Agency, a Member shall fully disclose in writing the role and nature of the service that the Member shall be providing to the Person. The Member shall also disclose the Member's role to others involved in the Transaction when appropriate.

Why use it?
Here are examples of issues hat may sometimes occur in real estate transaction and how these problems can be diminished by using the Confirmation of Co-operation and Representation for every transaction:

  • The listing broker agreed six weeks ago to co-operate on an exclusive listing but now that you are presenting an offer, you are being informed that seller and listing broker have decided to reduce the commission. (Get this form signed at first contact with the listing broker and these problems can be avoided.)
  • The listing broker is claiming you verbally agreed to reduce the commission to co-operating broker that was indicated on the MLS listing. (The co-operation agreement confirms the amount of commission to co-operating broker.)
  • You are presenting an offer from a buyer broker on one of your listings and, to your dismay, the offer includes a clause increasing the commission to co-operating broker. (The offer should NEVER be used to negotiate the amount of commission the listing broker is paying the co-operating broker and these issues can be resolved and documented on the form before an offer presentation.)
  • The buyer is claiming you never mentioned the topic of agency and they thought you were representing their interests. (The form will confirm the buyers understood their status as customer.)
  • The property you sold was not listed and the sellers are now claiming you should have protected their interests. (Even without a commission agreement from the sellers, the form also can document customer status of the seller.)
  • The sellers are not happy with the transaction, claim they were not aware that you also represented the buyers, and are refusing to pay the commission. (The form can confirm the buyer and seller were aware of the dual agency.)
  • The buyers are not interested in signing a buyer agency agreement and the listing office informs you that the seller will not permit sub-agency. (Because of the potential for liability, the sellers may not want to extend sub-agency to co-operating brokers and salespeople. The form provides for this situation to be documented.)
  • The buyer broker waived the offer of sub-agency and compensation when the offer was accepted but now requests the commission as indicated on the MLS listing. (The form will prevent any misunderstanding between brokers on this important issue.)
  • Your seller clients claim, after the Agreement is signed, that they were not informed that the buyer is the daughter of your common-law spouse. (The daughter does not fall under the RECO definition of 'Related Person', but such additional disclosures can be made on this form by the co-operating broker.)

The best reason to use the Confirmation of Co-operation and Representation form:

 

  • The transaction was completed without any problems and exactly as described in the Confirmation of Co-operation and Representation.

Will this multi-purpose form eliminate all of the problems you may encounter with a real estate transaction? Not likely. Will it eliminate many of the potential problems? It will certainly help, but only if it is used regularly and used correctly.

For more information on the proper use of this form, contact the OREA Real Estate College Continuing Education Department and register for a course on the use of OREA forms.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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