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Should I sign a Buyer Representation Agreement with a real estate agent?
In Ontario, you are only required to sign a Buyer Representation Agreement (BRA) when you are ready to put and offer on a home. The BRA ensures one agent presents your offers to the selling agents on your behalf.
It’s important to find a reliable real estate agent who has a strong understanding of the housing market and will guide you in good faith. Ideally, you want to work with an agent that is referred to you by someone you trust but being new to the country it's not always possible. You can get information on the agent and find out of they are licensed by researching them on the RECO website. The (RECO) Registrant Search page will give you information about the agent and their brokerage, and will disclose any charges or disciplinary actions initiated against them by clients.
Once you're ready to put in an offer on a house, the agent will ask you to sign an exclusivity agreement or contract. A BRA or Form 300 is a contract between you (the buyer) and the real estate agent (brokerage) that lists terms of their representation in the home-buying process. By signing this contract, you are agreeing to have that agent exclusively represent you when putting offers forward to the selling agents.
You can still see homes and look for sale properties on your own or with another agent but you can only put in an offer on a home with the representing agent of the BRA. Failing to do that, can result in commissions owed to that agent and brokerage even after you pay commissions to a new agent. A BRA term can be anywhere between 90 days to 6 months.
*NOTE: Prohibition on the Purchase of Residential Property by Non-Canadians Act from January 1, 2023 and January 1, 2025 Temporary Residents cannot buy a residential property in Canada with the following exceptions:
- Study Permit holders can purchase a residential property as long as they have been physically present in Canada for a minimum of 244 days in each of the 5 calendar years preceding the year in which the purchase was made. They must also have filed income tax returns for the past 5 years and are restricted to a purchase that does not exceed $500,000
- Work Permit holders can only purchase a residential property if they have a valid work permit and have worked full-time in Canada for at least 3 years within the 4 years preceding the year in which the purchase was made. They must also have filed income tax returns for the 3 years that they worked full-time.
Before you Sign
Always take the time to read over and understand all documentation you are being asked to sign by an agent. There is no obligation to sign any document if you are just looking at homes for sale. Be suspicious of agents trying to rush you through the signing process or that fail to explain properly what you’re signing. Sometimes, unethical realtors target newcomers because it can be easier to trick you into signing things you aren’t familiar with.
While it’s tempting to scan through documents fast, rushing through the review process can be an expensive mistake. You could end up signing and agreeing to terms you weren’t aware of.
Don’t Sign Unless you Understand
Don’t sign anything unless you fully understand what you are signing. Always ask the agent to clarify and explain what you don’t understand, especially if you are unsure of what is being requested of you in the BRA or any other documentation. If you are still unsure of what you are signing, ask your lawyer for clarification first.
When reviewing the contract, make sure all the things you discussed with the real estate agent are clearly listed. Look for things like:
- Services included, agent and brokerage’s duties to you as the buyer and your duties to them.
- Length of representation (typically 90 days but could be up to 6 months or longer).
- If you sign a contract longer than 6 months the agent must ask you to initial the expiration date in acknowledgement that you agree to a term that is longer than 6 months.
- Fees and commission percentage expectations.
- Any other conditions or terms that are important to you that were discussed verbally.
Make sure to obtain copies of all documents the agent has you fill out and sign.
There is no obligation to purchase a home during the term specified in the contract. However, if you put in an offer, you must do it with that agent and brokerage only. The expectation is that you are working with that agent now and they will be showing you listings and handling the offers.
Work Transfer to a New City After you Sign a BRA
If you sign a BRA and transfer to a new city and wish to make a purchase there instead before the term expires, you are still required to use the representing agent and brokerage where the contract was signed. Moving outside of Ontario, could change things depending on the rules in that province. Some provinces have different rules than Ontario. If you are house-hunting and thinking of moving due to work reasons, always ask what happens if you sign the BRA and then have to move?
The Holdover Clause
The “holdover clause” refers to a defined period after your BRA contract expires. If you wish to buy a home that was shown to you by the BRA agent during the holdover period, you are still required to pay the commission fees to that agent. Make sure you ask how long this period lasts before you agree to it, so you are aware of when you are free to make a purchase with a different agent.
Breaking a Buyer Representation Agreement
You can file a complaint with the Real Estate Council of Ontario (RECO) if you are unhappy with how the agent is representing you or you feel that you were wronged in any way,. RECO is the regulatory body that enforces the rules that real estate agents, brokers, and brokerages must follow. They will investigate the situation and let you know how you can proceed. The only way to terminate or break an agreement is if both the brokerage and you agree that the contract must be terminate. You will need to prove why you want to terminate the BRA or "fire" your agent so make sure you keep documented proof to support your request.
For More Information
- Buying your First Home in Canada - A guide for newcomers on everything you need to know about buying your first home.
- Looking to Move - Watch this video from RECO with 4 tips on what you should do before you start planning your home-buying activities.
February 7, 2023