Under what circumstances does an agreement end?

All good things come to an end they say, and the same can be said of agreements made between a brokerage, through their REALTOR^®, and a client. The clarity of how this can happen is crucial to the clear understanding of the parties. It is a simple fact agreements start and end within a season of representation, and in real estate, the ways this can happen must be detailed in the agreement itself. Let’s take a quick look at the various ways agreements can end.

Successful Sale or Purchase 

Single-handedly the most common way an agreement would end would be the successful sale or purchase of the property anticipated by either the seller or buyer representation agreements. This means the brokerage has satisfied its responsibilities to the client and the client has accomplished their goal through the agreement. Once the transaction is complete, the obligations of the brokerage and the client end with each other, but in the case of the representing REALTOR^®, they are always glad for referrals from happy clients!

Mutual Agreement

As it goes with relationships sometimes, they don’t always work. This could be a personality conflict between the REALTOR^® and the client where both parties mutually agree the relationship just isn’t working, or something has changed in the client's ability to buy or sell. In such situations, the brokerage and the client can simply agree in writing to mutually end their relationship, but perhaps still be friends. Sometimes this results in the client choosing a new brokerage that is a better fit for them, and the brokerage understands that is for the best.

Brokerage Issues 

Real estate brokerage in Alberta is a business, and as with any business, there is always a possibility of failure. In situations where the real estate brokerage business fails financially, by way of receivership, bankruptcy, or insolvency then the parties agree they would no longer be financially viable to maintain the representation capacity required in the agreement so it would dissolve immediately. Additionally, if a brokerage has its license suspended or canceled by the regulator, the brokerage would no longer have the legal ability to trade in real estate, and the agreement would dissolve immediately.

Bad Behaviour 

As a contract formed in common law, the buyer or seller representation agreement requires certain responsibilities of both the brokerage and the client. These responsibilities detailed in the agreement themselves form part of the agreement, so where one or more are substantially breached by either the brokerage or the client a provision is included to dissolve the agreement. This requires written notice from the damaged party to the breaching party of what specific portion of the agreement has been substantially breached and that the damaged party is giving notice that the agreement is ended immediately. As one may assume, this can be cause for legal action and should only be pursued under the advice of legal counsel to help determine if the breach is substantial.

Board Backlash 

When a REALTOR^® on behalf of their brokerage engages either a buyer or seller to provide services to help them buy or sell property, there is an expectation that a significant amount of the value the brokerage brings to the relationship is their connection to the real estate cooperative, board or association including the use of the MLS^® system to search or list a property for sale. In situations where a brokerage ceases to be a member of the real estate board by discipline, or choice but remains a licensed brokerage under the act, it can be inferred that a portion of the value a client was contracting for is no longer available to them. If the client determines this is the case for them, they may at their own discretion give notice to the brokerage they are ending the agreement due to the change of their membership status with the board, and the agreement is ended immediately.

It should be noted that if for any of these reasons the agreement is ended between the brokerage and the clients, the rights of the parties will remain in effect and legal advice should be sought to determine the next steps for the client. Brokerages and their REALTORS^® go above and beyond every day in service, expertise, and professionalism to live up to the expectations of the agreement, but good contracts make good relationships and by establishing these rules of play at the onset of the agreement, ensures stability and accountability in the relationship.