Can I Sign an Offer on Behalf of My Clients?

Posted on: Wednesday, June 19th, 2013

Sometimes situations are encountered in real estate transactions where clients are unavailable to sign the required legal documentation. A recent question was posed by an agent in relation to whether or not a real estate agent would be authorized to sign an offer on behalf of a purchaser if they have a letter signed by the purchaser specifying that they can sign the document on their behalf? The short answer, in my opinion, would be NO.

In this specific situation the agent had a letter from their client which said that the agent had the right to sign the client’s name based on this letter. I contacted RECO about this matter and they have advised that taking this action would be considered ‘improper conduct’.  It is my belief that this agent would need a power of attorney to do this or sign the offer in trust for this person which is a not a recommended way to proceed without understanding your own personal liability.

A Power of Attorney for property refers to a written legal document which authorizes one person (the “attorney”) to make legal decisions regarding another person’s financial affairs and property. A specific power or attorney relates to a specific piece of property and/or period of time for which the named attorney can act on behalf of the other person. In this document, the conditions and parameters of the attorney’s powers are set out. In the context of a real estate transaction, the document will note that the attorney has the power to execute certain documents necessary to complete the purchase or sale of real property (usually a specific piece of property).

Given the amount of power and various legal aspects relating to this sort of document, you as real estate agent should never be asked to prepare this document on behalf of your client, nor should you agree to do it. For more information on powers of attorney read one of my previous articles which can be accessed by clicking here.

It is also possible for a trustee to assign the offer to a third party, referred to as the “assignee”. In these circumstances, the trustee who is currently holding the property in trust (referred to as the “assignor”) would transfer the obligations under the agreement to the assignee. However, when this occurs, the assignor is not automatically relieved of liability when the agreement is transferred to the assignee. As a result, the assignor should ensure that the agreement contains a clause which allows for an assignment and removes all obligations and personal liability on the part of the assignor. Here is an example of a clause that can be inserted:

The offer is made by [assignor name] in trust, with the right to assign, and without personal liability. Upon assignment by the assignor to the assignee, and upon the assignee accepting the obligations herein, the assignor shall be relieved of all liability under the agreement of purchase and sale.

It is interesting to note that both British Columbia and Manitoba have rules pertaining to signing on behalf of clients. The Real Estate Council of British Columbia has a rule pertaining to ‘signing agreements on behalf of clients’, Rule 5-3 under Part 5 – Relationships with Principals and Parties. This rule states the following:

5-3 (1) Before signing a contract on behalf of a client, the licensee must have obtained written authorization for this from the client or an authorized agent of the client.

(2) For certainty, the authorization required by subsection (1) may be provided by a service agreement or separately.

The Manitoba Securities Commission issued a notice in 1997 to all registered real estate brokers, authorized officials and salespersons which stated the following information:

Clearly there could be cases, although rarely, where it may be necessary and permissible for a registrant to sign on behalf of another person. For this to be done properly, there are some factors to take into account:

1. The registrant must have the other person’s permission to sign on their behalf. This is best done by obtaining written authorization to that effect, including a description of the type of document(s) which the registrant may sign;

2. The signature of the agent must be affixed in such a way so as to clearly show that you are signing on behalf of someone else; it may be a criminal offence to do otherwise.

Although British Columbia and Manitoba outline information pertaining to obtaining written authorization and signing on behalf of clients, RECO does not have any specific information pertaining to this. And as previously noted they have advised that this is ‘improper conduct’.

The content of this article is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

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