Whose Clients are They?

As an Alberta real estate professional, you trade in real estate on behalf of your brokerage. You advertise on behalf of your brokerage. You service clients on behalf of your brokerage. You prospect for clients on behalf of your brokerage and you bring clients to the brokerage. Regardless of how they got there, though, the clients are the brokerage’s clients and when you transfer to another brokerage, you need permission from your original brokerage to approach clients about transferring. Your original brokerage may not agree to the transfer, in which case, you can’t ask the clients to transfer.

It’s a paradox. Individual industry professionals can’t trade in real estate without being registered with a brokerage, and they must trade in the name of and on behalf of the brokerage. On the other side of the equation, brokerages without individual industry professionals may find themselves with very few clients. They need each other; one is nothing without the other.

Clients of common law brokerages:
In a common law brokerage, clients enter into a service agreement with the brokerage. The brokerage is the agent for the client and the real estate professional is the brokerage’s representative, acting on behalf of the brokerage, to service the client.

Clients of designated agency brokerages:
In a designated agency brokerage, clients enter into a service agreement with the brokerage. The brokerage then appoints one or more real estate professionals to act as the client’s sole agent. The brokerage also agrees to supervise the sole agent to ensure they act within the law, in accordance with the terms of the agreement, and within the boundaries of the brokerage policies and procedures. In designated agency, appointing a real estate professional to act as sole agent for the client is one of the services the brokerage provides.

Transferring your licence, registration and the clients:
Once you have decided to switch brokerages, you must first terminate your registration with your current brokerage and then register with the new brokerage. As soon as you terminate your registration with your original brokerage, you can no longer provide services to clients on behalf of that brokerage.

Real estate professionals should proactively discuss a transfer with their broker before terminating their registration. Finding out how to deal with existing clients is one of the key elements of that conversation. You may have already considered and dealt with this issue in your employment agreement or independent contractor agreement with the brokerage. Alternatively, you may have to deal with the issue in the meeting with your broker without the benefit of a term in an employment agreement. Either way, you must have the brokerage’s consent to approach existing clients about transferring with you.

Client service
There are three distinct phases of servicing clients:

1. Buyers and sellers who have not yet entered into a purchase contract.
2. Buyers and sellers who have entered into a conditional purchase contract, but who have not yet satisfied or waived all conditions.
3. Buyers and sellers who have entered into a purchase contract that is unconditional, but not yet closed.

Transferring clients to your new brokerage may be more or less difficult depending on the phase. Whether the client is a buyer or a seller will also affect the amount of effort required to transfer the client. You and your broker will approach each client differently depending on the phase of the transaction. For example, the broker may agree to transfer all clients who have not entered into a purchase contract, but may not agree to transfer clients who have.

Your successful transfer between brokerages is dependent on a number of factors and client management is one of the most important elements to consider. Working proactively and collaboratively with your broker will typically bring everyone the best results.

How have you approached this issue with your broker when wanting to transfer clients to a new brokerage?