Designated Agency FAQs

General

What is designated agency?

Designated agency is a way for a brokerage to provide agency representation services to consumers, as an alternative to the traditional common-law agency model. In designated agency, the agreement to provide brokerage services is still between the brokerage and the consumer, but the agency relationship is strictly between the consumer and the individual designated industry member(s) (the ‘designated agent’). The term designated agent refers to the named individual industry member or group of named individual industry members with whom the client has an agency relationship. In order to practice this form of agency, a brokerage must formally adopt this model by becoming a designated agency brokerage and thereby ceasing to be a common-law brokerage. Any broker interested in transitioning into designated agency must rst contact the Nova Scotia Real Estate Commission.

Are there benefits of designated agency?

You decide. Arguably, consumers see their relationship as being with the individual industry member with whom they interact, so designated agency is consistent with consumer expectations. When properly practiced, it eliminates the conflicts of interest under common-law that arise when two industry members in the same brokerage represent the buyer and seller, in the same transaction. In a common-law brokerage, two industry members may, for example, have an agency relationship with a seller and a buyer, respectively.

If the buyer client were to decide to offer on the seller client’s property, the concurrent representation of two opposing parties in a single transaction would create an inherent conflict of interest, based on the principles of common law. This would require a change in representative capacity to eliminate this conflict of interest since the brokerage is legally unable to provide sole agency representation to parties on competing sides of a transaction. One alternative solution is for the relationship to change to transaction brokerage. In this new arrangement, neither party would receive any advice or representation from their respective industry member or brokerage.

In this scenario, a concern is that the parties (buyer, seller and industry members) may or may not clearly understand the implications of entering into such an agreement. In the transition from sole agency to transaction brokerage, you, as the industry member, can face serious challenges as you may want to instinctively advise or assist the client but you are now legally required to practice complete impartiality. Likewise, the consumer may not fully understand the scope of your limited representation created through this transition. These limitations include all advisory services connected to the transaction.

An industry member working under designated agency is the sole agent for each of their clients. Therefore, they are able to maintain that agency relationship, even in an “in-house” transaction, as long as both buyer and seller are represented by two different designated agents within the same brokerage. A conflict of interest from concurrent representation arises only under the following circumstances in a brokerage practicing designated agency;

  • When a buyer represented by the designated agent becomes interested in a property listed by the same designated agent; or
  • When the seller’s designated agent decides to purchase the property personally

In this case, the designated agent must first obtain a signed transaction brokerage agreement from the seller and buyer, before entering into transaction brokerage. In the third case, the industry member must sever the agency relationship between the designated agent and the seller by terminating the designated brokerage agreement. As a result of these differences, the instances of concurrent representation conflicts of interest arising has the potential to be reduced when a brokerage adopts the designated agency model. This results in more clients being able to maintain full agency benefits from the brokerage and industry members who represent them.

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Practising Designated Agency Basics

What happens if a buyer and seller in a single transaction are represented by two different designated agents, who are licensed by the same designated agency brokerage?

The buyer would have a Buyer Designated Brokerage Agreement (BDBA) with their designated agent and the seller would have a Seller Designated Brokerage Agreement (SDBA) with their industry member. Each designated agent must maintain the confidentiality of their client’s information, act solely in their client’s best interests and provide full agency representation.

What happens if two or more buyers competing for the same property are represented by two different designated agents, who are licensed by the same designated agency brokerage?

The buyers would each have a BDBA with their respective designated agent. Each designated agent must maintain the confidentiality of their client’s information, act solely in their client’s best interests and provide full agency representation.

What happens if the same designated agent at a designated agency brokerage represents a buyer and seller in a single transaction?

As the designated agent of both the seller and the buyer, the industry member would owe conflicting duties of loyalty, confidentiality and representing best interests, to the seller and buyer. Accordingly, the designated agent would have to obtain the written consent of both parties, in the form of a Transaction Brokerage Agreement (TBA), to act as an impartial transaction facilitator under transaction brokerage. All parties would signify their consent to this relationship by signing a separate transaction brokerage agreement, BEFORE any offer to purchase is prepared.

I am a broker of a designated agency brokerage, and as broker I have reviewed an accepted agreement of purchase and sale handled through my brokerage. I am also a trading broker. Subsequent to my review, the sale fell and now my buyer client wants to submit an offer on the property. What should I do?

As a broker of a designated agency brokerage who also actively trades, you may find yourself in this situation, or something similar, where you have knowledge of another agreement for a property in which your clients are interested. Your duty of confidentiality extends beyond a particular trade. One option is for you to represent the buyer in the sale, but because of the potential conflict where the buyer’s designated agent (you, the broker) has had access to the previous agreement of purchase and sale, the seller would have to acknowledge this and agree to it in writing, BEFORE any offer to purchase is prepared. After receiving such acknowledgement, you may proceed. Any knowledge gained by you in your capacity as broker could not be used to benefit the buyer client. In this scenario, another qualified industry member at the brokerage, preferably a managing associate broker, must be assigned by the broker to review the real estate agreements and represent the brokerage (i.e. act in supervisory role) in that specific transaction.

A second option is for you to refer the buyer to another designated agent at the brokerage in order to reduce any real or perceived conflict of interest. The Commission strongly recommends the second option since it exposes the client and brokerage to less risk.

I only intend to introduce my buyers to properties where my commission is paid by the seller. Is that okay?

No. The BDBA (as well as the common-law buyer brokerage agreement, “BBA”) and the Commission Bylaw require industry members to seek out and advise the buyer of available properties in the market area which may meet the buyer’s requirements, including those listed with other brokerages, those “for sale by owner” and all other available properties known to the industry member. Industry members who do not intend to introduce their buyers to;

  • a “For Sale By Owner” where the seller is not prepared to remunerate the buyer’s brokerage;
  • an exclusive listing with a brokerage that is not offering any cooperating brokerage commission; or
  • an MLS® listing where the cooperating brokerage commission being offered is less than the industry member is prepared to provide their services for (including Mere Postings);
  • must ensure that their signed BDBA (or BBA) re ects this limited representation. Without the written lawful instruction to not show such properties or represent their client in such circumstances, the designated agent may breach the Bylaw and their duciary duties to their client. It is imperative that industry members wishing to represent buyers reach a clear, written, understanding with their client at the start of their representation about compensation and the nature and extent of the services they are prepared to provide.

    Remuneration expectations are laid out in the BDBA (or BBA) and any changes to the remuneration must be properly documented and authorized in a written amendment to that agreement.

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Confidentiality in Designated Agency

How are privacy and confidentiality different under designated agency?

Under common-law agency, the service agreement and agency relationship is between the brokerage and the client. The agency obligation of client confidentiality—whether personal information, information relating to the service agreement or relating to a specific transaction—is owed at the level of the brokerage. The brokerage is responsible for keeping client information confidential from third parties, but not from industry members within the brokerage. This means, even though a client may only deal with one specific industry member, the client’s file is theoretically available to all industry members in the brokerage, and the knowledge of the specific industry member is attributed by law to all other industry members in the brokerage. All industry members in a common-law brokerage are legally deemed to have the same knowledge of each client.

Under designated agency, the agency obligation of client confidentiality is owed at the level of the industry member acting as the designated agent. The brokerage is still responsible for keeping client information confidential when dealing with third parties. The brokerage must also ensure each designated agent within the brokerage keeps their clients’ information confidential from other designated agent licensed within the brokerage who are not acting as designated agents for the same clients. The brokerage and the designated agent undertake that they will not disclose any confidential information concerning the client to any other designated agent at the brokerage unless authorized by the client or required by law. This responsibility also pertains to any unlicensed employee of the brokerage or designated agent.

I am a salesperson at designated agency brokerage and I need advice on a transaction. Can my broker give me advice?

Potentially. Brokers have obligations under the Commission’s Bylaw to supervise the activities of their industry members, which include ensuring the business of the brokerage is carried out competently. Despite the fiduciary obligations between the client and the designated agent established under designated agency, the broker still must comply with the Bylaws by adequately supervising the designated agents and ensuring the designated agents are compliant with the Act, Commission Bylaw and the brokerage’s policies.

In order to ensure you are simultaneously supervised and assisted, one of the following may take place;

  1. The broker may provide hypothetical advice to broad questioning, while continuing to treat the interests of the seller and\or buyer in an even-handed and objective manner. If this option has any potential to create a conflict of interest with the broker the risk of conflict increases substantially in cases where the buyer and seller are clients of the brokerage to a particular trade.
  2. The broker may assign an additional second designated agent to help represent the client. Again, if there is a potential conflict, the risk of conflict increases substantially.
  3. The broker may advise if the designated agent(s) is violating a provision of the Act or a Bylaw, and suggest they review specific sections of the appropriate legislation.

In each of these scenarios, the broker acts as a supervisor but can provide some assistance and advice regarding a transaction. Regardless of the approach, your duty of confidentiality to the client is paramount and you must take every action to ensure that their information is protected.

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Forms & Agreements in Designated Agency

In a designated agency brokerage, is it necessary to have written service agreements with sellers, and which form do I use?

Yes. Designated agents representing sellers must have a SDBA completed and signed by their seller clients.

When must a seller sign the SDBA?

A SDBA must be signed as soon as an agency relationship occurs. The seller must be given a true copy (original or identical copy of the original) of the signed SDBA immediately upon signing and initialing.

If my brokerage is practicing common-law agency and changes to designated agency, do seller clients need to sign a SDBA?

Yes, all sellers who have active seller brokerage agreements must sign a new SDBA at the time the brokerage changes agency models. This rule also pertains to seller clients with listings on which there are pending offers.

If my brokerage is changing agency models, do my seller-customers need to sign a new non-agency service agreement and/or acknowledgements (for example, mere posting service agreement, fee agreement and seller-customer status acknowledgment, seller-customer status acknowledgment)?

No. The change in agency model relates to agency and therefore only affects client relationships not customer relationships, which are non-agency under either model.

I plan to change brokerages and the new brokerage practices a different agency model. Do my sellers need to sign a new brokerage agreement?

Yes. If your current brokerage consents to you taking the listings to the new brokerage, and your sellers also consent to the move, you may do so and must sign a new brokerage agreement with the sellers. This applies whether you are moving from a common-law brokerage to a designated agency brokerage or vice versa.

What happens to designated brokerage agreements if the designated agent changes brokerages or they cease to be licensed with their brokerage (i.e. leave the industry)?

The seller and buyer designated brokerage agreements contain a clause that stipulates that, if for any reason, the designated agent ceases to be licensed with the brokerage, the brokerage will designate another industry member licensed with the brokerage to act as the designated agent for the seller/buyer. Despite this clause, each brokerage must have a written policy and procedures manual to speak to this specific circumstance. All industry members licensed with the brokerage must acknowledge this policy in writing.

In a designated agency brokerage, is it necessary to have written agency agreements with buyers, and which form do I use?

Yes. Designated agents representing buyers must have a BDBA completed and signed by their buyer clients.

Why do buyers represented by a designated agency brokerage need to sign BDBAs?

Buyers must sign a BDBA because buyers must consent in writing to opt out of common law.

When must a buyer sign the BDBA?

A BDBA must be signed as soon as an agency relationship occurs. The buyer must be provided with a true copy (original or identical copy of the original) of the signed BDBA immediately upon signing and initialing.

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Changing Brokerages and Agency Models

I am a designated agent with several buyer and seller clients. Are these my clients?

In designated agency, the agency relationship is between the designated agent and the clients, however contracts with clients and customers are with the brokerage.

I work at a designated agency brokerage, and want to take my clients with me to another brokerage, which is also a designated agency brokerage. How do I do that?

In designated agency, the agency relationship is between the designated agent and the clients, however contracts with clients and customers are with the brokerage.

What if I am going to a common-law brokerage from a designated agency brokerage or vice versa?

If you are changing brokerages but the new brokerage is a different agency model, the sellers/buyers who agree to change brokerages to retain their relationship with you must sign a new brokerage agreement (BDBA, SDBA, BBA, SBA) consistent with the model of agency now being practiced and must understand the differences and implications of the change in agency representation they will receive. Other pertinent real estate documents may need to be updated as necessary.

If my brokerage is practicing common-law agency and changes to designated agency, do buyer clients need to sign a buyer designated brokerage agreement?

Yes, all buyers represented in a designated agency brokerage must sign a BDBA. This applies to any buyers with whom the brokerage is in agency relationships with at the time the brokerage changes models regardless of whether there has been a BBA signed by the buyer under common-law agency. This includes buyers with an accepted agreement of purchase and sale as of the date that the brokerage changes agency models, as well as all those who are in agency relationships with the brokerage.

If my brokerage is practicing common-law agency and changes to designated agency, do customers need to sign new customer status acknowledgements?

No. The change in agency models relates to agency and therefore only affects client relationships, not customer relationships, which are non-agency under either model.

If my brokerage is practicing common-law agency and changes to designated agency, do I have to get new agreements of purchase and sale or amend existing (pending) agreements of purchase and sale?

No. The agency disclosure in the agreement of purchase and sale would be the same for industry members practicing common-law or designated agency.

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Adding a Designated Agent

Who can take care of my clients if I am sick or away on holidays if I am in a designated agency brokerage?

With the seller’s/buyer’s written consent, the broker may designate another industry member to act on the buyer’s/seller’s behalf for the period of time you are away (or otherwise unavailable). The replacement industry member must be added to the SDBA or BDBA by a written amendment signed by the client and both industry members. The replacement industry member then becomes part of the designated agent for the client. Their agency relationship with the client can be severed at the end of the period for which it is required, providing the amendment to the brokerage/designated brokerage agreement reflects a specific time-period, or the designated brokerage agreement is again modi ed by written amendment. The termination of the replacement industry member’s agency relationship does not relieve them of their duty of confidentiality to the seller/buyer even after their agency relationship is severed.

Does a client have to be noti ed and provide a signature to authorize a replacement (or additional) industry member to become their designated agent?

Yes. The client must consent in writing to all changes to the SDBA or BDBA , using an amendment to the seller or buyer designated brokerage agreement.

Must an industry member who hosts an open house for the seller’s designated agent always become a designated agent for the seller?

Yes, though that relationship may be severed later (as noted above). If the seller’s designated agent cannot be present at an open house, they may, with the seller’s written consent, have another industry member “host” the open house. As noted above, the replacement industry member must be included on the SDBA, or added (even for a short period of time) using an amendment to the seller/designated brokerage agreement in order to become part of the designated agent and be deemed to act on behalf of the seller.

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Teams in Designated Agency

Why is there a difference between what teams are required to do under common-law and under designated agency?

Under common-law agency, the agency relationship is between the buyer/seller and the brokerage. All industry members licensed with the brokerage represent the clients of brokerage and are deemed to know all relevant information about those clients. For example, when any industry member at a common-law brokerage takes a listing, every industry member at the brokerage is immediately considered to be a representative of that seller and owes that seller undivided loyalty, advice and advocacy. This is why a common-law brokerage that represents a buyer and a seller in a single transaction must limit their duties to each party, employing transaction brokerage or treating one party as a customer.

When it comes to teams under common-law, team members can freely share information about brokerage clients amongst themselves, because industry members at common-law brokerages have always been free to share information about brokerage clients.

Under designated agency, agency relationship is between the buyer/seller and the designated agent specified in the brokerage agreement only. Unlike under common- law agency, when any industry member at a designated agency brokerage takes a listing, only the industry member specified in the brokerage agreement as the designated agent represents the seller and owes that seller undivided loyalty, advice and advocacy. It is the brokerage’s responsibility to put policies and procedures in place to protect the confidential information of all brokerage clients and ensure the designated agent does not communicate any of the client’s confidential or sensitive information to other industry members of the brokerage. This is why a designated agency brokerage can represent a buyer and a seller in a single transaction with full agency representation to both parties.

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Teams and Agreements

As broker, what documents do I need in place for each team operating with my brokerage?

You must create a written brokerage/team contract for each team and their respective team members. The brokerage/team contract must state the team name, that the team members agree to work together on the team as one designated agent and identify which team members can sign a real estate service agreement (i.e. SDBA) on behalf of all other members on the team. The brokerage/team contract must be signed and dated by each member of the team and the broker. Maintain the brokerage/team contract as long as the team operates at your brokerage. If there are any change to the team, a new brokerage/team contract must be completed.

Do the names of all team members have to be included as the designated agent on designated brokerage agreements?

Yes. The licensed names of all members of the team must be inserted in the space provided In designated brokerage agreements. Where there are space considerations, additional names must be provided on an attached Schedule. While all members of the team must be listed as the designated agent, any single member of the team may execute documents on behalf of the brokerage (i.e. all members of the team are not required to sign the document), providing the brokerage maintains a signed team agreement that indicates who has the authority to bind the team.

What if I am part of a large team and there isn’t enough room on the brokerage designate section?

You must write the name of your team and followed by an attachment reference. The attachment to the service agreement must be a written document (i.e. schedule or addendum) that clearly identifies all the members of your team.

Can a single member of a team be appointed as the designated agent of a buyer or seller?

No. As team members share, or are deemed to share, confidential information of their clients, all members of the team must be listed as the designated agent of any buyer or seller represented by the team or any of its members. Where both the buyer and the seller are being represented by the team as the designated agent, they must agree to the team limiting its agency obligations in transaction brokerage.

If a designated agency relationship has already been established with one party but has not yet been established with the other party, there is also the option of all team members being the designated agent for the first party, and all team members treating the second party as a customer.

Who is required to sign service agreements and related documents that I prepare (i.e. amendments to seller/buyer designated brokerage agreements)?

If your brokerage/team contract identi es you as being authorized to sign service and service-related agreements on behalf of your team, you must sign them. If you are not identi ed as a team member who can sign on behalf of a team, another team member who has signing authority must sign agreements that you prepare.

When I am preparing service agreements and service-related agreements, how do I fill out the section that identifies who the brokerage designates?

You must write in all the names of the industry members on the team and the team name.

When I prepare an agreement of purchase and sale for a buyer, how do I complete the agency relationship disclosure section of that agreement?

You write in your brokerage name, your name and your team’s name.

Whose name do I write in the agency relationship section for the seller if they are represented by another brokerage?

If the property is listed on MLS® and is not a mere posting, you write the other brokerage’s name, the industry member(s) identified with the listing and the team name, if applicable.

My team represents a buyer. I prepared the agreement of purchase and sale, but someone else on my team is finalizing the offer with the buyer, and presenting the offer to the seller’s brokerage. Whose name do I write in the agency relationship disclosure section of the agreement of purchase and sale?

You write the team name, the brokerage name, and the name of the industry member finalizing the offer with the buyer and presenting the offer to seller’s brokerage.

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Teams and Assistants

I am a licensed assistant to two industry members who are not a team. Do I need to be disclosed in and included as a signatory on service and service related agreements?

If you will be privy to any confidential information concerning a client of either industry member then you must to be added as a designated agent on any service (or service-related) agreements entered into by the respective industry member(s) you assist. Once added, you must also sign any service or service-related agreement.

If I have a licensed assistant, do we have to advertise as a team?

No. Licensed assistants do not fall under the definition of a team as listed above.

If I have an unlicensed assistant, are we a team and can we advertise as a team?

No, and no. Unlicensed assistants are not counted as team members. Unlicensed assistants cannot advertise directly or indirectly in real estate.

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Teams and Advertising

I want to advertise as being part of a team, but also on my own. Is this okay?

No. You are on team or you are an individual. You cannot be both. All advertising must identify your team, including, but not limited to, business cards, print advertising, digital advertising, social media, for sale signs, etc.

Can my team have a team logo and can I advertise using that logo?

Yes, but your team logo/name cannot appear larger than the brokerage name in any advertising. Your team logo/name must be the same size as or smaller than the brokerage name in all advertising. The team name/logo cannot appear to be a brokerage.

Our advertising has our team picture. Is that okay?

If your advertising contains a team photo, you must identify each person in the picture.

Our For Sale signs and business cards contain our team name, but are individualized for each person with their own picture, name and phone number. Is that okay?

Yes, providing the brokerage name and team name appear, with the brokerage name prominent.

Who approves my team name/logo?

Brokers are responsible for approving all team names, logos and all advertising.

Another industry member and I want to advertise our services jointly to save money. Does this make us a team?

No. Not unless your advertisement makes you and the other industry member appear;

  • to be working together to provide real estate services,
  • to be a single entity, and
  • under a collective name, like team or group.

I am not part of a team. What do I need to know about co-advertising?

Industry members do not have to be a team to co-advertise; however, designated agency places additional obligations on industry members to safeguard client information, including designated agency information barriers. Co-advertising must comply with the requirement for each designated agent to have a dedicated phone number, email address and fax number, which means advertisements and websites must display individual contact information for each industry member engaging in co-advertising. As with all advertising, make sure you have your broker review and approve the ads.

My For Sale sign has my brokerage name and my team name on it. Can I add a rider to the sign that has my name on it?

Yes.

If I am on a team and we advertise together, may we list individual phone numbersfor each team member in the advertisement?

Yes

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Co-Listings and Designated Agency

How does designated agency apply to a co-listing between two different brokerages?

In a scenario where two industry members at different designated agency brokerages co-list a property, only the specified designated agents are representing the seller. If a prospective buyer was represented by one of the designated agents, transaction brokerage would be required. If a prospective buyer is represented by any other industry member engaged by either brokerage, transaction brokerage would not be necessary.

If industry member #1 lists their own property with industry member #2, who works in the same brokerage, may industry member #3 in that same brokerage act as the designated agent of a prospective buyer without being an impartial transaction facilitator?

Yes. Industry member #3 could act as the designated agent of the buyer without being an impartial transaction facilitator as long as there is no sharing of the confidential information of either the buyer or the seller among industry member #3 (who represents the buyer), industry member #1 (who owns the property), and/ or industry member #2 (who represents the seller). If any confidential information has been shared, the brokerage would have to seek and obtain the written consent of the buyer and the seller to have industry members #2 and #3 continue to represent the parties as impartial transaction facilitators (i.e. transaction brokerage).

Due to the sensitive nature of this type of transaction, brokerages and their industry members should proceed with caution and ensure that the buyer is fully aware of the unique situation and the fact that the seller is an industry member with the brokerage. Industry member #1 will be required to provide the usual written disclosure of their interest in the trade to the buyer, and of their licence status, when presenting the offer.

The latter also applies where an industry member wishes to purchase a property listed by their brokerage where another industry member is the listing representative.

Industry member #1 has an expired listing re-listed by industry member #2 at the same brokerage. Are there any circumstances under which industry member #1 could be the designated agent of a buyer and industry member #2 could be the designated agent of the seller?

Yes. After the initial listing expires, the agency relationship between the seller and industry member #1 is over, save and except for the requirement of confidentiality. Industry member #1 is free to represent buyers in full agency, but must not disclose any confidential information learned in their previous agency relationship with the seller.

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Other Important Questions

If I am representing a buyer, does it have to be an exclusive right to represent?

No. A buyer may choose to have a non-exclusive contract (or open contract). Such an arrangement must be clearly documented in the BDBA.

We are married designated agents who are not a team and do not co-list. Can this work?

Yes, provided each industry member takes every action to ensure the client’s confidentiality is protected. For example, if husband and wife represented both sides of a transaction it would be difficult to represent. You would have to assess every situation to ensure you are not in a perceived conflict.

We are two designated agents who share the same licensed industry member as an assistant. If we represent both the buyer and seller in a transaction, both of whom are clients, what type of agency should be entered into?

The licensed assistant is by virtue a designated agent of both clients. The licensed assistant has or is perceived to have access to all the information of these respected clients. In this circumstance you are acting in the capacity of transaction brokerage.

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The Nova Scotia Real Estate
Commission
is the regulator of the
Nova Scotia real estate industry.

Contact Us

Nova Scotia Real Estate Commission

601-1595 Bedford Highway
Bedford, NS
B4A 3Y4

p: 1.902.468.3511 or
1.800.390.1015

f:  1.902.468.1016 or
1.800.390.1016

e: For licensing information
licensing@nsrec.ns.ca
For complaints
compliance@nsrec.ns.ca