This is Part 1.2 in our Real Estate Blog Series.
In our first article, we discussed the issue of professional negligence and the steps real estate agents can take to minimize their exposure to litigation. An essential part of these steps include common law obligations that real estate agents have to their clients. We’ll take a closer look at the wider scope of these obligations, which can be broken down into two categories.
In this blog post, we will discuss the first category, which concerns general obligations of real estate agents. In Ontario, the general obligations agents owe to their clients stem from the legal framework under the Real Estate and Business Brokers Act:
1. To exercise care and skill: the Act provides a benchmark for the standard of operational skills required to carry out real estate services including providing services with requisite knowledge and skills, accuracy of information and the recommendation of relevant experts, where applicable;
2. Ensure honesty: honesty is the cornerstone of a real estate agent’s service. Real estate agents must demonstrate honesty of intent in all their dealings with the client or the customer;
3. Confidentiality: maintaining utmost confidentiality with respect to all matters relating to the client’s file including but not limited to reasons for buying/selling, personal information and amounts to be paid or accepted during negotiations;
4. Complete Disclosure: Agents must disclose all relevant information pertinent to the client, especially information that may contain damaging content. For instance, actual or potential conflicts of interest, and any information relating to the transaction;
5. Negotiation: always keep the client’s best interest in mind. Favourable terms and conditions, based on negotiations, should be included in the agreements;
6. No delegation: all real estate agents must perform their duties in person and avoid delegation of duties unless specifically agreed with client;
7. Follow instructions: client’s instructions with respect to any real estate transaction set out the scope of services to be provided by the agent and must be followed to the letter. The only exception to the rule is if the client’s instructions go against the law (for example, the client asks you to overlook a certain defect in the property or to create a misleading advertisement regarding the property);
8. Perform mandate: the representation agreement should outline the mandate that must be performed. If this is ever in doubt you should always clarify before acting. Never hesitate to ask, as agents must act within the specified authorization.
You’ve now seen a snapshot of the first category that concerns itself with the general common law obligations held by Real Estate agents to their clients. Stay tuned for the next instalment of our series that will focus on the fiduciary aspect.