Standards for Conduct for all Real Estate Brokerage Professionals

RECA developed the Industry Professional Standards of Conduct to assist consumers with understanding the conduct expected of industry professionals.

The Standards of Conduct are plain-language summaries of Part 2 of the Real Estate Act Rules, Industry Standards of Practice. Should any discrepancy occur between these Standards of Conduct and the Real Estate Act Rules, the Rules take precedence.

 

Sections 47-63:  Real Estate Brokerage Professionals

48

Working with a real estate professional

Consumers establish an agency relationship with a real estate brokerage when they agree that the brokerage and its licensed professionals will work on the consumer’s behalf. This is a client relationship. If the brokerage and its industry professionals are not working on behalf of the consumer through an agency relationship, the consumer is a customer, and the brokerage and its industry professionals have reduced responsibilities.

Licensed real estate professionals need to work through a licensed brokerage. One real estate broker manages each brokerage and most brokerages have real estate associate brokers and real estate associates.

Additional Resources
Section 48 of the Real Estate Act Rules
Consumer Information: Working with an Industry Professional
Consumer Information: Industry Members and Their Roles
Consumer Information: Consumer Relationships with Real Estate Professionals
Consumer Information: Client – Real Estate
Consumer Information: Customer – Real Estate

49,

50,

51,

52,

53,

54

Responsibilities and prohibitions of all real estate professionals

  • use the personal and brokerage name that appears on their licence. Industry professionals have to use their licensed name, and work only on behalf of their brokerage. They cannot advertise using only a nickname. Industry professionals who work for a team must not advertise or act in a way that makes them appear separate from their brokerage.
  • ensure their brokerage name is in all advertising. This helps ensure real estate professionals properly identify who they work for.
  • ensure all written agreements comply with legislation
  • only pay a service provider or referral fee through the brokerage.  Industry professionals cannot personally pay referral fees or service providers.
  • accept payment or referral fees through their brokerage. Individual professionals can only receive compensation through their brokerage. This means a consumer can’t pay an individual real estate professional directly.
  • only a brokerage can offer incentives to consumers. Incentives are anything to attract business to the brokerage, such as offers to enter a prize draw, gift cards, or anything of value. Individuals cannot offer their own incentives.
  • real estate professionals can’t provide inducements to consumers except through their brokerage and with their brokerage’s written permission. An inducement is a one-time offer of something of value to close a particular deal, such as a commission reduction or an offer to pay legal fees. Individual industry professionals cannot offer their own inducements.
  • disclose any conflicts of interest they may have in writing, and not proceed unless they have the consumer’s written acknowledgement and permission to continue. Examples of conflicts include a real estate professional representing two buyers who are interested in the same property, or the industry professional is representing a buyer and seller in the same transaction.

Additional responsibilities

Real Estate Brokerages

Must have a licensed broker.

Real Estate Brokers Must

  • manage the brokerage’s business and its industry professionals. The broker is responsible for the brokerage’s industry professionals and its employees.
  • provide the brokerage’s licensees and its employees with policies and procedures to help them understand the brokerage’s expectations of them.
  • hold consumer deposit money (trust money) in accordance with the law, and control access to the trust account. A real estate broker cannot use trust money for any purpose other than the reason it’s held in trust (usually as part of a deposit on a purchase)
  • review all agreements and offers to purchase in a timely manner
  • maintain all documents related to relationships with and services provided to consumers (relationship agreements, offers, purchase contracts, property information, and consumer information). Brokers need to keep records, even records for deals that didn’t go through and offers that weren’t accepted.
  • notify all parties in writing if the brokerage does not receive a deposit, receives a deposit late, or a deposit cheque bounces

Real Estate Associate Brokers and Associates Must

  • provide their broker with all documents
  • be responsible for any assistants or other employees they hire directly, and ensure they adequately supervise them
  • keep the broker informed of their activities, respond promptly to broker inquiries, and notify the broker as soon as possible if they learn of another associate or employee violating legislation.

Additional Resources
Sections 49-54 of the Real Estate Act Rules
Information Bulletin: Responsibilities – Real Estate Broker
Information Bulletin: Responsibilities – Real Estate Assoc. Brokers and  Associates
Information Bulletin: Responsibilities and Prohibitions – Real Estate Brokerage
Information Bulletin: Prohibitions – Real Estate Industry Professionals
Consumer Information: Real Estate and Mortgage Assistants
Information Bulletin: Assistants – Real Estate Brokerage
Information Bulletin: Employees
Information Bulletin: Brokers – Accountability
Information Bulletin: Brokers – Active in Management
Information Bulletin: Advertising – Licensed Name
Information Bulletin: Advertising – False and Misleading
Information Bulletin: Advertising – Clearly Indicated
Consumer Information: Protecting Your Information
Information Bulletin: Protection of Client Information
Personal Information and Privacy Act
Personal Information Protection and Electronic Documents Act
Information Bulletin: Referrals – Industry Member Requirements
Information Bulletin: Recommending Service Providers
Information Bulletin: Trust Money Disputes and Disbursements
Consumer Information: Incentives and Inducements
Information Bulletin: Incentives
Information Bulletin: Inducements
Information Bulletin: Disclose – Conflicts of Interest
Information Bulletin: Prohibition – Discourage Legal Advice
Information Bulletin: Prohibition – Fraudulent Unlawful Activity

55

Disclosing information to you

As soon as possible, and in writing, real estate professionals must, disclose to consumers they are representing:

  • what services they will provide (e.g. advertising, open houses, signs, lockboxes, negotiating, photos etc.)
  • any conflicts of interest (i.e. they have a personal stake in a transaction, or a family member, friend, or existing client has a stake in a transaction)

They must ask you to acknowledge in writing that they gave you this information.

Real estate professionals do not have to disclose these things to you if they are merely hosting an open house you choose to attend, if you are in preliminary discussions about possibly working with them, or if they are responding to general questions from you as a potential client. They only need to make these disclosures when you begin formally working with them, typically through signing a written service agreement.

Additional Resources
Section 55 of the Real Estate Act Rules
Consumer Information: Cost of Services
Information Bulletin: Disclose – Conflicts of Interest
Information Bulletin: Service Agreements – Real Estate Brokerage

 

Sections 57-60: Types of Real Estate Representation

 

57,

58

Sole agency – real estate professional’s obligations to clients

Your real estate professional must use their best efforts to market your property if you’re a seller, and to find a property that meets your requirements if you’re a buyer. This includes showing a buyer properties listed by other brokerages and for-sale-by-owner properties

  • they must promote your interests
  • they must identify themselves immediately to potential buyers/sellers as your agent
  • they must obey all your lawful instructions. If you ask your agent to do something illegal, they cannot obey that instruction.
  • a fiduciary relationship is one in which someone places special trust, confidence, and reliance in the work of another. A buyer or seller places their trust in the hands of the real estate professional. The real estate professional owes fiduciary duties, which include loyalty, confidentiality, and full disclosure of all conflicts of interest.
  • your brokerage cannot appoint another brokerage to act on your behalf unless you give them your written consent.
  • your real estate professional must competently and carefully perform duties for you. That means they must have the enough education and experience, and they can’t be negligent
  • your real estate professional must assist you in negotiating favourable terms and conditions
  • real estate professionals representing sellers must inform all potential buyers of material latent defects in the property known to the agent. Material latent defects are defects that are not reasonably determined by an inspection of the property and that could affect the use and value of the property
  • real estate professionals representing buyers must try to discover information about any property the buyer is considering. This may include asking the seller’s agent additional questions or doing their own research (for example, reviewing flood plain maps)
  • real estate professionals representing buyers must tell their clients if they find out about any competing offers
  • real estate professionals must inform you of any relevant facts or information they learn during a transaction as soon as they can. This might include facts that could seriously affect the transaction, such as the discovery of easements or utility right of ways on a property title, or the fact a buyer has lost their job or plans to immediately sell the property to someone else at a higher price.
  • your real estate professional must give you all offers and counter-offers as soon as they can
  • your agent must keep you fully informed of the progress of your purchase or sale. Your agent must suggest you consult with other experts if those matters are outside of your agent’s area of expertise (e.g. tax lawyer, structural engineer, septic or well water specialists, or electricians and plumbers). 
  • real estate professionals must comply with legislation and the standards of conduct

Additional Resources
Sections 57, 58 of the Real Estate Act Rules
Consumer Relationships Guide
Exclusive Seller Brokerage Agreement
Exclusive Buyer Brokerage Agreement
Consumer Information: Working with an Industry Professional
Consumer Information: Industry Members and Their Roles
Consumer Information: Consumer Relationships with Real Estate Professionals
Consumer Information: Client – Real Estate
Consumer Information: Customer – Real Estate
Consumer Information: Material Latent Defects

58.1

Designated agency brokerages

In designated agency, the brokerage designates an individual real estate professional (or multiple professionals) to act as the designated agent for a consumer. The assumption is the rest of the brokerage has no knowledge of the consumer’s confidential information, and other licensees from the brokerage don’t represent them. The basic obligations of designated agents are the same as in sole agency (see above).

Designated agency brokerages must have policies and procedures to ensure protection of confidential information and policies that govern the brokerage’s operations. They must communicate these policies to clients.

Agreements between consumers and designated agency brokerages must be in writing, and must contain the following details:

  • name(s) of the designated agent
  • what happens if the designated agent leaves the brokerage and the brokerage has to appoint a new agent
  • client acknowledgement that their agency relationship is with the designated agent, and not the brokerage
  • that the brokerage’s role will be limited to supporting the designated agent and ensuring your information is kept confidential

Additional Resources
Section 58.1 of the Real Estate Act Rules
Consumer Relationships Guide
Exclusive Seller Brokerage Agreement (Designated Agency)
Exclusive Buyer Brokerage Agreement (Designated Agency)
Consumer Information: Working with an Industry Professional
Consumer Information: Industry Members and Their Roles
Consumer Information: Consumer Relationships with Real Estate Professionals
Consumer Information: Client – Real Estate
Consumer Information: Customer – Real Estate
Designated Agency Practice Guide for Industry Members

59,

59.1

When a common law brokerage represents the buyer and the seller
(transaction brokerage)

If a buyer and seller are both represented by the same brokerage, it’s a conflict of interest. The brokerage cannot work in the best interests of both sides in the same deal, but the transaction can continue if the buyer and seller agree with transaction brokerage. In transaction brokerage, the brokerage treats each party like a customer, not a client.

In transaction brokerage, the brokerage must treat both parties in an even-handed, objective, and impartial manner. The brokerage cannot advocate for either party, nor can it use discretion or judgement to advance the interests of one party over the other.

Before agreeing to transaction brokerage, the buyer and seller both need to have a chance to review the transaction brokerage agreement and request any additional information if they need it.

If one of the parties does not agree to transaction brokerage, the brokerage will continue to represent the consumer that first had a written agreement with the brokerage. The other party can be a customer of the brokerage, or the brokerage can refer that party to another brokerage or to another designated agent within the same brokerage in the case of designated agency brokerages

Transaction brokerage agreements must outline:

  • how the brokerage or industry professional will get paid
  • how the real estate professional will treat the interests of both parties objectively and impartially (advice given to one side will be disclosed to the other)
  • that they will perform their duties competently
  • that they will obey instructions from both sides
  • that they will not act in a way that benefits one side over the other

The services they will provide to each side include:

  • providing real estate statistics and information on similar properties
  • providing the necessary documents to complete the transaction, and prepare the documents according to the buyer’s/seller’s instructions
  • providing the names of other professionals who may help during the transaction (appraisers, mortgage brokers, surveyors, building inspectors, lenders, insurance agents, architects, engineers)
  • present offers and counter-offers, and relay information between the parties as soon as possible
  • keep both sides fully informed of the transaction’s progress

 
In transaction brokerage, the brokerage or designated agent has to disclose all known defects with a property to the buyer, and all material facts related to the buyer’s ability to purchase the property to the seller.

The brokerage will continue to follow the rules for sole agency, including:

  • holding all deposit money in a trust account
  • not giving false or misleading information
  • not giving either side confidential information known to the agent or designated agent, including:
    • that the buyer may pay a higher price
    • the seller may accept a lower price
    • either side’s motivation for buying or selling
    • any other personal information

Additional Resources
Sections 59, 59.1 of the Real Estate Act Rules
Consumer Relationships Guide
Agreement to Represent Both Buyer and Seller
Agreement to Represent Both Buyer and Seller (Designated Agency)
Consumer Information: When a Real Estate Professional Represents the Buyer and the Seller (Transaction brokerage)
Consumer Information: Working with an Industry Professional
Consumer Information: Industry Members and Their Roles
Consumer Information: Consumer Relationships with Real Estate Professionals
Consumer Information: Client – Real Estate
Consumer Information: Customer – Real Estate
Transaction Brokerage Practice Guide for Industry Members
Information Bulletin: Facilitation Services
Information Bulletin: Transaction Brokerage – Not Always Appropriate
Information Bulletin: Transaction Brokerage – Parties Do Not Agree
Information Bulletin: Conflict – Representing Seller and Buyer

60

Being treated as a customer and not a client

You can choose customer status with a brokerage or designated agent, and you will sign a Customer Acknowledgement Form.

When you are a customer, a brokerage or designated agent will give you reasonable care and skill, they will not knowingly mislead you, they will hold any deposit money in a trust account, and otherwise comply with the legislation. A customer acknowledgement outlines that you understand what it means to be a customer, and that you had the opportunity to get more information or advice before signing it. When you are a customer, the brokerage or designated agent does not work in your best interests, and will not give you any advice or advocate on your behalf.

The brokerage or designated agent will:

  • provide real estate statistics and information on comparable properties provide the necessary documents to complete a deal, and prepare them according to your instructions
  • provide the names of other professionals who may assist during the transaction (appraisers, mortgage brokers, surveyors, building inspectors, lenders, insurance agents, architects, engineers)
  • present offers and counter-offers, and relay information between the parties as soon as possible
  • keep you fully informed of the transaction’s progress

Additional Resources
Section 60 of the Real Estate Act Rules
Consumer Relationships Guide
Customer Status Acknowledgement (Buyers and Sellers)
Seller Customer Acknowledgement and Fee Agreement
Consumer Information: Working with an Industry Professional
Consumer Information: Industry Members and Their Roles
Consumer Information: Consumer Relationships with Real Estate Professionals
Consumer Information: Client – Real Estate
Consumer Information: Customer – Real Estate
Information Bulletin: Customer – Real Estate Brokerage

60.1,

61

Forms when you agree to work with a real estate professional

Real estate professional have to use certain forms. The list of forms are in the Rules, and contain some mandatory content. Real estate professionals can use forms that contain additional content, but that additional content can’t affect the content that is mandatory. Real estate professionals can’t change the mandatory content unless a client asks them to change it and all parties agree.

Real estate professionals must provide and discuss the Consumer Relationships Guide with residential buyers and sellers they’re working with. By signing this document, you are acknowledging that you received and understand it. It is not a contract and it does not obligate you to anything.

When a real estate professional receives an offer or an accepted offer in writing, they have to give their client and the other party a true copy of it as soon as possible.

Additional Resources
Section 60.1, 61 of the Real Estate Act Rules
Consumer Relationships Guide
Exclusive Seller Brokerage Agreement
Exclusive Buyer Brokerage Agreement
Exclusive Seller Brokerage Agreement (Designated Agency)
Exclusive Buyer Brokerage Agreement (Designated Agency)
Agreement to Represent Both Buyer and Seller
Agreement to Represent Both Buyer and Seller (Designated Agency)
Customer Status Acknowledgement (Buyers and Sellers)
Seller Customer Acknowledgement and Fee Agreement
Consumer Information: Written Service Agreements
Information Bulletin: Delivery of Documents – Real Estate Brokerage
Information Bulletin: Service Agreements – Real Estate Brokerage

62

When a real estate professional wants to buy your property, or sell you theirs

Real estate professionals, when buying or selling property on their own behalf, must disclose the following in writing, if the other party to the transaction is unrepresented:

  • that they are the buyer or seller
  • that they are a licensed real estate professional
  • the name of their brokerage
  • if they’ve made a future deal for the property (i.e. they’re buying a home, and they already have an agreement to resell the property to someone else)
  • any information that may affect the property’s value

Disclosure rules also apply when an individual who works for a brokerage or who is associated with a brokerage (for example, a family member of the brokerage’s broker) wants to buy a property that is listed with the brokerage, the brokerage must immediately disclose, in writing, to the seller:

  • the fact there is a conflict of interest
  • the name of the person
  • their relationship with the brokerage
  • any confidential information of yours they may have

The real estate professional must also provide you the opportunity to obtain legal advice before proceeding.

Additional Resources
Section 62 of the Real Estate Act Rules
Consumer Information: Real Estate Professionals Buying Your House or Selling You Theirs
Information Bulletin: Personal Trades in Real Estate
Information Bulletin: Conflict of Interest
Information Bulletin: Conflict – Buying Client’s Property
Information Bulletin: Disclose – Conflicts of Interest

63

Guaranteeing they will sell your property

Some industry members offer guaranteed sales to sellers, but they can only make that offer on behalf of their brokerage. They can’t personally offer you that guarantee.

Additional Resources
Section 63 of the Real Estate Act Rules
Consumer Information: Guaranteed Sales Agreements
Consumer Information: Incentives and Inducements
Information Bulletin: Guaranteed Sales Representations
Information Bulletin: Incentives

 

 

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