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BCFSA’s information is clear, concise, easy-to-read explanations of the requirements for real estate professionals under the Real Estate Services Act (“RESA”), Real Estate Services Regulation (“Regulation”), Real Estate Services Rules (“Rules”), and other applicable legislation.
This information is intended for use by real estate professionals, to support their understanding of the standards they must meet in the delivery of real estate services.
(a) Act in the Best Interest of Your Client
A fundamental principle of any agency relationship is that you act in the best interest of the client who hired you. You owe your client this fiduciary duty. This means, above all else, that you must put your client’s interests ahead of everyone else’s, including your own, except when explicitly required by law.
Listening to your client and providing them all the information they need to make informed decisions, whether these decisions benefit you or not, is the key. At times, acting in your client’s best interest may even require referring your client to someone else if your client’s needs are outside your area of expertise.
(b) Act in Accordance with the Lawful Instruction of Your Client
The common law of agency also establishes a basic obligation for real estate professionals to follow the lawful instructions of their client. This obligation is also part of the fiduciary duty of obedience.
When receiving instructions, it is important for you to consider whether the form in which you have received the instructions matches with terms of a listing or service agreement that is in place. For instance, if you have a service agreement that requires all client instructions to be in writing and you receive an oral instruction, you must ask your client to reduce it to writing.
Most instructions from clients are perfectly legitimate, but you should remain watchful for any instruction that could result in the breach of applicable legislation. Any instruction that is unlawful or dictates that you breach the Real Estate Services Rules or other legislation cannot be followed. Explain to your client why their instruction is not lawful and advise them to get legal advice should they persist with their request.
(c) Act Only Within the Scope of Authority given by the Client
It is always important to ensure that you have been granted the authority of your client to complete any work that you have been hired to do. This may include things like overseeing a renovation project on behalf of a strata corporation or being granted signing authority on a strata corporation’s accounts so that third party contractors can be paid.
When a client wants to adjust the scope of authority, all risks created as a result of the change must be discussed with your client before it is implemented so that they can make an informed decision as to whether the change is in their best interest. Any service agreement or disclosure of representation you have entered into provided must then be amended to reflect that change.
While changes to the scope of authority granted by a client will often increase what you are permitted to do on their behalf, your client is also able to reduce that authority given to you at any time. Continuing conversations around your scope of authority is key to ensuring you do not accidentally overstep the authority granted.
(d) Advise the Client to Seek Independent Professional Advice on Matters Outside the Expertise of the Real Estate Professional
Sometimes acting in the best interest of your client means understanding the limits of your own knowledge and referring your client to a third party when necessary. This can happen if your client needs, for example, legal guidance, advice around home renovations, or information about fireplace certifications. It could also involve type of property or a market that you’re not familiar with, where the client would be better served with the help of another real estate professional with the necessary expertise.
Providing your client with advice that may not be accurate or complete, just to appear more knowledgeable, can put both you and your client at risk. RESA outlines that providing service not deemed to be competent could rise to a level of professional misconduct. Being prudent and ensuring your clients receive the most accurate information, even if it comes from a third party, not only protects your client’s interests, but will also serve as additional education for you that can be used in future transactions.
It is prudent to request a written statement from your client when they provide you an instruction based on external advice. This will protect you should they later claim the advice was given by you.
(e) Maintain Confidentiality of the Client
All duties owed to clients under the Real Estate Services Rules end with the termination of an agency relationship with the exception of confidentiality. Relationships can terminate either through the completion of the transaction, or notice being provided that relationship will end on a certain date.
Confidentiality can be impacted by the brokerage model chosen. It is important to understand how the duty of confidentiality is applied if you are practicing under designated agency or brokerage agency.
Your clients also have the ability to waive confidentiality when they believe sharing the information is to their benefit. You should always have this waiver in writing and retained in your brokerage file. The details about what information and can be shared and with who must also be clear.Learn more about confidentiality
(f) Disclose All Known Material Information to the Client
What is material to one client may be drastically different than what is considered to be material to another. At the outset of your agency relationship and as your relationship continues, it is important to understand what kind information about the trade in real estate, the real estate itself and the services you are providing, your client will want to have to protect their interests.
There is information that you will have gleaned from a property database, or information that may have been volunteered by the consumer or their real estate professional on the other side. This may include a property advertisement stating that the home is in foreclosure, or a real estate professional telling you that their client is going through a divorce and is very motivated to sell.
All the information you have about the consumer on the other side of the transaction, circumstances which may affect the deal or information you have that your client has indicated is of importance to them, must be shared. Providing your client with all the pertinent details known to you will help them in negotiating a deal that best meets their needs. If in doubt, disclose.Learn more about disclosures
(g) Communicate All Offers in a Timely and Unbiased Manner
Depending on market conditions, buyers and tenants will often attempt to negotiate terms in a transaction that are favourable to them. If you are representing a seller, there may be certain conditions that must be met before they are willing to accept an offer from a potential buyer. For instance, they may advise you that they are not willing to accept an offer below a certain threshold, or that they will only entertain an offer if it is not subject to a property inspection.
While it may seem prudent to save your client time by only showing them offers that you feel meet their needs, the Real Estate Services Rules are clear in that all signed offers must be presented. While on the surface a particular offer may appear to be lacking in some respect, offers can be negotiated by the parties and that unacceptable offer may end up being one that your client chooses. Your client may also realize, after receiving only one offer, or multiple offers that do not meet their needs, that they need to temper their expectations and reduce their requirements.
It is never up to you to decide which offers are worthy of being presented to your client.
(h) Discover Relevant Facts Respecting the Property That a Client is Considering Acquiring
While the obligation to disclose all known material information about a transaction covers any information that is already known, as a buyer’s agent you must go a step further and use due diligence to discover anything your client identifies as a matter that may impact your client’s interest in the property. This could include stigmas such as the number of the house, or a death which has occurred on the property.
Should you not be able to provide the client the information requested, telling the client what you did to try to get the information and what the risks are of proceeding without the information is prudent.
(i) Take Reasonable Steps to Avoid Conflicts of Interest
Conflicts of interest can be encountered at any point in an agency relationship and can affect real estate professionals in all sectors. From dealing with former clients, to dual agency in restricted circumstances, to having an interest in trade, you must always be mindful of potential, actual and perceived conflicts that could affect your client. Where possible, you must avoid conflicts that could impact your client’s interests.Learn more about conflicts of interest
(j) Promptly Disclose Any Existing Conflicts of Interest
If a conflict of interest exists, whether it was avoidable or not, you must disclose the existence of the conflict to your client as soon as you become aware of it.Learn more about conflicts of interest
Should a client and brokerage agree that the duties you owe need to be modified, it must be done in writing prior to acting on the modification. The Real Estate Services Rules provide for two ways to modify the duties owed:
- In the service agreement to reflect the modifications (this applies to all sectors of the real estate industry); or
- Amend the Disclosure of Representation in Trading Services if there is no service agreement (this applies to trading services real estate professionals only).
The amendment must include:
- Which duties have been modified;
- How the duties have been modified; and
- Which duties are no longer applicable.
The modification of duties does not absolve your brokerage of supervising your conduct to ensure you are fulfilling all other duties owed to your client. Confidentiality must also be retained unless your client authorizes you to disclose the information, or where it is required by law.