The importance of early disclosure
The disclosure requirements effective June 15, 2018 are all designed to ensure that consumers have the relevant information they need to make informed decisions in a real estate transaction.
It is essential to have a consumer’s informed consent before a brokerage or any of its related licensees acts on their behalf.
Effective June 15, 2018 licensees must make disclosures to consumers earlier than has previously been the norm in the real estate industry. The Disclosure of Representation in Trading Services and the Disclosure of Risks to Unrepresented Parties introduce some changes into the practices that many licensees are accustomed to following with potential clients.
You must make a Disclosure of Representation in Trading Services to the consumer before providing them with any type of trading services to a consumer.
This means providing the disclosure before:
(a) advising on the appropriate price for the real estate;
(b) making representations about the real estate;
(c) finding the real estate for a party to acquire;
(d) finding a party to acquire the real estate;
(e) showing the real estate;
(f) negotiating the price of the real estate or the terms of the trade in real estate;
(g) presenting offers to dispose of or acquire the real estate;
(h) receiving deposit money paid in respect of the real estate.
You should also provide the disclosure before learning any of the consumer’s confidential information, such as their maximum/minimum price or preferred terms. If not, you run the risk of creating an ‘implied agency’ relationship with the consumer. An agency relationship may be created by conduct, when a licensee’s actions lead the consumer to believe that the licensee is acting as their advocate.
Giving a consumer advice can create an agency relationship that you didn’t intend -– so be sure that you are clear with yourself and with consumers about whether they are your client.
Ensuring that consumers are well-informed and well-protected requires you to do more than just make sure that the right forms are signed.
Make sure you:
- Engage in clear and open communication with clients, potential clients and unrepresented parties.
- Engage in active listening to understand consumers’ expectations and questions.
- Use your professional judgement.
- Take time to ensure there is mutual understanding between you and the consumer, and that the consumer is making fully-informed choices.
- Make sure you carefully document conversations and agreements, to prevent misunderstandings later.
Licensees who fulfill their disclosure obligations by obtaining informed consent can reduce their risk of consumer complaints, and help ensure the integrity of the real estate industry.
Published on May 04, 2018