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Professional Standards Manual

Notice of Change: Information in this manual changed when new agency and disclosure rules came into effect on June 15, 2018. Learn more about the new rules.Notice of Change: Information in this manual changed when new agency and disclosure rules came into effect on June 15, 2018. Learn more about the new rules.

Trading Services

1. Practice Standards

(b) Agency - View Entire Section

(VI) Conflicts of Interest

When a licensee is engaged by a client to provide real estate services, certain duties are owed to that client:

  • Section 3-3(a) of the Rules requires licensees to ‘‘act in the best interests of the client’’.
  • Section 3-3(i) requires licensees to ‘‘take reasonable steps to avoid any conflict of interest’’.
  • Where a conflict of interest, which cannot be reasonably avoided, does exist, section 3-3(j) requires the licensee to ‘‘promptly and fully disclose the conflict to the client’’.

A fully informed client may then choose to allow the licensee to continue to act in that conflict by modifying or making inapplicable the obligations which can’t be fulfilled because of the conflict. 

 

Conflicts Respecting Current Clients

Conflicts of interest can arise with respect to current clients or former clients. Section 5-18 of the Rules gives guidance on these potential conflicts for current clients that would give rise to Dual Agency.

 

Addressing conflicts of interest when acting for multiple clients

5-18 (1) If the provision of trading services by a licensee to or on behalf of multiple clients in respect of a trade in real estate would constitute dual agency, other than under section 5-17 [dual agency in under-served remote location], the licensee must either:

(a) not provide trading services to any client in respect of that trade in real estate, or

(b) represent only one of the clients, as a client, in respect of that trade in real estate.

(2) A licensee must not represent a client under subsection 1 (b) unless the licensee has obtained written agreement from all clients in respect of the trade in real estate that meets the requirements of subsection (3).

(3) The written agreement referred to in subsection (2) must be in a form approved by RECBC and must include all of the following information:

(a) a description of the conflict of interest;

(b) a description of the duties and responsibilities the licensee will no longer have to the client with whom the licensee is terminating its client representation;

(c) a statement that the licensee may have confidential information about the client with whom the licensee is terminating its client representation, and that the licensee is prohibited from disclosing any of that information;

(d) a statement that the advice and information that the licensee may provide to the client that the licensee will continue to represent may be limited due to the licensee’s ongoing duty to maintain the confidentiality of the information of the client with whom the licensee will terminate its client representation; and

(e) a recommendation that the clients seek independent professional advice in respect of that trade in real estate. 

 

The following discussion of conflicts respecting current clients and former clients is courtesy of UBC Sauder Real Estate Division Trading Services Licensing Course Manual.

To assist a licensees appropriately manage conflicts of interest when acting for multiple clients, section 5-18 of the Rules states that, if providing trading services to or on behalf of multiple clients in a real estate transaction would result in exception, the licensee has two options to manage the conflict:

  1. The licensee can decide not to provide the trading services to either client. In this case, the agent is “recusing” himself or herself from providing any further trading services to either party. Furthermore, the licensee cannot continue to work with either client as an unrepresented party, and should either refer the clients to separate licensees or instruct the clients to find separate representation themselves.
  2. The licensee can continue to represent only one client, if he or she obtains a written agreement to do so by all of the clients. In this case, the licensee is required to enter into an Agreement Regarding Conflict of Interest Between Clients with each client. This is a standard form agreement that has been created by RECBC. This agreement must be obtained at the time the conflict arises, and must contain the following information:
  • A description of the conflict of interest;
  • A description of the duties and responsibilities the licensee will no longer have to the client with whom the licensee is terminating its client representation;
  • A statement that the licensee may have confidential information abut the client with who the licensee is terminating its client representation, and that the licensee is prohibited from disclosing any of that information;
  • A statement that the advice and information that the licensee may provide to the client that the licensee will continue to represent may be limited due to the licensee’s ongoing duty to maintain the confidentiality of the information of the client with whom the licensee will terminate its client representation; and
  • A recommendation that the clients seek independent professional advice in respect of that trade in real estate.

It is a licensee’s responsibility to ensure that all clients in the transaction fully understand the risks of entering into this agreement, and to recommend that all clients seek independent professional advice.

As A Licensee
The conflicts of interest that arise when your clients’ interests conflict can be a common occurrence, especially if you are a well-established licensee with many clients or practice real estate in a relatively small community. Your brokerage should have policies and procedures respecting how conflicts of interest will be addressed. These policies should be communicated with your clients at the outset of an agency relationship so that the correct expectations can be set.

For example, while you may agree to act for a particular buyer client, you may tell the client that, in the event that he or she becomes interested in a property in which you are the designated agent for the seller, you will ask the buyer if he or she will agree to find alternate representation because you will want to continue acting for the seller in listing the property. You may tell the buyer that, if this situation arises and he or she agrees to allow you to continue representing the seller, you will provide a referral to another licensee that can assist him or her.

Despite this conversation with the client, a licensee is always required to obtain a written agreement from all clients at the same time that the potential conflict arises. This means that the buyer (and the seller) in the example above must sign an Agreement Regarding Conflict of Interest Between Clients once the conflict arises.

 

 

Conflicts Respecting Former Clients

There may be times when a licensee is acting for a client in a transaction and is approached by a former client who is seeking representation in that same transaction.  The most common example of this conflict is where a licensee is listing property for sale and is contacted by a former client who is interested in that property. 

In this case, the licensee must first advise the former client that the licensee cannot represent him or her because the seller of the property is a current client of the licensee. Whether the licensee can continue acting for the current seller client requires an analysis of the confidential information that the licensee has with respect to the former client.

[updated 06/15/2018]