This seems straightforward, but really it’s not.
The issue is set out in the Code of Ethics published under the Real Estate and Business Brokers Act, 2002.
Reference is made, but the expression “competition” is not a defined term.
This leaves two possibilities open: 1) the narrow, legal, technical interpretation, or 2) the broader, ethical, more inclusive interpretation.
The law is about as “clear as mud” on this issue. The determination is whether you have:
1) two Offers, or
2) two Bidders.
Once an Offer has expired or is not “on the table”, there are no longer technically “competing Offers”. That’s a strict legal interpretation. However, it doesn’t necessarily mean that it’s the correct legal decision. Ethically, of course, we still have two Bidders, until one of them says “I’m done…I’m through here…”.
Over time, you will appreciate that the law catches up to the correct ethical decision.
The RECO Discipline Committee appears to reflect the narrow interpretation in its decisions, while RECO in its Bulletins appears to endorse the broader definition.
Ultimately, it would be good to have a final resolution to this matter.
The complicating factor is that there are no rules whatsoever at common law about this. A Seller is free to do whatever they choose to do. It’s basically the “wild west”.
When it comes to the construction industry, there are indeed some significant rules. The “bidders” are “valued”. That’s the significant difference. For large, major projects it may cost a bidder $10 million to participate. At the end of the competition, the Owner wants all of the unsuccessful bidders to feel that they were fairly treated.
Unfortunately, that’s not the case with real estate. Who cares about the buyers? Nobody!
Brian Madigan LL.B., Broker