Estate Sale: Who’s the Client?

Sometimes, this is a little more complicated than it would seem.

Mary Jones had three daughters: Marie, Cathy and Joan. Marie was just like an extra mother because she was 10 when Cathy was born, and 20 when Joan was born.

Today, their ages are 41, 31, and 21. Marie lives in Vancouver, Cathy lives in Halifax and Joan is still in Toronto attending university.

Mary became ill, and all three of her daughters rushed to her side. They called in a lawyer, who prepared a Power of Attorney, Will and Transfer of the house.

They all agreed that Joan should be the Attorney. It only made sense. She was the only one in Toronto with the mother.

The Will divided up the entire estate 3 ways between them, all receiving equal shares. Again here, it was agreed that Joan would be the Estate Trustee.

The estate consisted of the house, a principal residence worth $1,000,000, and about $100,000 in various miscellaneous assets, stocks, bonds, gics and bank accounts.

The lawyer indicated that since Mary’s impending demise was close at hand, that she transfer the property from her own name to “Mary Jones and Joan Jones as Joint Tenants”. That would avoid “probate fees” of approximately $15,000. That seemed reasonable to everyone and so the transfer was registered on title.

Three months went by, Mary passed away with her estate set up in this fashion.

Appointment of the Real Estate Agent

After the funeral, Marie, Cathy and Joan met with Bill, the real estate agent. They wanted his advice with respect to sale. Should they fix up the property a bit, or sell it as is? They wanted to be sensitive in terms of closing date, since Joan lived there and was soon to write her final exams.

There was a general consensus and Bill was told to prepare the necessary “paperwork”.

Who’s the Client?

We have three choices here:

  1. Estate of Mary,
  2. Joan,
  3. Marie, Cathy and Joan.

Correct Technical Answer

The actual correct technical answer is The “Estate of Mary”. Bill would deal solely and only with Joan in terms of taking instructions and executing documents.

Broader Equitable Response

Beyond the simple direct relationship with Joan and the Estate, Bill really has very much the same relationship with Marie and Cathy. In the meeting, he received the approval and “blessing” from all three sisters.

So, what was Bill’s relationship with Marie and Cathy:

  1. Strangers, no relationship at all,
  2. Consumers (public) services under the Real Estate and Business Brokers Act,
  3. Customer Services under the Real Estate and Business Brokers Act, or
  4. Client Services under the Real Estate and Business Brokers Act.

As you know, Client Services would be “agency”. That’s the Listing Agreement. It was just signed by Joan alone. That means that we do know that Joan and the Estate are clients.

Marie and Cathy signed nothing at all.

But, they did receive suggestions, guidance and “advice” from Bill. The moment that Bill offered ADVICE, he crossed the independence threshold and made them clients. He was their agent too. This is “implied agency! Although no one spoke about it, mentioned it, or thought about it, for that matter, this was an implied agency appointment.

Answer to the Legal Question:

The correct technical answer will be the appropriate operating theory. There is nothing to prove otherwise, we have to go with answer #1.

Until, of course, the matter were to proceed to Court and the Court were to rule in favour of the “broader equitable response” as being the correct legal answer, then the correct answer would be #2.

Agent’s Paperwork

Confronted with this same situation, Bill can keep everyone in the loop by sending original documents to Joan, after all, she’s the one who has signing authority as far as third parties are concerned, and sending copies to Marie and Cathy. Then, everyone has the same information as everyone else at the same time.

Joan is a Client duly appointed by written contract, and Marie and Cathy are also clients by an implied agency appointment.

Naturally, that’s if everyone gets along. If they are all fighting, that’s another story.

Brian Madigan LL.B., Broker

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