IMPACT of Conflict between the Code and Fiduciary Duties

As previously discussed, we are going to have a conflict effective 1 April 2023 when the new TRESA Regulations come into effect.

This is the new provision:

“Disclosure of facts by seller’s broker or salesperson

22.2 (1) If a seller has a legal obligation to disclose a fact to the buyer and the fact is known to the broker or salesperson who represents the seller, the broker or salesperson shall disclose the fact to every buyer who expresses an interest in the real estate. O. Reg. 357/22, s. 12.

(2) The registrant shall make best efforts to obtain a written acknowledgement from each buyer who receives the disclosure under subsection (1) indicating that the disclosure has been received and, if a buyer makes the acknowledgement, provide them with a copy of it. O. Reg. 357/22, s. 12.”

The agent’s obligations at common law are:

  • Disclosure
  • Obedience
  • Competence
  • Confidentiality
  • Accounting
  • Loyalty

The Ontario Court of Appeal considered the conflict almost 30 years ago.

In Raso v. Dionigi, 1993 CanLII 8664 (ON CA), The Court dealt with matter of an Agent “double ending” a transaction and failing to disclose his relationship with the Purchaser. Justice Dubin stated:

“In cases of obvious conflict of interest,

….the normal rule is that the agent cannot act for both vendor and purchaser.”

… “The agents were not entitled to any commission since,

…where an agent has breached a fiduciary duty, the agent is precluded from claiming a commission.”

….real estate agent is not entitled to any commission.

…I think, axiomatic that where an agent has breached a fiduciary duty …the agent is precluded from claiming any commission.”

Basic Principles

If there is a breach of fiduciary duties, then the agent will not be entitled to commission.

This same breach should give rise to a right to termination on the part of the principal.

So, tell the “secret” that the Seller told you and instructed you not to tell, then:

  1. The Seller can terminate the Listing, and
  2. The agent is not entitled to commission.

So, this sort of situation had better be handled properly.

Brian Madigan LL.B., Broker

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