Information Guide Explained #2

The Role of a Real Estate Agent

This section is entitled “Working with a real estate agent”:

“Agents in Ontario must be registered, which requires completing the necessary education, and carrying consumer deposit insurance and professional liability insurance.

Real estate agents provide valuable information, advice, and guidance to buyers and sellers as they navigate the complexities of real estate transactions.

If you are a seller, an agent can:

• Advise you on market conditions and the best strategy to attract buyers and get the best price for your home

• Market or advertise your home, including arranging photographs, videos and virtual tours

• Provide referrals to other professionals you’ll need, like a lawyer or home staging company

• Arrange and attend home inspections and appraisals

• Arrange showings for interested buyers

• Advise you on how to handle competing offers, sharing the content of competing offers, and other aspects of the transaction

• Vet offers and potential buyers to ensure they can afford to buy your property

• Negotiate with buyers to achieve the best results, price, and terms, for you

• Guide you through paperwork and closing the transaction successfully

If you are a buyer, an agent can:

• Assist you with getting pre-approvals for financing so you know how much you can afford

• Make you aware of any tax exemptions you might be eligible for

• Gather and share information about neighbourhoods and homes that meet your requirements, and arrange to show you homes you’d like to see

• Make inquiries about zoning, permitted property use, or other aspects of the home

• Advise you on the best approach in competing offer situations and how to protect your offer information

• Negotiate with sellers to achieve the best results, price, and terms, for you

• Guide you through paperwork and closing the transaction successfully

• Provide referrals to other professionals you’ll need (for example, home inspectors, lawyers, or contractors)”


The above was all set out on Page 2. It has now become commonplace for Brokerages if they are preparing for you to sign a Listing Agreement to include a Schedule “A” which will specifically mention those items specified above. If you are to sign a Buyer Representation Agreement (BRA), it will also include in Schedule “A” the items mentioned above.

Previously, neither Listings nor BRA’s would contain such an itemized list.

Kindly note the opening sentence:

“Agents in Ontario must be registered, which requires completing the necessary education, and carrying consumer deposit insurance and professional liability insurance.”

Agents are “registered” in the Province of Ontario. They are not “licenced”. Many agents will say they are licenced. They may be true in part because they have a driver’s licence, a fishing licence or a hunting licence, BUT, they do not have a “real estate licence” nor have they ever had such while practicing real estate in the Province. It is possible that an agent could be currently licenced in another jurisdiction.

There are two types of insurance coverage which are available to you:

  1. Consumer Deposit Insurance

If the Brokerage absconds with the funds placed in their trust account, or goes bankrupt, then, a consumer would have a claim against this policy.

To protect yourself as a Buyer or a Seller, ensure that the Brokerage which is nominated to hold the deposit is in fact “registered” with RECO. Search the RECO website and take a screenshot so that you will have a record. Also, note any disciplinary offences or restrictions which have been placed upon them.

When transferring funds, ensure that the funds are payable to “ABC Brokerage in trust”.

  • Professional Liability Insurance

If the agent’s conduct, or the Brokerage’s conduct has fallen below the appropriate standard of care, a consumer who suffered a financial loss would have a claim against them and would ultimately be compensated through this policy.

To protect yourself as a Buyer or a Seller ensure that the agents with whom you deal in a transaction are “registered” with RECO. Search the RECO website and take a screenshot so that you will have a record. Also, note any disciplinary offences or restrictions which have been placed upon them. This includes not only your own agent but also the agent on the other side of the transaction.

Information Guide Page 3

“You will also benefit from the duties the brokerage and agent owe to you as a client

Undivided loyalty

Your best interests are promoted and protected by the brokerage or agent representing you. As a client, your interests take priority over the interests of the brokerage, its agents, and any other party.


They must tell you everything they know about the transaction or your client relationship that could have an impact on any decisions you make.


Your confidential information cannot be shared with anyone outside of the brokerage without your written consent, except where required by law, even after your client relationship ends. This includes, for example, your motivation for buying or selling, and the amount you would be willing to pay or accept.

Avoid conflicts of interest

They must avoid any situation that would affect their duty to act in your best interests. If a conflict arises, they must disclose it to you and cannot provide any additional services to you unless you agree in writing to continue receiving services.

You have responsibilities as a client

You need to:

• be clear about what you want and don’t want and make sure you share all information that might be relevant (for example, you might want zoning that permits your intended use, maybe a home office or another specific use, or you might not want a property where there has been a violent crime);

• respond to your agent’s questions quickly;

• understand the terms of your agreement with the brokerage; and,

• pay the fees you have agreed on (see page 7), even if an agreement to buy or sell later falls through because of your default or neglect.”


Fiduciary Duties

It seems rather unusual that RECO’s Information Guide would address some but not all of the common law fiduciary responsibilities.

Those obligations are often summarized using the acronym DOC CAL for Disclosure, Obedience, Competence, Confidentiality, Accounting and Loyalty.

There are some fundamental and basic obligations at common law which the agent offers to the principal including disclosure, obedience, competence, confidentiality, accounting, and loyalty. These obligations are taught and emphasized to real estate practitioners.

  1. Disclosure. The agent is under an obligation to keep the principal informed and to disclose any material and relevant matters to the principal. This would include keeping the client advised of changing market conditions, as well as numerous other “material facts” relating to a proposed acquisition.

2) Obedience. The agent is subservient to the interests of the principal. The agent is to follow the reasonable and lawful directions of the principal, carrying out the principal’s instructions. The agent is to act in the principal’s best interests and not his own.

3) Competence. The agent is under an obligation to be competent in his profession, and to inform the principal if there are matters beyond the agent’s expertise.

To the extent that the agent might lack experience or expertise, then other professionals should be recommended to the client for consultation. The onus naturally is upon the agent to identify and disclose such a matter to the principal.

4) Confidentiality. The agent is to maintain the privacy of the principal and matters that are of a private nature are to remain in confidence. Information provided to an agent is received in a fiduciary capacity and is not to be disclosed without authorization by the principal.

5) Accounting. The agent is to account for monies received and disbursed. Payments of any kind or nature, direct or indirect are all for the benefit of the principal. Funds are received as a fiduciary, and are to be disclosed and remitted in full to the principal. The agent is the intermediary between the principal and third parties. The agent is not a third party contractor but rather the person who brings the principal and third parties into a contractual relationship.

6) Loyalty. An agent is to offer loyalty to the principal. Once engaged in a fiduciary capacity, the agent must place the interests of the principal above his own, must not entertain the interest of others, including himself above that of his principal. Any potential conflict of interest must be disclosed.

Each of the duties are separate and distinct obligations and may be varied or modified in the actual agency agreement.

As well, there are two others that might also be considered:

7) act in the best interests of the client. Basically, that is simply an extension of “competence”.

8) not engage in any conflicts of interest. This is really the same as “loyalty”.

In addition, there are obligations set forth in the Code of Ethics, and some specific duties mentioned in other TRESA legislation and Regulations.

The client’s role seems to focus upon the following:

  1. Be clear,
  2. Respond quickly,
  3. Understand the agreement, and
  4. Pay the fees.


Certainly, it makes good sense to communicate clearly and accurately, however, that isn’t always possible where the client may be compromised in terms of the ability to comprehend and understand by reason of a lack of familiarity with the English language, an inability to read the English language, impairment due to alcohol, drugs, medications, in specific situations or mental difficulties due to depression, anxiety, senility or dementia. These matters should all be recognized by the agent, who should ensure that these matters are taken into consideration and resolved.

The client should indicate to the agent any matters which might be relevant to the transaction. These matters are then “material facts” and the agent has a duty under the legislation to record and document the material facts.

Respond quickly

While it would seem to be natural in many environments to respond quickly, that’s not always in the best interests of the client. There is no legal obligation imposed upon clients anywhere to respond quickly. So, this reference seems peculiar!

In any event, there may indeed be time limits for various matters that arise under an Agreement of Purchase and Sale. The agent has a legal obligation to bring those matters to the client’s attention.

Understand the agreement

Indeed, that would be great. Courts will take the approach that you did indeed “understand” the agreement if you signed it, but again, it was the agent who had the duty to explain the document in the first place. And, what if they don’t understand it that well. Potentially, we have a problem!

Pay the fees

This is a very strange statement from RECO. It has nothing to do with the new TRESA legislation. It’s unusual to be included in this type of a Guide. It might have been better worded if it said something along the following lines: “you may be at risk of paying fees if you are in default”. That would be expressed as a “caution” rather than a “mandate”.

Surely, you should seek guidance from a lawyer if the contract “falls through”. Then, the next step would be to determine whether or not it was all your fault or just partially your fault. It’s at this point that the issue of the obligation to “pay fees” would arise.

Brian Madigan LL.B., Broker

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