Informed Consent for Real Estate Professionals

Gradually, the doctrine of “informed consent” is working its way into the real estate field.

First, it took hold in the field of medical malpractice and professional liability. Now, it finally seems that the real estate profession will not be exempt.

What does it mean?

Essentially, it calls for a full and complete explanation to be given by the professional to the client, sufficient that the client will truly understand and appreciate his options and then make his own “informed” decision.

What that doesn’t allow, is the brief, no information comments by the professional, all with the expectation that the client will just follow the professional’s lead, and say either “yes” or “no”, as the case may be.

Now, the professional MUST provide ALL the relevant information, and it is the Client, who makes the decision, based upon that information. Clearly, this takes a lot longer than the old way, and many professionals don’t like it.

However, if you follow the rules, then you can’t be sued, so there is certainly some advantage to the new approach. The bedside manner of doctors has improved considerably in the last 41 years after the Supreme Court of Canada pronounced in decision in Reibl v. Hughes (1980) when it first applied the doctrine:

“A doctor must give the patient sufficient information so that an objective, reasonable person in the patient’s position would be able to make an informed choice about a medical procedure.”

If we were to look at this case, and apply it to the real estate industry, we would first have to consider real estate agents as “professionals”. That appears to be the case since brokers, sales representatives and brokerages are all required to be registered and regulated under the Real Estate and Business Brokers Act, 2002.

What would the correct standard be in real estate practice?

It might be expressed as follows:

“A real estate agent must give the Client sufficient information so that an objective, reasonable person in the Client’s position would be able to make an informed choice about a real estate decision.”

So, that’s it. That’s all there is. Basically, it’s very simple and straightforward.

It’s interesting that OREA has introduced several documents which take this principle into consideration. Have a look at the new Forms 127 and 225. They both apply this concept.

Professionals can no longer simply point to the client’s signature as evidence of his “informed consent”, they will need something more. The intention is to have Forms 127 and 225 come to the rescue.

Brian Madigan LL.B., Broker

Comments 2

  1. This is excellent. So many lawsuits have risen from the agent simply stating, “initial here, sign there and date there.” Agents, save for the professionals seem to work on the concept of “you can trust me” which should be the first thing that should make the customers wary.

  2. Post

Leave a Reply

Your email address will not be published. Required fields are marked *