Now that the TRESA Code of Ethics is in force, there are some changes.
Let’s look at a few of the provisions.
Best Interests
The Old Code stated:
Best interests
4. A registrant shall promote and protect the best interests of the registrant’s clients. O. Reg. 580/05, s. 4.
The New Code says:
Best interests
8. (1) A registrant that represents a client shall promote and protect the best interests of the registrant’s clients.
(2) If a registrant that represents a client believes that a client’s ability to understand information or make decisions relevant to a trade in real estate may be impaired, the registrant shall make reasonable efforts to ensure that the client understands the information and appreciates the reasonably foreseeable consequences of the decision.
COMMENT
In both cases we are dealing with clients. These are not public duties. These are obligations specifically owed to the Principal by the Agent in an agency situation.
This duty has been expanded. This is “informed consent”. There is a specific duty to ensure that the issues are properly explained and understood.
There are a few steps here in the process:
Knowledge
If a registrant believes that a client’s
- ability to understand information, or
- make decisions
relevant to a trade in real estate may be impaired
Solution
the registrant shall make reasonable efforts to ensure that the client
- understands the information and
- appreciates the reasonably foreseeable consequences of the decision.
This is, of course, “informed consent”.
Previously, the agent had to “act in the best interests” of the client. They could do that, without the client really understanding anything at all. The test would be “objective”. Did the agent truly act in the best interests of the client? If so, then the obligation has been satisfied.
Now, the duty has been increased and expanded. The test is now “subjective”, Did that particular client truly understand and “properly authorize” the steps that were taken? Although, those extra words were not added, they are part of the agency fiduciary duties anyways. They fall under “obedience” at common law. Follow the client’s lawful instructions!
So, best interests now include “informed consent”.
Brian Madigan LL.B., Broker