TRESA: Spousal Consent and the Information Guide

Question:

Would a spouse signing spousal consent need to be provided the RECO Information Guide? The agent is not providing representation or services to the spouse, but does have to communicate with them for signatures.

Answer:

The quick answer would be: “sometimes yes, and sometimes no.” The real issue is just who is the spouse and what is their relationship to the real estate agent? If they are a client, then the answer would be “yes”. If the real estate agent has maintained a substantial distance and is remote from the person, then, the answer is likely “no”.

A determination needs to be made to assess whether or not “implied agency” has arisen in the circumstances. If it has, then, the answer would be “yes”. The reality is that in many situations, implied agency arises because the real estate agent has offered advice and guidance which extends beyond facts and information.

As for the Information Guide itself and the non-titled spouse, it’s helpful only with respect to seeking legal advice and complaining to RECO.

Let’s look at three different situations:

1. Moving to a New House and Staying Together

Bob and Mary have been living together for 4 years. They just got married and have decided that it’s time to have a family. They have engaged you to find them a house. You have done that and the title to the new property will go in both their names. They have both signed up as clients of yours for the purchase.

Now, it’s time to sell Bob’s condominium apartment. From a technical perspective, you might be able to throw Mary out the window, but you went to University with her and she introduced you to Bob. Mary has a spousal interest in the condo and you will require her to sign away her possessory rights. In this regard, you will need to ensure that Bob provides you with authorization to keep Mary in the loop when it comes to the sale. If anything goes wrong, there may not be sufficient funds for their joint purchase. Mary really needs to know because she has other funds set aside for what she estimates is the shortfall.

It will be extremely difficult to indicate to Mary that she is not a client on the sale, but is a client on the purchase. So, set up agency and ensure that she is a client.

Part of the downpayment on her new house purchase is coming from the sale of Bob’s condo. She needs this information!

2) Separated 10 Years Ago and Moved Out West

Bob and Margaret were married for one year. They really didn’t get along all that well They separated about 10 years ago. Margaret was offered a promotion at her Company and moved out west. She’s quite happy, and has no intention of coming back. She is willing to sign whatever she needs to sign now that Bob is selling his condo. They are on very good terms.

You examine the circumstances: 1) she lived in the condo and they were married, 2) she left and moved out west, 3) she never signed any releases or agreements. So, you will require her signature on the “Spousal Consent”. The key date is the date of separation.

You call her and she advises you to forward any documents you wish to have signed to her lawyer in Vancouver.

In this situation she will have a solicitor-client relationship with her lawyer. With you, she is a Self-Represented Party, Very simple! So, keep it simple. Send the Information Guide, confirm that she is an SRP. Nothing has crossed the line. Be sure that she has not been provided with any “agency services” which could trigger “implied agency”.

3) Living Together Now, But Moving Out with Children

Bob and Jane have lived together for 12 years and have three children. They have been married for 10 years.

The arrangement is that she will move out with the children. She will relocate with her parents in North Bay from Toronto. The market has been slow and an Offer has come in: $800,000.00, closing 30 June. It’s January! You get Jane to sign the “Spousal Consent”.

Now, from a technical perspective, once you have done that, you are finished with Jane. OR, are you?

The negotiations continue. The Buyers drop the price to $700,000.00 for a quick closing at the end of February. You never go back to Jane. You never send any emails to Jane. She is still thinking: $800,000.00 and the end of June.

What she finds out about from Bob’s lawyer is that she has to move in a couple of weeks, pull the three children out of school, move to North Bay, find a place to stay and enroll her children in a new school in late February. She had planned to move into her parents’ basement, but there’s a Tenant in place now, who is not moving out until the end of June.

What about Jane! Should you have told her anything? Should you have kept her in the loop? She is a little upset about the price. She had executed a Separation Agreement where she was to receive all of the equity out of the house while Bob was to retain all of his pension. Both were worth about $300,000. Now, she gets $200,000.00 and Bob keeps his $300,000 pension.

In this situation, Jane really needed to know what was going on. In all likelihood, in order to ensure her cooperation you had an agency relationship with her. She was the one living in the house who cleaned it up for showings. Bob moved out, months ago. She thought of you as the agent for BOTH of them. There never, ever was a clear, distinct conversation in which you said you were acting for Bob and NOT for her. No verbal discussions ever addressed that issue.

As a result:

1. Mary is likely a client, provide her with the Info Guide and advice,
2. Margaret is likely an SRP, provide her with the Info Guide and no advice,
3. Jane is likely a client, provide her with the Info Guide and advice,

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com