Clients and Customers
Are there any specific duties and obligations owed to Clients that are not owed to Customers under the Act and the Regulations (aside and apart from “best interests)? And, what is that difference? Please use an example to illustrate!
Well, as you go through the Act and the Regulations you will only find three references where there is a distinction:
1) Best interests,
2) Material Fact Disclosure,
3) Multiple Representation Consent.
All the other duties and obligations apply to clients and customers alike.
There are, of course, some duties and obligations which are to be provided to the public generally.
1 Best Interests
The provision in the Code of Ethics dealing with “best interests” is as follows:
4. A registrant shall promote and protect the best interests of the registrant’s clients. O. Reg. 580/05, s. 4.
The specific positive duty is to “promote” and “protect”. Note, this ONLY applies to Clients. It will not be found elsewhere dealing with customers somewhere.
2 Material Fact Disclosure
The Code deals with material facts for clients and customers in a slightly different way, for clients, it is a positive duty to “determine” and disclose; while the duty for customers is somewhat restricted, it sets out a duty to disclose what you know, and also, what you ought to know.
Here are the two duties:
21. (1) A broker or salesperson who has a client in respect of the acquisition or disposition of a particular interest in real estate shall take reasonable steps to determine the material facts relating to the acquisition or disposition and, at the earliest practicable opportunity, shall disclose the material facts to the client. O. Reg. 580/05, s. 21 (1).
(2) A broker or salesperson who has a customer in respect of the acquisition or disposition of a particular interest in real estate shall, at the earliest practicable opportunity, disclose to the customer the material facts relating to the acquisition or disposition that are known by or ought to be known by the broker or salesperson. O. Reg. 580/05, s. 21 (2).
You will likely notice that it is very difficult indeed, if not impossible to come up with an example or illustration of a set of circumstances which would fall under 21(1) but not under 21(2) and vice versa.
Upon application to the real world, you are likely to find that they are both the same standard, but they just use different words to set out that standard.
3 Multiple Representation Consent
This is the provision concerning the consent to multiple representation. It reads as follows:
22. A registrant shall not represent more than one client in respect of the same trade in real estate unless all of the clients represented by the registrant in respect of that trade consent in writing. O. Reg. 567/05, s. 22.
This would apply to two Sellers both selling the same property, two buyers both acting together buying the same property, two buyers competing against one another in respect to the purchase of the same property, a Seller and a Buyer dealing at arms-length in respect to the sale and purchase of the same property.
These situations are actually slightly more complicated than they appear to be, since it is the Brokerage who is indeed the agent. That means that two sales representatives from a large Brokerage may not even know that they both represent buyers participating in the same bidding war.
Brian Madigan LL.B., Broker