Brian Madigan LL.B., Broker
BRMadigan@iSourceRealEstate.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300
Toll Free: 1-888-507-0817

 

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Agent’s Negligence: Breach of Code of Ethics

November 6, 2017 - Updated: November 6, 2017

Agent’s Negligence: Breach of Code of Ethics

There are a number of potential transgressions under the Code of Ethics which would support a claim in negligence against an agent.

 

Agency Obligations under the Act and Code of Ethics

 

Some of the relevant provisions of the Act and the Code of Ethics (under consideration here) are set out in Schedule “A”, which outline the responsibilities of registrants. These are the statutory requirements, and can give rise to disciplinary proceedings or civil liability in the event of breach.

 

You will see that there is a duty to act with fairness and honesty. The section also imposes an obligation to act with integrity. This obligation applies to everyone not just clients. (s.3)

 

A registrant is to:

 

1)    promote, and

2)    protect

 

the best interests of the client. This is the primary, fundamental duty and obligation under the Act and the Code of Ethics. (s.4)

 

In order to promote and protect, the registrant must offer information, explain information, provide advice and guidance. Such activities are fundamental to a “professional”, and acting as a “professional”.

 

The next statutory requirement is the duty and obligation to act and provide conscientious and competent service. All services are to be provided with the registrant demonstrating reasonable knowledge, skill and judgment. (s.5)

 

These three sections in fact underlie the fundamental obligations of the registrant and are at the cornerstone of most disciplinary proceedings:

 

1) fairness, honesty and integrity,

2) promotion of the client’s best interests, and

3) conscientious and competent service (carried out with reasonable knowledge, skill and judgment).

 

You will notice that some of the provisions in the Code simply restates the same legal obligations and principles of agency that exist at common law.

 

The remaining sections of the Code of Ethics outline certain more specific duties and obligations on the part of registrants.

 

There may be circumstances where a particular registrant is not able to provide the services with reasonable knowledge, skill, judgment and competence. In these cases, the registrant is to:

 

1)    refrain from the provision of advice and opinion, and information. (s.6) and

2)    the registrant is to recommend that such advice, opinion and information should be obtained from others. (s.8)

 

There is a specific obligation of supervision by the brokerage on this point. (s.6.2)

 

A full and complete explanation of the law of agency, the distinction between clients and customers and the services which are to be provided are to be explained to the buyer or seller before entering into an agency agreement (where the principal is a client) or non-agency agreement (where the party is merely a customer). (s.10)

 

Once engaged in a contractual relationship, the registrant is under a duty to discover material facts, in the case of a client, that is, determine and disclose. (s.21.1). In the case of a customer, the obligation is to disclose known material facts and material facts which ought to have been known. (s.21.2)

 

The obligation to investigate, determine and verify is at the root of the registrant’s professional responsibilities.

 

You will notice that the obligations set forth in the statutory provisions reinforce investigation, discovery, and disclosure.

 

There is a positive duty to keep the client informed. (s.23)

 

The Code of Ethics imposes certain negative covenants, concerning inaccurate representations (s.37), unprofessional conduct (s.39), abuse and harassment (s.40).

 

The Code of Ethics also specifies that the registrant has a positive duty to prevent error, misrepresentation, fraud or unethical practice in respect of a trade in real estate (s.39).

 

Brokerages are placed under a statutory duty to ensure compliance by their brokers and sales representatives. This requires active oversight and supervision (s.41).

 

Informed decision-making is one of the hallmarks of the agency relationship and the role of the real estate professional as a trusted advisor.

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Brian Madigan LL.B., Broker

www.iSourceRealEstate.com


Tagged with: lawsuit negligence code of ethics rebba ontario law
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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

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