Conflicts of Interest Flashcards
Conflict of Interest
Conflict of Interest
What is a conflict of interest?
Occurs when there is substantial risk that an agent’s representation of a client would be negatively affected by the agent’s own interest or by the agents duties to another current client, a former client, or a third party
How to address a conflict of interest
Your first obligation must always be to avoid the conflict
When not possible, you must disclose the conflict, consult with your client, and explain all the option available to the along with the benefit or risks involved with each option
Actual vs perceived conflicts of interest
Actual vs perceived conflicts of interest
Conflicts can be either
Actual or perceived
An actual conflict
Is a conflict that objectively exists and can be recognized by all parties
Perceived conflict
Is one that may or may not be a conflict but appears to be one in the mind of a client
What if you do not see a conflict
If you think it is possible that your client may view it differently, you will follow the same disclose requirements as you would for an actual conflict
This will reduce the risk of a complaint bein filed by an unhappy client
Willfully ignoring conflicts of interest or failing to spot a conflict of interest can result in
discipline and or court action
Your obligations to avoid conflicts of interest
Your obligations to avoid conflicts of interest
Personal conflicts of interest
Personal conflicts of interest
When must Personal conflicts of interest be addressed?
Must be disclosed immediately to your client
If you become interested in a property you have listed
You are not able to be impartial or objective, nor are you able to meet another obligation of a licensee: act in the nest interest of your client
If you proceed and represent in a transaction of a property you intend tp purchase
You must notify your managing broker of your intentions and get their approval before proceeding.
You must also provide the appropriate Disclosure of Interest in Trade form to the other party in the transaction before any offer is accepted
Selling your own property
You should always seek advise and permission of your managing broker first if you choose to sell your home through the brokerage
If you decide to sell your own personal home
The errors and omissions insurance will not cover the transaction
Representing a spouse
Be careful, ensure you are not the agent on the other side of the sale
Personal Loans
Both loaning money to clients and accepting loans from clients can create unintended risks and conflicts
Loans can create a conflict in the agency relationship regardless of the circumstances
Such as when there is a payment default
Potential conflicts could be created if you accept a personal loan from your client
Loans should never
be made between a client and their licensee.
Both you and your client should always seek external lenders to provide financial assistance
Conflicts with Other Employment
Conflicts with Other Employment
If you are licensed for trading services,
Conflicts of interest can also arise when you are also license to provide other types of real estate services under RESA (Rental, Strata)
Property manager conflict
Influencing your buyer client to purchase an investment property so that you can manage the property as a rental property manager
Working with affiliated professions that do not require a license under RESA
Individuals with supplemental employment such as mortgage brokers, insurance brokers, contractors, and developers can easily find themselves in conflict of interest when acting in multiple capacities
