module 1

Question 1

legislative term: Representation

Answer 1

Marketplace term: Agency

Question 2

legislative term: Representation agreement

Answer 2

Marketplace term: Listing ( seller Agency) Agreement/ buyer agency agreement

Question 3

legislative term: Agreement ( conveyance interest in real estate)

Answer 3

Marketplace term: Agreement of purchase and sale

Question 4

legislative term: multiple representation

Answer 4

Marketplace term: dual agency

Question 5

legislative term: convey offer

Answer 5

Marketplace term: Present offer

Question 6

legislative term: Acquisition/ divestiture by registrant

Answer 6

Marketplace term: Purchase/ sale by registrant

Question 7

what is Dual agency?

Answer 7

Dual agency occurs when there is one agent (brokerage) representing two or more principals (sellers and/or buyers) within the same transaction.

example: There are several circumstances in which dual agency can occur, such as representing a seller and a buyer, or representing two competing buyers. These circumstances can also be referred to as concurrent representation, which is a legal term generally referring to a brokerage representing two clients at the same time.

Example: A brokerage is representing a seller in the marketing of their property. A buyer is also represented by the same brokerage when submitting an offer on the seller’s property. Both the seller and the buyer are represented by the same brokerage for the transaction which results in dual agency/multiple representation.

Question 8

what is a Principal?

Answer 8

A principal is an individual who authorizes an agent to act on their behalf in an agency relationship. The principal provides information and lawful instructions to the agent regarding the transaction.

In REBBA, the term “client” is used to identify the principal and a client can be a seller or a buyer.

Example: When a brokerage represents a seller when listing a property for sale, the seller is known as the principal.
Example: When a brokerage represents a buyer when showing properties for sale, the buyer is known as the principal.

Question 9

what is Third party?

Answer 9

A third party is an individual who is not directly connected with a legal transaction but may be affected by it.

In REBBA, the term “customer” is used, and a customer/third party can be a seller or a buyer.

Example: A brokerage representing only a seller would consider a buyer as a third party or customer.

Example: A brokerage representing only a buyer would consider a seller as a third party or customer.

A third party may also be another individual otherwise involved in the transaction.

Example: A brokerage representing only a buyer, and the buyer’s parents are providing the deposit. The buyer’s parents would be considered a third party.

Question 10

what is Fiduciary?

Answer 10

Fiduciary generally refers to a relationship of trust with one or more parties. An agent (specifically, a brokerage) as a fiduciary has the legal obligation to act in the principal’s (specifically, a seller’s or buyer’s) best interests.

As the relationship is fiduciary in nature, the agent’s obligations to the principal include:
• Full disclosure—disclosure of all facts known
• Obedience—obey the lawful instructions of the
principal
• Confidentiality—all information that is
confidential will not be disclosed
• Competence—provide all services competently
• Accounting—responsible handling of all
documents and funds related to the transaction
•Loyalty—promote and protect the principal’s best interests at all times

Example of Disclosure: A salesperson discovers a material fact that may impact their buyer client’s decision to purchase a specific property. The salesperson fully discloses the information to the buyer so that an informed decision can be made.

Example of Confidentiality: A salesperson knows a seller is motivated to sell the property due to relocation. This information is not shared with any buyer who may ask why the seller is selling.

Question 11

what is Authority?

Answer 11

In real estate, the principal gives permission to the brokerage to offer the property for sale and to represent their best interests in a transaction.

Example of Actual Authority: A seller gives the brokerage authority to offer their property for sale.

Example of Implied Authority: The brokerage will determine the best marketing methods to offer the property for sale.

Question 12

What is agreement?

Answer 12

There are many ways in which a brokerage can enter into an agency relationship with a seller or a buyer. The most common way is by agreement, which can be either express or implied.

Question 13

Agency Relationship by Agreement- Written agreement

Answer 13

A written agreement details the obligations of all parties and would be signed by the brokerage and the seller or the buyer.

A brokerage would document the agency relationship by using a Seller Representation Agreement or a Buyer Representation Agreement.

Question 14

Agency Relationship by Agreement- Verbal agreement

Answer 14

A verbal agreement could include many of the same aspects of a written agreement, only the details are not documented.

Example: A buyer has met with a salesperson and has verbally given them the authority to search for a property for them. The agreement is verbal only, but the salesperson has identified suitable properties and has shown these to the buyer even though there is no written agreement.

Question 15

Agency Relationship by Agreement-Implied agreement

Answer 15

An implied agreement can be unintentionally created based on the words and actions of the salesperson, the seller, or the buyer.

Example: A salesperson and their friend are spending the day skiing. On their way to the ski hills, they notice a home that is listed for sale. The friend states the property is one they have longed to purchase. The salesperson provides advice about obtaining a mortgage, the amount of down payment required, and follows up the next day with information on the property and copies of recent sales to help determine an offer price. Even though there is no agreement between the parties, an implied agency relationship is created based on their actions.

Question 16

Additional Ways to Create an Agency Relationship-By ratification

Answer 16

An agency relationship by ratification is when the authority is granted retroactively.

Ratification applies if the agent has acted either without authority or in excess of the authority granted. In such instances, when the principal subsequently agrees to be bound by such unauthorized acts, the agency relationship is ratified.

Example: A property was previously listed for sale by a salesperson which did not sell. A few months later, this salesperson is approached by another salesperson asking if the seller would consider an offer from their buyer who viewed the property when it was listed. The salesperson obtains the offer and approaches the seller who agrees to sell.

When the seller accepts the offer, the agency relationship has been created by ratification.

Affirming a prior act which was not legally binding; the affirmation gives the act legal effect. Occurs when an unauthorized agent acts, and the principal later affirms the action, giving authority retroactively.

Question 17

Additional Ways to Create an Agency Relationship-By estoppel

Answer 17

An agency relationship can be created by estoppel when a principal leads a third party to believe they are being represented by the agent, and that the agent has the authority to act on behalf of the principal.

In real estate, a relationship can be created by estoppel when the seller or buyer gives the impression to a third party that they already have an agency relationship with a brokerage.

There must be clear evidence that the seller or buyer has by words or actions indicated that the brokerage has the authority to act on their behalf.

Example: A buyer is viewing a property that is being privately offered for sale. The buyer is concerned about the condition of the electrical system and makes enquiries with an electrician to inspect it.

Question 18

Additional Ways to Create an Agency Relationship-By operation of law

Answer 18

Operation of law creates an agency relationship where a duty created by circumstance is imposed on an agent to act on behalf of the principal, where previously no agency relationship existed. The agency relationship would be based on established legal principles rather than by a formal agreement.

In real estate, operation of law is rare and happens in emergency situations.

Example: A property manager has been retained to oversee the day–to-day operations of a property, but the owner clearly indicates major expenses must be approved first.
After a violent storm, the property manager visits the site and discovers significant damage. Despite being unable to reach the owner, the property manager arranges for repairs to be made immediately to the structure at a significant cost, as the building was unsafe and would have put others at risk.
Under operation of law, an agency relationship was established. Even though the actions were outside of what had been agreed to, the owner will be obligated to pay for the repairs even though they were not authorized.

Question 19

Terminating an Agency Relationship

Answer 19

There are several ways in which an agency relationship is terminated, but these can be generally categorized as either by agreement or by operation of law. Termination does not disturb legal rights and obligations associated with the relationship unless otherwise agreed to by the parties.

Question 20

Termination of an Agency Relationship by Agreement- Completion or performance

Answer 20

Termination by performance is automatic once the obligations under the terms of the agreement are fulfilled.

Example: A salesperson has represented a buyer in purchasing a home. The sale has now closed, and the buyer has possession of the property. The agency relationship that was created is now automatically terminated.

Question 21

Termination of an Agency Relationship by Agreement- Mutual agreement

Answer 21

An agency relationship can be terminated by mutual agreement between the agent and the principal.

In real estate, both the brokerage and the seller or the buyer must mutually agree to terminate the relationship. Both the principal and the agent would document this termination by mutual agreement using a termination or cancellation form.

Example: A seller has listed their property for sale with a brokerage pending the seller being relocated to another province. The seller no longer wishes to sell their property as the relocation has been cancelled. Both the seller and the brokerage agree to terminate the listing agreement.

Question 22

Termination of an Agency Relationship by Agreement- Expiry

Answer 22

An agency relationship is automatically terminated on the expiry date agreed to by the parties.

Example: A seller and brokerage have contracted to list and market a property for sale, and the parties have agreed to a 90-day term for the listing agreement. The seller received one offer on the property during the listing period, but the offer was not accepted. With no extension to the agreement, the agency relationship is automatically terminated once the agreement has expired.

Question 23

Termination of an Agency Relationship by Agreement- Revocation

Answer 23

The principal has the power to revoke the authority of the agent to act on their behalf. Revocation may be either lawful or unlawful.
Example: A seller is approached by a buyer, who wishes to purchase the property but suggests a private sale to avoid remuneration being paid. The seller revokes the listing agreement with the brokerage and proceeds to sell the property privately. The brokerage has been fulfilling their duties, so the seller’s attempt to revoke is unlawful. The brokerage could make a claim for remuneration as the property was sold during the term of the agreement.

Question 24

Termination by Operation of Law- Impossibility of performance

Answer 24

An agency relationship can be terminated because of the impossibility of performance. This occurs when the subject matter of the agency ceases to exist. Thus, the duties and contractual obligations of the principal and the agent can no longer be fulfilled under normal circumstance

Example: A seller’s house has burned down, and there is no longer a house to sell. In this instance, the seller and their brokerage would complete a cancellation of the listing agreement to confirm the termination of the agency relationship due to impossibility of performance.

Question 25

Termination by Operation of Law- Illegality

Answer 25

An agency relationship is terminated if the agency purpose or the agency relationship is unlawful. This could occur both from an agent’s and a principal’s perspective.

Example of Agent/Brokerage Perspective: A seller has listed their property for sale with a salesperson at a brokerage. The owner of the brokerage is retiring and has decided to cease operations as a brokerage. Once the brokerage’s registration under REBBA has been terminated, all agency relationships with sellers and buyers are automatically terminated.
From the principal’s perspective, if the authority to bind the principal was illegally obtained, the relationship would be terminated

Example of Principal/Client Perspective: An agency relationship is terminated when the brokerage discovers that the seller’s son fraudulently signed a seller representation agreement for his own gain after forging a Power of Attorney to act for his father. This is an example of revocation due to unlawful conduct of the seller’s son.

Question 26

Termination by Operation of Law-Death, mental incapacity, or bankruptcy

Answer 26

The agency relationship generally terminates with the death, bankruptcy, or mental incapacity of either the agent or the principal.

Example of Termination Due to Death: A brokerage is representing a buyer in their search for a property to purchase. During the term of the agreement, the buyer passes away. The agency relationship is terminated on the buyer’s death.

Example of Termination Due to Mental Incapacity: A seller contacts a brokerage to list their property for sale. During the listing process, the salesperson notices they are forgetful and distracted. Several

Question 27

what is Granting Authority?

Answer 27

The most common method of entering into an agency relationship with a seller or a buyer is by express agreement. Leading practice would be to document that agreement in writing. Once the agency relationship has been created, the principal grants authority to the agent to perform certain activities on their behalf.

Question 28

what is Authority Granted by a Principal?

Answer 28

Typically, an agency relationship between the agent (Brokerage) and the principal is documented in a buyer or a seller representation agreement.

In real estate, there are two types of authority – express (Sometimes referred to as actual) and implied.

Express authority is the authority granted by the principal (Buyer or seller) intentionally to the agent (Brokerage) and is outlined in the terms of the representation agreement.

Implied authority is assumed given the nature of the relationship; this allow the agent (Brokerage) to complete the task properly, efficiently and competently.

Question 29

what is Express authority granted by a seller?

Answer 29

A seller grants express authority to a brokerage to offer their property for sale.
A representation agreement must contain certain information to comply with REBBA, but specific wording can vary. An agreement will explicitly outline the main tasks the brokerage is to carry out.
A seller’s express authorities can also include:
• Allowing buyers to fully inspect the property.
• Placing a “For sale” or “Sold” sign on the property.
• Giving the exclusive authority to make all advertising decisions to the brokerage.

Question 30

what is Express authority granted by a buyer?

Answer 30

A buyer grants express authority to the brokerage to seek out suitable properties for the buyer to view.
In addition to providing the brokerage with express authority to locate a suitable property, a buyer’s express authorities can also include:
• The brokerage’s entitlement to receive and retain remuneration paid by the seller or the listing brokerage.
• Providing information as needed to third parties retained by the buyer to assist in a transaction.

Question 31

what is implied authorities?

Answer 31

implied authorities grant the agent the ability to take actions and make decisions as an extension of the express authorities granted by the principal. Activities undertaken under implied authorities are consistent with the express authority granted, such as those authorities identified in a seller or a buyer representation agreement. Implied authorities allow the agent to undertake incidental activities and perform other acts usual to a real estate transaction, which are not specifically detailed in the agreement.

Question 32

Buyer representation implied authorities

Answer 32

A buyer grants express authority to the brokerage to locate suitable property within a geographic area.
The implied authority allows the brokerage to select the appropriate methods to locate properties for viewing.
Additional implied authorities by a buyer can include:

• Delegation: The brokerage delegates various
activities to brokers and salespersons employed by that brokerage to carry out the buyer’s express instructions.

• Relevant Facts/Presentation: The brokerage obtains and presents relevant facts for consideration.
• Negotiations: The brokerage arranges showings and assists in negotiations.
• Notices: The brokerage has certain implied authorities involving receipt of notice. For example, a notice received by a brokerage that an offer has been accepted is deemed to be notice received by the buyer.

Question 33

Brokerage Authority Limits: Contract

Answer 33

Brokerages or salespersons do not have the authority to sign a contract on behalf of a principal, unless precise and clear authority is granted.

Since signing on behalf of a principal could place a brokerage in a position with legal ramifications, a brokerage would not approve a salesperson participating in any such activity.

Example: An offer has been received on a seller’s property listed with a brokerage. The seller is currently out of the country and would like to accept the offer but is not available to sign the offer before it expires. The seller asks the salesperson to accept the offer on their behalf.

Question 34

Brokerage Authority Limits:Delegation of duties

Answer 34

As the agency relationship is established between the principal and the agent, delegation of duties to any salesperson or broker employed by the brokerage is acceptable.
However, delegation of duties by the listing brokerage to use other brokerages in the marketing/selling process is neither presumed nor implied under agency law because the agency obligation is particular to that brokerage. For other brokerages to participate in the marketing/selling process, this authority must be specifically provided for in the agreement. A brokerage would document this authority in a listing agreement.

Example: A brokerage obtains a listing and delegates the duties owed to the seller to a salesperson employed by the brokerage. The seller has also agreed that other brokerages may participate. This allows co- operating brokerages to show the property to prospective buyers and obtain an offer.

Question 35

Brokerage Authority Limits: Purchase price

Answer 35

Brokerages have no implied authority to receive all or part of the purchase price; they can only receive a deposit relating to the purchase.
The deposit is now considered monies held in trust for the seller. When a deposit is received by a brokerage (related to a transaction), the brokerage holds the deposit in trust. Upon completion of the transaction, the buyer receives a credit towards the purchase price for the deposit amount.

Example: A listing brokerage receives a $10,000 deposit from a buyer related to an offer accepted on a seller’s property. The brokerage places the deposit into its real estate trust account and the funds are held in trust pending the completion or termination of the agreement. When the transaction has been completed, the buyer’s deposit is shown as a credit to the purchase price and the deposit funds are now held in trust for the seller. Typically, the brokerage then applies the deposit towards the remuneration owed by the seller to the brokerage.

Question 36

Brokerage Authority Limits: Expenses

Answer 36

Brokerages cannot incur expenses on behalf of the principal or seek reimbursement without express authority. Typically, an agreement with a principal will identify the remuneration paid to the brokerage, which includes any expenses incurred. If the principal requests extra services, such as alternate forms of advertising, the agent can seek additional reimbursement, only if agreed to by the principal.

Example: A brokerage agrees to list a property for sale and provides the seller with a marketing plan. The seller would like additional signage, the home staged by a professional, and a property inspection report completed. The brokerage and the seller agree that the seller will reimburse the brokerage for the additional expenses.

Question 37

The principal owes the given duties to the agent:

Answer 37

1. Duty of indemnification
2. Duty of remuneration
3. Duty regarding any other obligations agreed to

Question 38

Duty of indemnification

Answer 38

As a general rule of agency, the principal owes the agent indemnification and remuneration. In addition, the principal owes any other obligations agreed to, which are typically documented in an agreement between the principal and the agent. In real estate, the seller or buyer’s obligations to the brokerage would be documented in a representation agreement.

The agent must act according to the lawful instructions of the principal, and in doing so, may not be held responsible for any liability, claim, loss, cost, damage, or injury resulting from these acts. As a general rule of agency, the principal must compensate an agent for loss or damage incurred in carrying out lawful acts.

Seller perspective: The brokerage may be indemnified should the seller breach any warranty or representation made by the seller.

Buyer perspective: The brokerage may be indemnified should any latent defect to the land or improvements not be identified by the brokerage, as the buyer will be required to make their own enquiries to confirm the condition of the property.

Question 39

Duty of remuneration

Answer 39

The principal, upon signing the agreement, is obligated to pay the brokerage for the services agreed to and provided as part of the agency relationship between the parties. The payment is typically the remuneration paid to the agent for services rendered.
For the duty of remuneration to apply, the agent must be duly authorized by provincial legislation to trade in real estate, and the terms of the representation agreement must be fully met. The brokerage’s remuneration must be specified in the representation agreement.
Sample wording of brokerage remuneration provision in a seller representation agreement: “In consideration of you listing the property, I agree to pay the listing brokerage a remuneration rate of 5% of the sale price of the Property or for any valid offer to purchase or lease the Property from any source whatsoever obtained during the Listing Period and on the terms and conditions set out in this Agreement OR such other terms and conditions as I may accept.” You will learn more about representation agreements later.

Question 40

Duty regarding any other obligations agreed to

Answer 40

The principal must perform any other obligations as agreed to by both parties in the representation agreement. It is strongly recommended that any other obligations be formally documented in the representation agreement rather than agreed to verbally in order to avoid any misunderstandings.
Examples of other obligations typically agreed to by a seller as a principal include: • Payment of applicable taxes (such as HST on any remuneration paid)

• Agreement to maintain insurance on the property, until the sale has been completed
• Referral of enquiries to the brokerage, if a potential buyer contacts the seller directly for information regarding the property
• Paying remuneration, if the sale does not close due to their default or neglect
• Right of the brokerage to apply any deposit against remuneration
Examples of other obligations typically agreed to by a buyer as a principal include:
• To refer all properties of interest which the buyer may wish to view to the
brokerage
• Entitlement of the buyer’s brokerage to receive/retain remuneration from
the seller’s brokerage or the seller
• To pay remuneration, if the sale does not close due to their default or neglect

Question 41

Lesson 3: Duties and Obligations of a Salesperson

Answer 41

Lesson 3: Duties and Obligations of a Salesperson

Question 42

the duties and obligations a brokerage and salesperson owe to a client : Duty of Care

Answer 42

The phrase “duty of care” refers to the standard of care and skill provided by a salesperson to a client or a customer.

One distinguishing aspect of an agency relationship is related to providing advice. Any information provided when giving advice by the brokerage or salesperson—whether written or verbal and no matter how honestly provided—can give rise to action for damages due to negligence.
Negligence results from not providing competent services and/or not completing the required due diligence.

Example: The seller asks for advice on whether or not to accept an offer. The salesperson meets an acceptable duty of care by providing input based on knowledge of existing sales, reviewing the benefits and drawbacks of the offer, pointing out any particular difficulties that might be encountered (such as the removal of any conditions), and answering seller questions as the need arises when reviewing the agreement.

Question 43

Duty of care owed to a customer

Answer 43

Duty of care owed to a customer is limited and involves ensuring that honesty, fairness, and integrity is exercised, that information provided is accurate, and that any services the brokerage agrees to carry out on behalf of the customer are thorough and performed with reasonable care and skill.
A brokerage and salesperson must also ensure the obligations regarding disclosure and privacy are followed. Certain disclosures must be made to a customer. These include but are not limited to:
• Any material facts known or that ought to be known by the salesperson
• Any direct or indirect interest held by the salesperson or brokerage related to a trade

Duty of care owed to a customer is limited and involves ensuring that honesty, fairness, and integrity is exercised, that information provided is accurate, and that any services the brokerage agrees to carry out on behalf of the customer are thorough and performed with reasonable care and skill.
A brokerage and salesperson must also ensure the obligations regarding disclosure and privacy are followed. Certain disclosures must be made to a customer. These include but are not limited to:
• Any material facts known or that ought to be known by the salesperson
• Any direct or indirect interest held by the salesperson or brokerage related to a trade
A salesperson must also ensure any obligations to protect the privacy of the customer and any personal information are complied with.
It is important for a salesperson to be conscious of limiting their services to providing information only, not advice. Otherwise, the act of providing advice can unintentionally alter a customer relationship to that of a client.

Example: The buyer, as a customer, asks for advice regarding the condition of the seller’s home. The salesperson states that the seller is their client, but that, in all honesty many buyers seek out a home inspector, as the responsibility rests with the buyer to satisfy themselves regarding the condition of the property.

Question 44

Ensuring duty of care as a salesperson

Answer 44

A duty of care is implied when one party seeks information from another, who has special skills, such as a seller or buyer requesting advice or information from a salesperson. A salesperson is in a position of trust and must exercise due care when giving advice or providing information since they should know this will be relied upon.
A salesperson can avoid problems relating to duty of care by the given guidelines:
• Seek advice: Be aware of the limits to your knowledge and experience, seek advice or
assistance when needed, and recommend the client or customer obtain legal or other
appropriate advice.
• Accuracy in documentation: Make certain that contracts are properly worded,
documents are delivered appropriately, and persons signing are aware of associated
implications of the contract or document.
• Be informed: Stay up-to-date on relevant issues impacting property ownership in your
trading area, such as zoning and taxation.
• Make inquiries: Do not rely on information provided by others without completing
proper investigations and due diligence to confirm the accuracy of the information.

Question 45

Obligations Owed to Both Clients and Customers

Answer 45

Two general obligations that are owed to both a client and a customer are:
• Exercising care and skill
• Ensuring honesty

Question 46

Obligations Owed to Both Clients and Customers

Answer 46

Exercise Care and Skill Example: A buyer who is viewing a property with their salesperson indicates concern over the water stains on the basement wall. The salesperson responds by saying that water stains can indicate larger problems, so a professional should be retained to investigate the extent of any damage and whether the problem still exists today. The salesperson also recommends including a condition in any offer allowing for an inspection to be completed and a satisfactory report received.

Honesty Example: The listing salesperson arrives at an open house 30 minutes before it is scheduled to begin. The seller is speaking to another individual, who has arrived early and is interested in viewing the property. The salesperson joins them as the seller states that the property features a large backyard and is priced very well considering the bush and stream at the rear. The potential buyer indicates owning a property that includes a bush and stream is very appealing. The salesperson concludes the potential buyer is mistaken by what the seller has said and explains that the bush and stream are not located on the property but are lands owned by the Crown, and the seller’s property ends prior to the treeline.

Question 47

six general obligations a brokerage and salesperson owe to a client

Answer 47

1-Negotiate favourable terms
2-Maintain confidentiality
3-Disclose information
4-Act in person
5-Obey instructions
6-Perform mandate

Question 48

1-Negotiate favourable terms

Answer 48

A brokerage must diligently advance the client’s interests by assisting in negotiations, discussing their options, and drafting favourable terms and conditions in agreements arising from these negotiations.

Example: A salesperson is presenting an offer received on a seller’s property. The salesperson points out concerns about a financing clause the buyer added to the offer and recommends a change that could result in more favourable terms from the seller’s perspective. The seller agrees to the change, and a counter offer is submitted with the revised terms to the buyer’s salesperson. The buyer reviews the terms and agrees to the change resulting in a successfully negotiated agreement of purchase and sale between the parties.

Question 49

2-Maintain confidentiality

Answer 49

Maintaining the confidentiality of a client is fundamental to an agency relationship. A brokerage and salesperson must maintain confidentiality regarding all matters that could adversely impact or undermine the client’s position during negotiations

Example: The listing salesperson has obtained an offer on the seller’s property, which is lower than what the seller had anticipated receiving. The seller indicates they are willing to accept the offer but would like to first counter the buyer’s offer with a higher price.
The salesperson submits the revised offer to the buyer’s salesperson and does not disclose any information related to the seller’s willingness to accept a lower price. The buyer agrees to the seller’s offer and a sale is successfully negotiated between the parties.

Question 50

3-Disclose information

Answer 50

A brokerage and salesperson have a duty to fully disclose any information that is relevant to the relationship as principal and agent, or matters relating to the transaction, which could impact the decisions being made.

Information about the relationship includes any actual or potential conflicts of interest, such as the salesperson being a party to the trade, either directly or indirectly. Matters related to the transaction can include events involving the property, the offer, or third parties.

Example: A salesperson is showing a property to a young couple, who are very interested in purchasing it. The salesperson knows the buyers have limited funds set aside, if the property purchased needs any immediate repairs.

Question 51

4-Act in person

Answer 51

A brokerage is obligated to obey all lawful instructions from the client. However, this obligation only extends to lawful instructions.

Example, the brokerage would not have to follow an instruction from the seller to provide false and misleading information about the property to a buyer, such as identifying there has been no water seepage in the basement when in fact, there has been.

Example: A seller indicates specific instructions for any showings when listing his $1,500,000 penthouse condominium. The seller requires all salespersons to leave a business card at the property when showing buyers through the home and also requires the listing salesperson to be present for all showings. Any feedback from prospective buyers during such showings is to be provided in an email. The listing salesperson agrees to these instructions as they are all lawful.

Question 52

5-Perform mandate

Answer 52

A brokerage must perform the mandate as set out in the representation agreement between the parties and act within specific authorities granted.
The brokerage should seek clarification when doubt exists regarding such authorities. A brokerage, including all employed salespersons, is not legally obliged to complete specific acts, unless these terms are explicitly set out in the agreement.
Example: A seller signs a representation agreement that authorizes the brokerage to undertake marketing activities it deems effective to sell the property. In accordance with this instruction, the brokerage markets the home by placing the listing on the brokerage’s website, promoting the listing using social media, and showing the property to prospective buyers during reasonable hours. However, the seller has specifically removed any authorization in the agreement for any signage at the property. As such, the brokerage must act within the specific authority granted and should not place a “for sale” sign on the property.

Question 53

6-Obey instructions

Answer 53

A brokerage is obligated to obey all lawful instructions from the client. However, this obligation only extends to lawful instructions.
Example, the brokerage would not have to follow an instruction from the seller to provide false and misleading information about the property to a buyer, such as identifying there has been no water seepage in the basement when in fact, there has been.
Example: A seller indicates specific instructions for any showings when listing his $1,500,000 penthouse condominium. The seller requires all salespersons to leave a business card at the property when showing buyers through the home and also requires the listing salesperson to be present for all showings. Any feedback from prospective buyers during such showings is to be provided in an email. The listing salesperson agrees to these instructions as they are all lawful.

Question 54

Fiduciary Obligations Owed to a Client, based on three fundamental premises:

Answer 54

Loyalty: Loyalty is focal to any fiduciary relationship and, in fact, encompasses all other obligations within its scope. At all times, the client’s best interests are serviced, and these interests will always take priority over personal and third-party interests.

Best interests: A brokerage must at all times act in the client’s best interests. A brokerage and salesperson must never permit their own interests, or those of a third party, to override this duty. The client’s informed consent must be obtained if such interests come into conflict, either directly or indirectly, with the client’s interests.

Trust and confidence: A client places trust and confidence in the brokerage and relies on the advice given. As such, a client becomes dependent on and vulnerable to the brokerage.

Question 55

1-Maintain utmost loyalty

Answer 55

This obligation effectively encompasses all other fiduciary duties. The client’s interests take precedence over those of the brokerage, any salesperson, and that of any other party.
Maintaining loyalty is best achieved by representing the interests of only one party to a transaction (single representation). Difficulties in maintaining loyalty arise when a brokerage attempts to act in the best interests for competing parties in a transaction in multiple representation, such as a seller and buyer or two competing buyers.

A breach of any brokerage obligation owed to a client constitutes a breach of loyalty, as the brokerage is not acting in the client’s best interests.

Question 56

2-Avoid conflicts of interest

Answer 56

Many forms of conflict of interest can arise, both within a brokerage and individually for a salesperson. A conflict of interest can involve:
• A brokerage representing two clients at the same time in the same transaction (multiple representation)
• A salesperson purchasing their client’s property
• A client purchasing their salesperson’s property
• A salesperson or brokerage being either directly or indirectly involved in the
transaction (for example, the seller is a relative of the listing salesperson)
• A brokerage having some other association that creates a potential or actual
conflict of interest, such as a brokerage with a salesperson who is also an appraiser)

Question 57

3-Disclose conflicts

Answer 57

The brokerage must disclose any personal or third-party interests that conflict (or may conflict) with the interests of the client. The client must have full knowledge of the exact nature and extent of the conflict if the brokerage is to avoid potential liability for breach of any fiduciary obligations.
While common law does not mandate a disclosure be in writing, practical considerations would result in a signed document attesting to the client’s awareness of, and consent to, the specified conflict. Failure to openly disclose conflicts can give rise to liability for a brokerage and a salesperson.
In addition to the practical considerations, a salesperson must comply with the requirements under REBBA relating to disclosures of an interest, either directly or indirectly, by a salesperson. These disclosure requirements apply to both clients and customers of a brokerage. You will learn more about obligations owed under REBBA later in this module.

Question 58

Do not make a secret profit

Answer 58

This obligation prohibits an agent from profiting unlawfully at the expense of the principal. This obligation can involve a brokerage and salesperson profiting from various activities. These activities can include:
• Improper advice or breach of loyalty: Any profit from the principal’s trust and reliance on advice provided to further the personal interests to the
detriment of the client is prohibited. This would include instances such as a salesperson advising a seller to accept an offer below market value because the property has been difficult to sell, and the listing is soon to expire.
• Payment from another party: A brokerage may not accept remuneration from both parties to a transaction unless full disclosure is made to all parties. The amount being received must be disclosed and consent by the client to retain the payment is required.
• Payment by third party: A brokerage may not receive a secret profit from someone who is providing services relating to the transaction. This would include a referral fee being paid by a property inspector, appraiser, or lender. Also included would be any third party who is providing services that are incidental to the transaction, such as a moving company, contractor, or stager. Any payment by a third party must be disclosed to the client.
In addition to this fiduciary obligation, a salesperson also has disclosure requirements under REBBA relating to any direct or indirect financial benefit. You will learn more about obligations owed under REBBA later in this module.

Question 59

4-Do not make a secret profit

Answer 59

This obligation prohibits an agent from profiting unlawfully at the expense of the principal. This obligation can involve a brokerage and salesperson profiting from various activities. These activities can include:
• Improper advice or breach of loyalty: Any profit from the principal’s trust and reliance on advice provided to further the personal interests to the
detriment of the client is prohibited. This would include instances such as a salesperson advising a seller to accept an offer below market value because the property has been difficult to sell, and the listing is soon to expire.
• Payment from another party: A brokerage may not accept remuneration from both parties to a transaction unless full disclosure is made to all parties. The amount being received must be disclosed and consent by the client to retain the payment is required.
• Payment by third party: A brokerage may not receive a secret profit from someone who is providing services relating to the transaction. This would include a referral fee being paid by a property inspector, appraiser, or lender. Also included would be any third party who is providing services that are incidental to the transaction, such as a moving company, contractor, or stager. Any payment by a third party must be disclosed to the client.
In addition to this fiduciary obligation, a salesperson also has disclosure requirements under REBBA relating to any direct or indirect financial benefit. You will learn more about obligations owed under REBBA later in this module.

Question 60

5-Do not misuse confidential information

Answer 60

A brokerage and salesperson will acquire confidential information by the very nature of the client relationship. As this relationship is established based on trust and loyalty, any confidential information obtained must not be divulged or used to promote the interests of the brokerage or salesperson. Providing confidential
information to another party to the transaction can have significant detrimental impact on the client.

This requirement excludes any information about the client, the property, or the transaction that, by law, the brokerage is required to disclose.

Seller Example: A salesperson is working with a client to sell their house; the client is in a hurry due to a job change and very eager to sell. A buyer customer is looking at the seller’s property and is considering making an offer, but first wants to know why the seller is selling. The salesperson does not engage in any casual conversation regarding the property nor do they disclose their client’s personal information.

Buyer Example: A buyer informs the salesperson in confidence they are willing to pay the full asking price of a property because they are quite anxious to purchase it. The buyer wants to submit an offer that is less than this amount but states if the seller makes a counter-offer at a higher price, they will accept the offer. The salesperson does not disclose this information, as this would impair the buyer’s negotiating position.

Question 61

Regulatory Obligations Owed to Clients and Customers

Answer 61

A brokerage and salesperson must comply with regulatory obligations under REBBA in addition to the general and fiduciary obligations imposed under the common law of agency. As a salesperson, to fulfill your obligations, you will need a thorough understanding of how the regulatory obligations impact any activities.

Under REBBA, obligations are owed to both a client and your customer, although, these obligations can differ substantially based on the relationship a brokerage has with a seller or a buyer. The given screens detail some of the regulatory obligations owed including how any responsibilities differ when representing a client or providing services to a customer.

Question 62

The following six sections contain information on the regulatory obligations owed to both a client and a customer under REBBA.

Answer 62

1-Account
2-Establish remuneration provisions
3-Do not induce, breach, or make certain promises
4-Deliver copies of agreements, offers, and statements
5-Document relationships and requirements for any agreement
6-Provide disclosure of service options before an agreement

Question 63

Account

Answer 63

Under REBBA, the brokerage has a regulatory responsibility to account for, safeguard, and keep proper records pertaining to money, documents, and property entrusted to that brokerage.

As part of safeguarding a buyer’s deposit, a brokerage must place it in the brokerage’s real estate trust account. In addition, all registrants, which include brokerages, brokers, and salespersons, must be insured under the RECO Insurance Program to maintain registration with RECO. This provides protection for a buyer’s deposit held in the brokerage’s real estate trust account.

REBBA also requires a brokerage to maintain a written record of all monies received and held in trust for other persons in connection with the brokerage’s business and to every transaction relating to that money. Such transactions would include any disbursement of the funds and interest earned on the money. Specific information must be documented by the brokerage in accordance with the trust requirements of the specific
trade.

A brokerage could retain this information in what is often referred to as the real estate trust ledger.
As a salesperson, understanding the brokerage’s requirements will ensure you do not place the brokerage in a position of non-compliance with REBBA.

Question 64

finder fee

Answer 64

an service provided to a client that had financial benefit

Question 65

Establish remuneration

provisions

Answer 65

-REBBA identifies the allowable ways remuneration payable to a brokerage can be calculated. Remuneration can be established based on an agreed-upon amount (a flat fee) or a percentage of the sale price/rental price, or a combination of both.

-A salesperson must disclose in writing at the earliest practical opportunity any direct or indirect financial benefit that a salesperson or person related
to the salesperson may receive from another person in connection with the trade in real estate. This obligation would require the salesperson to disclose any finder’s fee being paid to the salesperson, such as a fee paid by a lender who is providing financing for a buyer.

Question 66

Do not induce, breach,
or make certain
promises

Answer 66

REBBA prohibits a brokerage or salesperson from inducing a party to cancel an
agreement for the purpose of entering into another agreement. This would apply
to any agreement relating to a trade, including a representation or customer
service agreements, as well as an agreement of purchase and sale. Further, a
brokerage or salesperson cannot make certain promises to a seller or buyer (for
example, to resell the property if the buyer purchases it) unless the promise is put
in writing, signed by the person making the promise, and delivered to the party to
whom the promise is made

Question 67

Deliver copies of
agreements, offers, and
statements

Answer 67

A copy of the agreement for the purpose of trading in real estate must be
given to the client or customer immediately upon signing. This would include
a representation or customer service agreement. Each party signing the
agreement must receive a copy when the document has been signed.

A signed copy of any written agreement relating to the conveyance of an
interest in real estate is to be delivered to each of the parties at the earliest
possible opportunity. This would include an agreement of purchase and
sale.

Any deliverable within the agreement of purchase and sale, such as a
deposit or documents pertaining to the transaction, must be delivered in
accordance with the time and dates specified in the agreement.

Question 68

Document
relationships and
requirements for any
agreement

Answer 68

• The requirements relating to the minimum content to be included in any
written representation or customer service agreement include the start date
and expiry date, remuneration obligations, a description of the services
options available, and the services to be provided by the brokerage under
the agreement.

• The obligations relating to seller and buyer representation agreements or
customer service agreements must be in writing, signed on behalf of the
brokerage, and submitted to the respective seller or buyer for signature.
This must be done prior to any offer being made.

Question 69

Provide disclosure of
service options before
an agreement

Answer 69

The Code requires that a brokerage discloses the brokerage’s role and the service
options available as early as is practically possible and before entering into a
representation or customer service agreement. This disclosure requirement also
addresses the possibility of multiple representation and the consequent
implications for seller and/or buyer clients. The brokerage and salesperson must
use their best efforts to obtain a written acknowledgment from the consumer that
such information has been received and understood.

Example: A brokerage has prepared an information sheet, which explains the
types of service alternatives available and other information a seller or buyer is
required to receive prior to entering into a representation or customer service
agreement. The salesperson explains this information, confirms the buyer
understands it, and then obtains a signature from the buyer. The salesperson and
buyer then determine the type of relationship the brokerage and buyer will
establish.

Question 70

scenario of wanting to terminate a contract

Answer 70

• sale person should advise the buyer that they can not provide advice to the buyer on how to terminate the contract
• the sale person should advise the buyer to

Question 71

Representation can be grouped in two categories:

Answer 71

Single representation: In real estate, single agency is referred to as single representation. Single agency occurs when there is one agent (brokerage) representing one principal (seller or buyer) within a transaction with a third party.

Multiple representation: In real estate, dual agency is referred to as multiple representation. Dual agency
occurs when there is one agent (brokerage) representing two or more principals (seller/buyer) within the same
transaction.

Question 72

example of single representation

Answer 72

For example, when a brokerage lists a seller’s property for sale, the salesperson who is working directly with the seller is known as the listing salesperson. However, all obligations owed to the seller by this salesperson are also owed by all other salespersons employed by the brokerage. This is known
as single representation.

Question 73

multipipe representation

Answer 73

When a brokerage represents both the seller and the buyer, or two competing buyers
offering on the same property, this is known as multiple representation, even if different salespersons within the
brokerage are representing the seller and the buyer.

Question 74

seller single representation

Answer 74

the brokerage represents the seller as a client. The listing brokerage promotes
the listed property, seeks out qualified buyers, and uses their professional negotiation skills to advance the seller’s
interests. General, fiduciary, and regulatory obligations are owed to the seller.

In single representation involving the seller, the buyer is often represented by another brokerage (the co-operating
brokerage). In other instances, the buyer could be a customer of the seller’s brokerage, which also results in single
representation.

Question 75

Buyer Single Representation

Answer 75

Under buyer single representation, the brokerage represents the buyer as a client. The buyer’s brokerage (often
referred to as the co-operating brokerage when the seller is also represented by a brokerage) must promote the
buyer’s best interests, locate suitable properties for the buyer to view, and use their professional negotiation skills to
advance the buyer’s interests. General, fiduciary, and regulatory obligations are owed to the buyer client

Question 76

Multiple Representation

Answer 76

Multiple representation is when there is one brokerage representing more than one client (seller or buyer). Most commonly, multiple representation arises when two different salespersons within a brokerage represent the seller and buyer respectively in the same transaction or when the same salesperson represents both seller and buyer in the transaction.

A brokerage may operate from more than one location, so different salespersons working at
different locations for the brokerage would still constitute multiple representation. Additionally, multiple representation occurs when the same brokerage represents two or more buyers who are making an offer to purchase the same property at the same time. In the case of multiple buyers, it may not be clear that a single brokerage is representing multiple buyers until multiple buyers have expressed interest in the same property.

in such situations, consent to the multiple representation would be required when the brokerage becomes aware that it is operating in a multiple representation situation.

Question 77

Due to the limitations to the services a brokerage and salesperson may provide to a client under multiple
representation, REBBA requires specific disclosures to be made to a client or potential client.
Disclosure for multiple representation is best undertaken in two chronological steps:

Answer 77

1. Disclosure before a representation agreement

2. Disclosure before an offer

Question 78

Disclosure before a representation

agreement

Answer 78

Before asking a seller or a buyer to sign a representation agreement, a salesperson is
required to discuss various aspects of multiple representation including how:

1-this could occur and how the services provided would change.
>Ideally, this discussion should happen at the first available opportunity when meeting with a
seller or a buyer to ensure the limitations are understood before entering into a
representation agreement.

Requirements under the Code relating to multiple representation for a salesperson to discuss
with a potential client include:
• The fact that circumstances could arise in which the brokerage could represent more than one client in respect of the same trade in real estate but that the brokerage could not do this unless all the clients represented by the brokerage in respect of that trade
consented in writing
• The nature of the services that the brokerage would provide to each client if the brokerage represents more than one client in respect of the same trade in real estate

Question 79

Disclosure
before an
offer

Answer 79

REBBA states a brokerage cannot represent more than one party to a trade without the
written consent of all parties being represented.
Therefore, at the point where a brokerage wants to represent more than one client in a trade,
the Code requires disclosure of the given matters at the earliest practicable opportunity:
• The fact that the brokerage proposes to represent more than one client in respect of
the same trade
• The differences between the obligations the brokerage would have if it represented only
one client in respect of the trade and the obligations the brokerage would have if it
represented more than one client in respect of the trade, including any differences relating to the disclosure of information or the services that the brokerage would
provide

Question 80

what are broker and sale person obligated to do to practice in Ontario?

Answer 80

All brokers and salespersons in Ontario are regulated under REBBA, and registered with RECO.

Question 81

why work with a saleperson/broker

Answer 81

-As such, working with a registered real estate professional provides sellers and buyers with knowledge, professional standards, and
insurance.
-A real estate transaction is complex, so knowledge about the profession and the regulations impacting
the activities of a salesperson results in better services being provided on behalf of a brokerage.

Question 82

Advantages of Working with a Brokerage:

Answer 82

There are three inherent advantages for a seller or a buyer when working with a brokerage. ‘

1-Knowledge:
- completing the real estate course + by completing RECO’s Mandatory Continuing Education course every two years, brokers and salespersons ensure they have current knowledge and remain up-to-date with changes to legislation.
2-Professional standards:
- All registrants must follow the rules and regulations
that are in place to protect consumers. The Code
governs the actions of all registrants. Brokers and
salespersons are required to uphold these obligations
and professional standards that emphasize treating
everyone involved in a transaction with fairness,
honesty, and integrity.
- you are also able to file complain for any issue that arises
3-Insurance:
- Deposit insurance provides a buyer with peace of
mind, knowing that their deposit will be held in trust
and insured against loss, insolvency, or
misappropriation by a brokerage.
-Errors and Omissions insurance, depending on the circumstances of a situation, may provide coverage for a salesperson in the event that they are negligent in performing their duties

Question 83

Representation and Customer Service Agreements

Answer 83

The relationship between a brokerage and a seller or a buyer should be documented to ensure the parties
understand their obligations. A written agreement allows for clarity in terms of the expectations of a salesperson
and brokerage. Depending on the type of relationship established, a salesperson will use a document that is specific
to that relationship.

Question 84

what does REBBA require a saleperson to do?

Answer 84

REBBA requires a salesperson to explain to a seller or a buyer, the service options available. At the earliest
opportunity, a salesperson is to outline the relationship in a written document, sign it on behalf of the brokerage,
and submit it to the seller or the buyer for signing. All agreements that document a brokerage relationship must
comply with the Code, which specifies the minimum required content of any written agreement

Question 85

Types of agreements used to document distinct types of brokerage relationships including:

Answer 85

Representation agreement with a seller
• Customer service agreement with a seller
• Representation agreement with a buyer
• Customer service agreement with a buyer
• Representation agreement with a landlord or a tenant

Question 86

Types of Agreement Documents- Representation

agreement with a seller

Answer 86

-> This is an agreement that sets out the relationship between a brokerage and a seller in
which the brokerage represents the seller, who is the client. It is commonly referred to
as a “listing agreement”.

->The salesperson representing the brokerage is known as the listing salesperson. The
listing agreement is used to identify key terms such as the duration of the agreement
and remuneration payable.

->There are further terms, such as permission to place a “For Sale” sign on the property
and to specify whether the listing is exclusive to the brokerage or will appear on a local
listing service, which allows other brokerages to co-operate in the sale of the property.

** As you learned earlier in this module, a representation agreement will define the
authority granted to a brokerage, as well as any limits on the brokerage’s authority.**

Prior to any offer, a brokerage would ensure a seller representation agreement is
signed, presented to the seller for signature, and once signed by the seller, ensure the
seller receives a copy immediately.

Question 87

Customer service
agreement with a
seller

Answer 87

• > In situations where the seller is not being represented by a brokerage, a non-exclusive agreement that establishes a contract between a brokerage and a seller for customer service only can be used.
• > This agreement is used when a seller is selling their property privately and the brokerage is enquiring about the property to show it to a buyer. These sellers are referred to as for sale by owner (FSBO).

->The agreement is used to:
• Confirm the brokerage is not the representative of the seller.
• Provide the brokerage with the authority to obtain additional information about the property.
• Detail the remuneration to be paid by the seller.
• Obtain authorization to apply the deposit to reduce the remuneration payable.

• In instances where the seller is privately offering their
  property for sale, this agreement is typically negotiated with the seller prior to showing
  the property to a buyer

Question 88

Representation agreement with a

buyer

Answer 88

An agreement is used to set out the terms of the relationship when a brokerage is
representing a buyer seeking to purchase a property

A buyer representation agreement is an authority granted by a buyer to a brokerage to
act on their behalf in locating a suitable property for that buyer on terms and
conditions set forth in the representation agreement

-This agreement is used to identify key terms, such as the duration of the agreement, the desired property location and property type, and how remuneration is paid under
certain circumstances.

-Prior to any offer, a brokerage would ensure a buyer representation agreement is
signed, presented to the buyer for signature, and once signed by the buyer, ensure the buyer receives a copy immediately

Question 89

Customer service
agreement with a
buyer

Answer 89

->This is a non-exclusive agreement that establishes a contract between the brokerage
and the buyer for customer services only. Typically, this agreement is used when the
brokerage is representing the seller and providing customer services only to the buyer.

->A customer service agreement can also be used when a buyer selects to receive
services only rather than being represented by a brokerage. Experienced buyers may
select this option regardless of whether the seller is being represented by the same
brokerage or another brokerage.

*The agreement is used to confirm that no remuneration is paid for any customer
service provided by the brokerage, unless otherwise agreed to, and confirms that the
brokerage is not the representative of the buyer

—- This requires the buyer to complete
more due diligence and investigations into the property and its condition as the
brokerage is providing services only and will not be providing any advice. —-

-Prior to any offer, a brokerage would ensure a buyer customer service agreement is
signed, presented to the buyer for signature, and once signed by the buyer, ensure the
buyer receives a copy immediately.-

Question 90

Representation
agreement with a
landlord or a tenant

Answer 90

->An agreement is used to set out the terms of the relationship when a brokerage is
representing a landlord or a tenant.

->These agreements are used when a landlord is being represented in a listing for lease
or when a tenant is being represented to find suitable premises to enter into a lease
agreement

->The agreements are used to identify key terms such as the duration of the
agreement and remuneration payable, if applicable.

Question 91

Providing Information Before an Agreement

Answer 91

A salesperson is obligated to provide information to a seller or a buyer before entering into a representation or
customer service agreement. Failing to do so may cause confusion regarding the service options available resulting
in the selection of the wrong type of relationship with the brokerage.

Question 92

what is the Minimum Required Information Before an Agreement?

Answer 92

The Code identifies information a salesperson is required to provide to a seller or a buyer prior to entering into a
representation or customer service agreement:

1-Service alternatives : The types of service alternatives that are available to the seller or the buyer include
a representation or customer service agreement.

2-Services being provided:The agreement would detail the specific services the salesperson is agreeing to perform for the party. Documenting these services prevents misunderstandings between the party and the brokerage

3-Multiple representation- this can not happen if there in no consent in writing

4-Representation and obligations : Representation and obligations are the nature of the services that the brokerage would provide to each client in the possible event that the brokerage represents more than one client in the same transaction. AND the limitations to the
services when operating under multiple representation

5-Representation and customer service: Representation and customer service identifies that circumstances could arise in which the brokerage could, in respect of the same trade in real estate, represent clients as well as provide services to customers

6-Service limitations: Service limitations arise from the restricted nature of the services that the brokerage would provide to a customer in respect of a trade in real estate if the brokerage also represents a client in respect of that trade

7- Obtaining written acknowledgement: The brokerage must, at the earliest possible opportunity and before an offer is made, use its best efforts to obtain a written acknowledgment that information
regarding the required disclosures has been received.

Question 93

how to avoid situations where an implied agreement is unintentionally created based on the words and
actions of a salesperson

Answer 93

An implied agreement can be unintentionally created
based on the words and actions of the salesperson, which can lead the seller or the buyer to believe there is an express agreement when there is not.

Scenario conclusion- This situation could have been avoided had Seema initially identified she is representing the seller and enquired if Bruno is working with any other salesperson.This would have provided Seema an opportunity to discuss relationship options and ensure Bruno understood where her loyalties are. This may have
stopped Bruno from sharing confidential information
until they could come to an agreement on whether he
would be a client or a customer

Question 94

how to reduce the risks inherent in a seller or a buyer misunderstanding the services to be provided

Answer 94

Documenting the brokerage relationships is an
important aspect of reducing the potential for any
misunderstanding between the brokerage and the
seller or the buyer.

Cautionary Examples:
• The brokerage could be placed in a position
where the courts will need to determine whether
an agency relationship has been established
under a particular set of circumstances. This
could expose the brokerage to litigation and can
result in the loss of any remuneration payable to
the brokerage.
• The reputation of the salesperson and the
brokerage have potential to be harmed from a
misunderstanding around services to be
provided.
• To reduce risks to the brokerage, a salesperson
should ensure the services being provided and
the obligations owed by all parties under the
agreement are explained and documented as
soon as possible when entering into a
relationship with a seller or a buyer.

Question 95

Outlining Services for a Seller Client

Answer 95

The process of listing, marketing, and negotiating an offer has many steps and can often be daunting. Setting
expectations for the extent of the services being provided not only helps to avoid any misunderstanding about the
role you will play in supporting the seller, but can also help to ease any anxiety they may have about selling their
property

Question 96

what is due diligence?

Answer 96

Completing the due diligence required by a salesperson includes:
• Confirming the seller has made all necessary disclosures, as required by law
• Discovering all relevant information and material facts regarding the transaction
• Making appropriate disclosures to other parties, as required
• Demonstrating competence, skill, and judgement when providing opinions, advice, or information
• Referring a seller to third-party professionals when the advice or opinion is beyond the education or
experience of a salesperson

Question 97

Services for a Seller Client

Answer 97

( a table) - look at notion

Question 98

Services for a Seller Client- pre-listing

Answer 98

1-conduct visual walk through
2-gather and verify key information about the property
3- identify and disclose any material facts
4- explain marketing options
5- provide opinion on property options
6- Explain selling cost
7- advise on property preparation

Question 99

Services for a Seller Client- During listing

Answer 99

1- accurately list the property
2-Explain the process for showing
3- implement the marketing plan
4-qualify buyer based on sellers directions
5-Ensure all required disclosures are made by the seller

Question 100

Offer Transaction Management

Answer 100

Confirm offer process :
- When the brokerage has been notified there is an offer to be presented to the seller,
arrangements will be made based on any previous instructions received from the
seller.

• A salesperson is required to ensure any offer is presented to the seller in a timely
  manner and according to the seller’s instructions.

-Each offer will include a time and date which identifies the length of time the party has
to accept an offer. Once that time expires, the offer can no longer be accepted. This
time is referred to as the irrevocable time period.

-

Question 101

Analyze, advise on,

and negotiate offers

Answer 101

• Negotiations can become complex and emotional.
• A salesperson’s role is to review the
  offer, ensure the terms of the offer are fully understood, and then discuss the seller’s
  options.

-At all times, the salesperson should guide the seller through the negotiation
process and ensure the seller’s best interests are being protected when analyzing and
advising on offers.

• Although some offers are less complex and appear straightforward, others may
  contain complex clauses, which could require the seller to do something, guarantee or
  warrant something, or pay for something. All offers and clauses need to be reviewed
  and explained to ensure the seller understands their obligations if the offer were to
  be accepted.
• A seller may not agree with the terms of a buyer’s offer, and this will require a salesperson to provide the appropriate advice when making any changes
• A seller
  must understand that if they do not accept the buyer’s offer and make changes to it,
  the buyer is under no obligation to accept those changes. Negotiations can include
  several rounds of offers between the parties, before the terms are mutually agreed
  upon. There can be times when the parties cannot agree to the terms and an offer
  that has been sent back and forth between the parties results in no sale.

Question 102

Coordinate any
required
inspections/viewings

Answer 102

If the accepted offer includes any terms or conditions that require access to the
property to complete any due diligence on behalf of the buyer, a salesperson will
ensure that any additional appointments necessary are made and access is provided
by the seller. Access could be for third-party professionals such as a home inspector
or for any buyer follow-up visits agreed to in the offer.

Question 103

Follow up on
conditional dates
and closing

Answer 103

-A salesperson will be the point of contact to arrange appointments and to monitor the
completion of any terms or conditions within the scheduled time frame.

Question 104

Manage the post transaction

relationship

Answer 104

The services provided by a salesperson will not end at completion of the transaction.
To maintain the relationship, they will want to follow up with the seller to ensure there
are no additional services needed. A follow-up will not only demonstrate your
professionalism but also helps to maintain a salesperson’s relationship for future
business.

Question 105

Negotiations

Answer 105

•Win-Win: Everyone’s objectives are met in a positive manner. The seller obtains market value; the buyer
receives the sought-after property.
• Win-Lose (or Lose-Win): The seller wins by successfully selling his home at or close to asking price. The buyer,
disregarding certain problems with the property, must make significant repairs after taking possession.
• Lose-Lose: Both seller and buyer fail to achieve a meeting of the minds and everyone loses. The seller misses
the opportunity to sell to the best buyer; the buyer fails to get the desired property.
• No outcome: Some negotiations become stalemated and have no result; the seller decides not to sell, and
the buyer exits having second thoughts about the financial commitment. Both parties may re-negotiate at a
later time or advance to other win-wins. The challenge for a new salesperson is readily identifying the no
outcome.

Question 106

Sub-agency

Answer 106

In practice, sub-agency occurs when the seller is a client of the listing brokerage and a co-operating brokerage has a
buyer who is a customer; the co-operating brokerage in a sub-agency relationship owes fiduciary duties to the
seller and represent the interests of the seller rather than the buyer. The co-operating brokerage would treat the
buyer as a customer and provide ethical and competent service but owe no fiduciary duties such as confidentiality.
Prior to the existence of buyer representation, a buyer’s brokerage always worked under sub-agency. The subagent owes all of the same general, fiduciary, and regulatory obligations to the principal, as does the agent.

Question 107

Seller Customers

Answer 107

There are several reasons why a seller may select customer service rather than representation including:
• The seller has previous experience in selling a property and feels they can negotiate the terms successfully
without a brokerage.
• The seller does not want to formally list their property for sale, although they do want buyers to know it is
available. This would be called a For Sale by Owner.
• The seller is looking for any cost savings associated with reduced services.

Question 108

Seller Customers

Answer 108

When approaching a private seller, a salesperson would identify their brokerage has an interested buyer. The
salesperson is not attempting to list the seller’s property for sale but rather negotiate an offer on the buyer’s behalf
with the seller. The brokerage would ensure the seller clearly understands the brokerage is not representing them
but rather providing customer services.

Question 109

he typical activities a salesperson would perform when providing services to a seller customer include:

Answer 109

Explaining relationship and service options to the seller
• Documenting the customer service agreement
• Showing their property to the brokerage’s buyer
• Presenting offers to the seller customer that have been prepared on behalf of the buyer
• Delivering counter offers to the buyer on behalf of the seller customer

Question 110

Providing Services to a Buyer Client

Answer 110

check notion.

Question 111

Managing the Transaction for buyer at the offer stage :

Answer 111

In compliance with the Code, when the buyer is at the offer stage, a salesperson
can offer these services:
• Preparing offers and advising on conditions, clauses, warranties, and other
terms
• Attending the offer presentation whenever possible to promote the buyer’s
best interests (as opposed to sending the offer to the listing salesperson by
email or fax)
• Negotiating the offer on behalf of the buyer

Question 112

how can you Assist in completing
the buyer’s due
diligence?

Answer 112

These services can include:
• Keeping track of time limits of any conditions in an offer
• Attending a home inspection with a buyer
• Arranging for an appointment for an appraiser to view the property if an
appraisal is required for mortgage purposes
• Preparing the necessary documentation for a buyer based on the results of
any condition in the offer
• Assisting the buyer in obtaining home insurance by providing information
about the property

Question 113

Buyer Customer Services and Limitations

Answer 113

check notion lesson 7

Question 114

Communicating with a client of another brokerage

Answer 114

The Code establishes that if a salesperson from a
brokerage other than the listing brokerage wants to
convey information to the seller or ask a question of
the seller, that salesperson must only communicate
with the seller through the listing brokerage. The
exception to this rule is if the listing brokerage has
given written permission for a salesperson to
communicate directly with the seller.

The same is true if a salesperson has a buyer client
and another salesperson from a different brokerage
wishes to communicate with the buyer; this must be
done through the buyer’s brokerage unless written
permission has been given to communicate directly
with the buyer.

Though not a requirement under the Code, it is a
generally accepted practice that other salespersons in
a listing brokerage’s office would only communicate with a seller through the listing salesperson. The same
is true of a buyer client

Question 115

Inducing a party to break an existing contract

Answer 115

the broker or salesperson shall not
induce the seller or buyer to break the agreement.”

Example: A salesperson is approached during an open
house by an individual who states they have their
property listed for sale with a different brokerage. The
individual states they are unhappy with the services
being provided and would like to cancel the listing and
have the salesperson discuss a new listing.
The salesperson advises the individual to speak
directly with the listing brokerage and hopefully
resolve any problems. The salesperson ensures there
is no indication the individual should cancel the listing.

Question 116

Breaking agreements of purchase and sale

Answer 116

“No registrant shall induce any party to an agreement
for purchase and sale or an agreement for rental of
real estate to break the agreement for the purpose of
entering into another such agreement.”

Example: A salesperson is conducting an open house
and an interested buyer is viewing the property. The
buyer states they have an accepted offer on a property
already, but this property is more appealing, and they would like to know how to cancel their existing
agreement of purchase and sale.

The salesperson tells the buyer they cannot provide
any advice related to this and to contact their
salesperson.

Question 117

Fairness, honesty, and integrity

Answer 117

Remember that fairness, honesty, and integrity should
be at the core of every relationship a salesperson has
with all other parties. It is just as important to
incorporate this into interactions with salespersons
from other brokerages, all clients and customers of
other brokerages, and all third-party professionals a
salesperson interacts with throughout a trade.
The Code states:
“A registrant shall treat every person the registrant
deals with in the course of a trade in real estate fairly,
honestly, and with integrity.