Acting in the Best Interests of Your Clients

A reminder from Charles Stevenson, RECA Registrar

Recently, a CBC Marketplace investigation used hidden cameras and represented that some real estate professionals in Canada may be acting unprofessionally and even breaking the law by steering buyers away from low-commission homes.

Though the steering was caught on camera in Ontario, the headlines certainly made waves in the industry across the country.

Duty to Act in your Client’s Best Interest

If a licensee avoids showing a property because it would provide a lower-than-desired commission, they are acting in their own best interest, not in the best interests of their client. A licensee is also not acting honestly in their dealings with their client if they are misleading the client about a property in order to steer them to a higher commission alternative. It’s also considered anti-competitive behaviour and it is indeed very concerning.

When a licensee agrees to represent a client in an agency relationship, they agree to place the interests of the client above everything except the law. This is one of the agency obligations found in common law. In this instance, it means the licensee has an obligation to bring to the attention of the buyer every property that meets their material requirements.

In fact, the Real Estate Act Rules specifically state, “use best efforts in locating a property in the specified market area that meets the material needs identified by the buyer” [section 58(a)].

This means that beyond any misleading or dishonest behaviour used to steer clients away, the actual steering clients away from a property with a less than desired commission is against the Rules in Alberta. As always, if a licensee breaks the Rules by engaging in this practice, they could find themselves facing sanctions for being in contravention of the Real Estate Act Rules and the Competition Act.

Mandatory Written Service Agreements

Fortunately, steering is not something we see a lot in Alberta. Since 2014, real estate licensees in Alberta cannot represent a consumer as a client without a written service agreement, and this includes buyers. The Buyer Representation Agreement always includes details about the desired property type and market area(s) so there should be no doubt about the material requirements of the buyer. The agreement also includes the agreed upon remuneration for the buyer representative.

If a licensee finds themselves in a situation where the buyer wants to see a property where the commission offered is less than the amount agreed to in the written service agreement, the licensee must seek the buyer’s instructions. If the buyer wants to make an offer on the property, the licensee can either choose to not represent the buyer or to work with the buyer and amend the service agreement to reflect a new amount for remuneration. The buyer might also instruct the licensee to resolve the commission shortfall through negotiations with the seller prior to presenting the offer.