Blog by Andrew Peck

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"What is your role as a Realtor?"

"What is your role as a Realtor?"

This inquiry came to me from a consumer. The question is relevant to all Realtors and really underlines the importance of understanding your role as a fiduciary under the law of agency. Those who have not taken the mandatory agency course will learn that narrowing the scope of work as a buyer's agent through careful qualifying will reveal the buyer's expectations.

"I searched the internet and found out your name. I hope you can help me to answer several questions. As a buyer, before I buy the property, I read the information which the agent searched for me first. However, I don't know if all the information which the seller gave is correct or not. (I don't know does this information paper called feature statement? I can describe the paper: it has picture of the property, address, age, how big, how many bedrooms, how many garages, and so on). Does the buyer's agent have responsibility to check the correctness of all the information on the paper which he showed me? I also want to know if the buyer's agent has responsibility to go to the apartment management company to collect all the information about this apartment, then tell his client the real situation of the property, give some advice and help his client to do the best choice."

This question came to me from a consumer. The answer to them is noted below and I have given some further discussion for REALTORS to consider when dealing with the same question. Many of you will resist performing many of these duties when you are asked to work for a reduced fee. However, the amount you are paid does not relieve you of these duties unless you have consent to limit those services.

Andrew’s answer to the consumer:

If you give instructions to your buyer agent that this is one of your requirements to have information provided to be confirmed, then it is part of the duties of that agent. Such investigation cost would be borne by you as buyer. For example, an agent is not allowed to make comment on systems which are beyond their expertise. However, this is not to be construed as a warranty on the property as the agent can't know if there are no problems with a property. There is another form called a Property Disclosure Statement which the seller provides giving information about the property to the best of their knowledge. You may wish to interview several agents to get an understanding of what services they are prepared to provide and for what price. 

Andrew’s further comments to Realtors:

There are a couple of things to consider here. First and foremost is to do what your client instructs you to do as this is your fiduciary duty. When you start to work for a client it is important to review their expectations with them and to narrow the focus of those instructions. If they are a sophisticated buyer who has a lot of experience, they will likely be familiar with forms, processes and information. However if they are inexperienced, they will rely on their agent to advise them about the accuracy of information. Certainly the information provided on a data input form can easily be confirmed by a buyer’s agent if the client thinks this is important. As a consumer, I would want my agent to confirm the size of the house, and the size of the property. Other consumers will have greater or lesser expectations. If it turns out the information is inaccurate or wrong, then the buyer’s agent has well protected the buyer.  Many buyers will want to use inaccurate information as a negotiating point with a seller. However, the concepts of caveat emptor meaning let the buyer beware means that the buyer has a responsibility to confirm to their satisfaction. If the buyer concludes that the information provided is not accurate they are not obligated to proceed further. The Contract of Purchase and Sale specifically states that there are no guarantees or warranties contained in the contract. The information from the listing on the feature sheets also say that this information is not guaranteed and should be confirmed by the buyer. 

The Realtor Code of Ethics and Standards of Business Practices deals with this topic in two ways – the responsibility of the buyer’s agent to confirm the accuracy of the information and the responsibility of the listing agent to make sure they have provided accurate information.

The Code itself says:

As REALTORS®, we are committed to:

  • Professional competent service
  • Absolute honesty and integrity in business dealings
  • Co-operation with and fairness to all
  • Personal accountability through compliance with CREA's Standards of Business Practice

Article 1 (Informed of Essential Facts) says:
A REALTOR shall be informed regarding the essential facts which affect current market conditions. 

Interpretation 1.1 says:
A REALTOR shall be aware of current legislation and wherever reasonably possible, be aware of pending legislation (including zoning, government programs, etc.) which could affect trading conditions in the marketplace.

This would be a requirement of a competent buyer’s agent to ensure that they properly protect their client’s interests. If for example the area were under rezoning from residential to commercial use and the buyer’s agent failed to investigate that change, it could adversely affect the buyer’s use and enjoyment of what they thought they were purchasing. 

Interpretation 3.1 says:
A REALTOR shall fully disclose to his or her Client at the earliest opportunity any information that relates to the transaction. 

For example in this case, the listing agent has a duty to be fair and honest to the buyer. 

Interpretation 3.1 says:
A REALTOR shall fully disclose to his or her Client at the earliest opportunity any information that relates to the transaction.

Interpretation 3.2 says:
A REALTOR shall not intentionally mislead anyone as to any matters pertaining to a property.

Both of these interpretations reflect on the listing agent’s requirements to provide accurate and honest information about the property they have listed, and the duty of the buyer’s agent to fully disclose what they might know about the property or transaction. This is basic agency law under a fiduciary duty of disclosure. 

Article 4 (Discovery of Facts) really deals with the meat of this question:
A REALTOR has an obligation to discover facts pertaining to a property which a prudent REALTOR would discover in order to avoid error or misrepresentation.

Further, Interpretation 4.1 says: This Article applies equally to REALTORS working with Buyers or Sellers. 

So the buyer’s agent has just as much responsibility to discover necessary facts in order to properly protect their client and cannot lay blame on the listing agent for their errors. 

Finally, Article 10 (Outside Professional Advice) enforces the obligation of a REALTOR to direct their client to experts where needed where it is beyond the expertise of the REALTOR. 

Interpretation 10.1 says:

Outside professional advice would include, without limitation, lawyers, appraisers, home inspectors, surveyors, accountants, insurance agents or brokers, mortgage consultants, land use planners and environmental consultants.

In order to confirm information on a PDS it is likely you would need to go to outside advice as many of those questions are beyond the expertise of the REALTOR.

While a breach of the Code of Ethics and Standards of Business Practices are not in themselves something a consumer can enforce in a court of law for damages, they are certainly something that will be considered by a judge. These are essentially duties of agency law – a duty of disclosure and a duty to reasonable care and skill in performing your task.

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