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The Real Estate and Business Brokers Act, 2002 sets out some legal obligations related to trading in real estate. They apply to all “registrants”. So, unless you happen to be exempt from registration under the Act, then they will apply to you.

The Act contains certain obligations, as do the regulations passed pursuant to the Act. Previously, we reviewed the statutory obligations under the Real Estate and Business Brokers Act, 2002, and the obligations imposed upon all registrants under the Code of Ethics.

This article only deals with the additional obligations imposed upon registrants who may be acting for a “customer” and providing “customer services” to a consumer.

Let’s have a look at those specific additional regulatory obligations under the Code of Ethics. Just as a note of convenience, some sections appear to deal with clients, and then at the end, there is a provision which states that the same section applies with the necessary modifications to customers as well.

The Code provides:

Conscientious and competent service, etc.

5. A registrant shall provide conscientious service to the registrant’s clients and customers and shall demonstrate reasonable knowledge, skill, judgment and competence in providing those services.

Services from others

8. (1) A registrant shall advise a client or customer to obtain services from another person if the registrant is not able to provide the services with reasonable knowledge, skill, judgment and competence or is not authorized by law to provide the services.

(2) A registrant shall not discourage a client or customer from seeking a particular kind of service if the registrant is not able to provide the service with reasonable knowledge, skill, judgment and competence or is not authorized by law to provide the service.

Agreements with customers

15. If a brokerage enters into an agreement with a customer in respect of a trade in real estate and the agreement is not in writing, the brokerage shall, at the earliest practicable opportunity, reduce the agreement to writing, have it signed on behalf of the brokerage and submit it to the customer for signature.

Nature of relationship

17. If a registrant represents or provides services to more than one buyer or seller in respect of the same trade in real estate, the registrant shall, in writing, at the earliest practicable opportunity and before any offer is made, inform all buyers and sellers involved in that trade of the nature of the registrant’s relationship to each buyer and seller.

Disclosure of interest

18. (1) A registrant shall, at the earliest practicable opportunity and before any offer is made in respect of the acquisition or disposition of an interest in real estate, disclose in writing the following matters to every client represented by the registrant in respect of the acquisition or disposition: 1. Any property interest that the registrant has in the real estate. 2. Any property interest that a person related to the registrant has in the real estate, if the registrant knows or ought to know of the interest. (2) A brokerage shall, at the earliest practicable opportunity and before any offer is made in respect of the acquisition or disposition of an interest in real estate, disclose in writing the matters referred to in paragraphs 1 and 2 of subsection (1) to every customer with whom the brokerage has entered into an agreement in respect of the acquisition or disposition. (3) A broker or salesperson shall, at the earliest practicable opportunity and before any offer is made in respect of the acquisition or disposition of an interest in real estate, disclose in writing the matters referred to in paragraphs 1 and 2 of subsection (1) to every customer of the broker or salesperson with whom the brokerage that employs the broker or salesperson has entered into an agreement in respect of the acquisition or disposition. (4) A registrant shall disclose in writing to a client, at the earliest practicable opportunity, any direct or indirect financial benefit that the registrant or a person related to the registrant may receive from another person in connection with services provided by the registrant to the client, including any commission or other remuneration that may be received from another person. (5) A brokerage that has entered into an agreement with a buyer or seller that requires the buyer or seller to pay the brokerage a commission or other remuneration in respect of a trade in real estate shall not charge or collect any commission or other remuneration under another agreement entered into with another person in respect of the same trade unless, (a) the brokerage discloses at the earliest practicable opportunity to the other person, in writing, the terms of the agreement with the buyer or seller that require the payment of a commission or other remuneration; and (b) the brokerage discloses at the earliest practicable opportunity to the buyer or seller, in writing, the terms of the agreement with the other person that require the payment of a commission or other remuneration.

Material facts

21. (2) A broker or salesperson who has a customer in respect of the acquisition or disposition of a particular interest in real estate shall, at the earliest practicable opportunity, disclose to the customer the material facts relating to the acquisition or disposition that are known by or ought to be known by the broker or salesperson.

Conveying offers

24. (1) A registrant shall convey any written offer received by the registrant to the registrant’s client at the earliest practicable opportunity. (2) A broker or salesperson shall establish a method of ensuring that, (a) written offers are received by someone on behalf of the broker or salesperson, if the broker or salesperson is not available at the time an offer is submitted; and (b) written offers are conveyed to the client of the broker or salesperson at the earliest practicable opportunity, even if the broker or salesperson is not available at the time an offer is submitted. (3) Without limiting the generality of subsections (1) and (2), those subsections apply regardless of the identity of the person making the offer, the contents of the offer or the nature of any arrangements for commission or other remuneration. (4) Subsections (1) to (3) are subject to any written directions given by a client. (5) Subsections (1) to (4) also apply, with necessary modifications, to, (a) written amendments to written offers and any other written document directly related to a written offer; and (b) written assignments of agreements that relate to interests in real estate, written waivers of conditions in agreements that relate to interests in real estate, and any other written document directly related to a written agreement that relates to an interest in real estate. (6) Subsections (1) to (5) apply, with necessary modifications, if a brokerage and a customer have an agreement that provides for the brokerage to receive written offers. (7) Subsections (1) to (5) apply, with necessary modifications, to brokers and salespersons employed by a brokerage, if the brokerage and a customer have an agreement that provides for the brokerage to receive written offers.

Agreements relating to commission

25. (1) If a brokerage has a seller as a client and an agreement between the brokerage and the seller contains terms that relate to a commission or other remuneration and that may affect whether an offer to buy is accepted, the brokerage shall disclose the existence of and the details of those terms to any person who makes a written offer to buy, at the earliest practicable opportunity and before any offer is accepted. (2) Subsection (1) applies, with necessary modifications, to a brokerage that has a seller as a customer, if the brokerage and the seller have an agreement that provides for the brokerage to receive written offers to buy.

Competing offers

26. (1) If a brokerage that has a seller as a client receives a competing written offer, the brokerage shall disclose the number of competing written offers to every person who is making one of the competing offers, but shall not disclose the substance of the competing offers. (2) Subsection (1) applies, with necessary modifications, to a brokerage that has a seller as a customer, if the brokerage and the seller have an agreement that provides for the brokerage to receive written offers to buy.

Written and legible agreements

27. (1) A registrant who represents a client in respect of a trade in real estate shall use the registrant’s best efforts to ensure that, (a) any agreement that deals with the conveyance of an interest in real estate is in writing; and (b) any written agreement that deals with the conveyance of an interest in real estate is legible. (2) Subsection (1) applies, with necessary modifications, if a brokerage and a customer have an agreement that provides for the brokerage to provide services to the customer in respect of any agreement that deals with the conveyance of an interest in real estate.

Copies of agreements

28. (1) If a registrant represents a client who enters into a written agreement that deals with the conveyance of an interest in real estate, the registrant shall use the registrant’s best efforts to ensure that all parties to the agreement receive a copy of the agreement at the earliest practicable opportunity. (2) Subsection (1) applies, with necessary modifications, if a brokerage and a customer have an agreement that provides for the brokerage to provide services to the customer in respect of any agreement that deals with the conveyance of an interest in real estate.

Delivery of deposits and documents

29. Except as otherwise provided by law, if a registrant is representing a client or providing services to a customer in connection with a trade in real estate, and the client or customer has entered into an agreement in connection with the trade that requires the registrant to deliver a deposit or documents, the registrant shall deliver the deposit or documents in accordance with the agreement.

The Act itself deals with registration and entitlement to trade in real estate. It also provides a statutory framework for the regulation of conduct and offences under the legislative scheme.

The matters itemized above can result in the breach of professional standards identified in the Code of Ethics under the Act.

These are simple transgressions and can lead to penalties imposed by the Real Estate Council of Ontario for a breach of professional standards. They can also form the basis of civil liability. However, they do not constitute offences under the Provincial Offences Act.

There are two levels of service contemplated in the Real Estate and Business Brokers Act, 2002:

1) client service (agency), 2) customer service (non-agency).

This article deals specifically with the additional responsibilities imposed in the customer service business model.

So, let’s go back to the Code of Ethics and review what we have under the section dealing with “Obligations of Registrants”:

• conscientious and competent service is to be provided • registrants are to advise customers to seek services from others • registrants are not to discourage customers from seeking third party services • agreements with customers are to be documented and reduced to writing by the brokerage • direct and indirect interests in proposed transaction are to be disclosed to customers • material facts which are known (or ought to be) must be disclosed to a customer • offers are to be conveyed in accordance with customer’s instructions • commission reduction arrangements with customer may have to be disclosed to third parties • the number of competing offers received on behalf of a customer may have to be disclosed to third parties • a registrant with a customer is to ensure that transactions have written and legible agreements • a registrant with a customer is to provide all parties with copies of agreements • a registrant with a customer shall deliver deposits and documents as required

The breach of a provision of the Code of Ethics can result in censure by the Real Estate Council of Ontario (RECO), for professional misconduct. The registrant can be fined, required to attend educational programs, suspended or terminated from practice.

So, when it comes to “mere postings”, the above matters are quite serious. They are the regulatory transgressions which can result in censure for professional misconduct. These obligations are mandatory and apply to the customer service model, in addition to the ones that apply generally.

Registrants providing “mere posting” services will likely be offering the customer service level, so will have to bear in mind these specifically enumerated duties and responsibilities.

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