Time to Amend the Code of Ethics ~ RECO Election 2012

Candidate Brian Madigan LL.B.

Ontario Real Estate Source


By Brian Madigan LL.B.


As many of you know, I have offered to let my name stand as a candidate for election as a Director of the Real Estate Council of Ontario for a three year term commencing in June 2012.

Let's look at an issue which I believe is topical for the 2012 election?

There are offers commonly known as “Bully offers” which present a problem for the industry. Few participants are on the winning end. As part of the process, the existing ethical obligations apparently suggest that by placing the client in a higher position than the profession as a whole, that the consumer is well-served.

To me, the result is the opposite. The consumer loses faith in the integrity of the system. Those who breach the rules are encouraged and those who follow the rules become disgruntled.

Consumers and the public understand the rule of law and the basic system of fairness. What they do not understand is the bully offer loophole.

In my view, there are times when a professional must honour a professional code of ethics first and follow the client's instructions thereafter. This occurs every day in the legal and medical professions. It is a matter that should be honoured here too.

As the real estate business moves from an "industry" to a "profession", the Professional Standards and Code of Ethics need to form the primary responsibilities of the registrants.

While it is always possible to contact a lawyer for legal advice on such matters, I would suggest that appropriate amendments to the Code of Ethics be made under the Real Estate and Business Brokers Act, 2002 be made to ensure that a professional's responsibilities are primary.

The related and important consequence would be the elimination of the bully offer loophole. This will add to the inherent integrity of the system, ensure fairness and encourage the consumer to respect the registrants and the profession.


A seller would then be able to set up rules related to the presentation of offers, and everyone would be obligated to follow those rules, without the risk that a “bully offer” might arrive earlier. There should be no breach of ethical obligations if the registrant simply followed the seller’s rules and guidelines.


Here's the political promise: if I am elected I will support the appropriate amendments to the Real Estate and Business Brokers Act, 2002, to place adherence to the Professional Code of Ethics as the primary duty of the registrants.

The effect in my view will be "increased professionalism".
Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through RE/MAX West Realty Inc., Brokerage 416-745-2300.
www.OntarioRealEstateSource.com

Customer Disclosure Duties under REBBA 2002

What is the Disclosure Obligation to Customers in Ontario?

Ontario Real Estate Source

By Brian Madigan LL.B.

Under the Real Estate and Business Brokers Act, 2002, a registrant is charged with certain responsibilities.

Customers are entitled to ”services” and their agents must act with competency, knowledge, skill and judgment.

This is the obligation to clients under the Code of Ethics:

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.  

         

Material Facts are actually a defined term under the Code:

“material fact” means, with respect to the acquisition or disposition of an interest in real estate, a fact that would affect a reasonable person’s decision to acquire or dispose of the interest;       

It is difficult to appreciate the context without appreciating the definition of a trade in real estate in the Act:

trade” includes a disposition or acquisition of or transaction in real estate by sale, purchase, agreement for purchase and sale, exchange, option, lease, rental or otherwise and any offer or attempt to list real estate for the purpose of such a disposition, acquisition or transaction, and any act, advertisement, conduct or negotiation, directly or indirectly, in furtherance of any disposition, acquisition, transaction, offer or attempt, and the verb “trade” has a corresponding meaning;

So, this basically means that the agent must:

1)     at the earliest practicable opportunity,

2)     disclose to the customer,

3)     the known material facts, and

4)     the material facts which are unknown, but ought to be known.

Naturally, it would be wise from a risk management perspective that the agent recorded this information in some way, and was able to retrieve it later if required.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com