Toronto Real Estate Lawyer (Part 19) – What are the legal obligations of Ontario Realtors?

Oct 19

Toronto Real Estate Lawyer (Part 19) – What are the legal obligations of Ontario Realtors?

So what are the legal obligations of Realtors? In a nutshell, they include professional, ethical, fiduciary and contractual obligations, each of which will be briefly discussed in turn.

Realtors must follow certain professional and ethical standards under the Real Estate Business and Brokers Act, 2002 and the Code of Ethics made thereunder. Among other things, Realtors are required to:

not disclose confidential information;
act fairly, honestly and with integrity;
promote and protect their clients’ best interests;
demonstrate reasonable knowledge, skill, judgment and competence;
not knowingly make inaccurate representations;
use best efforts to prevent error, misrepresentation, fraud or other unethical practice;
disclose any property interest they may have in their client’s property; and
convey any written offer they receive to their client at the earliest practical opportunity.

Realtors, as necessary members of CREA, must also abide by CREA’s Code of Ethics. Among other things, that Code of Ethics requires Realtors to be committed to professional and competent service, absolute honesty and integrity in business dealings, cooperating with and being fair to all, and complying with CREA’s Standards of Business Practice. Discipline proceedings and penalties for violation of the Code of Ethics are established by local real estate boards.

Realtors also have a fiduciary (special trust) relationship with their clients. This relationship imposes common-law obligations on Realtors which are separate and apart from any obligations arising under the Act or any Code of Ethics. Among other things, Realtors must maintain proper records, not disclose confidential information, act competently and in good faith, and be loyal and obedient to their clients. Acting in good faith requires Realtors to be honest, promote their client’s best interests, and disclose conflicts of interest – either real or perceived – to their clients. Many of these fiduciary obligations are contained in the Act, the Code of Ethics made thereunder, and CREA’s Code of Ethics.

In addition to their professional, ethical, and fiduciary obligations, Realtors have contractual obligations. They must, for example, perform their obligations in a Listing Agreement which includes listing properties on MLS or exclusively within the brokerage and presenting all offers from potential buyers to the seller.

Individuals with complaints against Realtors may be able to take civil or criminal action against them (depending on the nature of the complaint) and can also launch a complaint under the Real Estate Business and Brokers Act, 2002 with RECO. Part V of that Act deals with complaints, investigations, and disciplinary measures which can be taken by RECO. If you believe you have been wronged by a Realtor, contact a lawyer to discuss your legal options.