By Natalka Falcomer

As a lawyer, manager of a brokerage and a member of the Real Estate Institute of Canada (REIC), I’m surrounded by rules of professional conduct and codes of ethics. All my actions – whether they’re related to my work or not – are filtered through not only the Law Society’s Rules of Professional Conduct but also the Real Estate and Business Broker’s Act and REIC’s Code of Ethics. While this seems like quite the process, I discovered that being ethical is just as good as having a lawyer on demand.

If you practice ethical behavior consistently – from how you act with your family members to how you treat your clients and other real estate professionals – you’ll become “lawsuit-proof”. This is because you develop a very strong intuition around what is ethical and what is legal.



Intuition, as it turns out, isn’t magic. Rather, it’s our brain quickly spitting out a mass amount of information we’ve gathered and analyzed through years of repeated actions. An example of this is when you “just knew” that the deal was going to fall apart or that the buyer wasn’t serious. Your gut instinct is not magic. It’s your unconscious brain picking up on numerous cues, which trigger a “gut reaction” you’ve had in the past to those very same cues.

Given how intuition works, it follows that developing a “legal mind” and lawsuit radar can be done through memorizing the code and practicing ethical behaviour. The problem in doing this, however, is that ethical behaviour isn’t clear cut and memorizing the code is not an easy or immediate solution. Given these obstacles, I use Institute of Real Estate Management’s “Five Question Method”. By consistent application of these five questions, I am not only able to clarify and examine ethical issues, but I’m also able to access a “built-in mini lawyer”.  The questions are:

  1. Is it illegal?
  2. Who is affected by your decision? And how?
  3. What are the consequences of the decision?
  4. How do you feel about the situation?
  5. Have you examined all the alternatives?

If this is too difficult, then an even simpler question to guide you is: “Would you like to see your action talked about on the front page of your local newspaper?” If the answer is “no”, it is likely unethical and possibly a breach of the law.

Natalka Falcomer is a lawyer, real estate sales agent and Certified Leasing Officer who has a passion to make the law accessible and affordable. She founded, hosts and coproduces a popular legal call-in show on Rogers TV, Toronto Speaks Legal Advice. She founded Groundworks, the only firm specializing in commercial real estate law that offers flat fee rates, online delivery of legal work and a guaranteed turnaround time.

  • Brian Martindale

    Excellent advice.
    Regarding question one: “Is it illegal?”: An unethical person would not care about the answer to this question.
    Regarding question two: “Who is affected by your decision? And how?”: An unethical person would only care about how his/her decision would affect his/her own bank account/balance.
    Regarding question three: “What are the consequences of the decision?”: An unethical person would think that he/she could evade the consequences.
    Regarding question four: “How do you feel about the situation?”: An unethical person does not feel much about any situation other than how it will feel to score big.
    Regarding question five: “Have you examined all of the alternatives?”: An unethical person would not think of any alternatives to what he/she has in mind in pursuit of closing the mark.
    The five questions are aimed at people who are ethical by nature. These questions serve to simplify one’s thinking process on-the-fly, when within the heat of the moment—whilst giving advice to a client who is emotionally churning through a “What should I do now?” situation—a relatively quick solution to the problem can be advanced without thought to one’s own financial situation. That takes a special kind of commission seeking/advocate personality, because the two personality types are in constant psychological opposition one to the other; they are mutually, non-mutually, exclusive.
    “If this is too difficult…” Then one should not even qualify to possess a real estate salesperson license in the first place. How about administering an I.Q. test prior to being admitted to real estate university? I would set the qualifying score at about the 115 to 120 level of one’s I.Q.. That is the level that is usually put forth for university student acceptance, and the universities still churn out some educated idiots.
    “Would you like to see your action talked about on the front page of your local newspaper?”
    This idea speaks to one who has no functioning conscience. The only thing that keeps a sociopath from committing breaches of fiduciary responsibility against one’s clients and or potential clients is the fear of reprisal. We don’t need that kind of personality within this industry either…but they get in, don’t they?
    Here’s an idea: Let’s make the fear of reprisal so severe that when said penalties for misbehavior are trotted out during the real estate university 101 “pre-course” (a one-day eye-opener reality-check course regarding the wannabe failure rate)—starting on day one in class, when the pitfalls of being a Realtor are revealed vs how much money one can generate (if one is one of the few lucky ones) once in the saddle—the unethical-by-nature future miscreants quickly exit stage left, or right, ask for their money back, and rightfully blank off back to their holes in the ground. That would be a good start don’t’cha think? Fear of receiving penalties actually works in the real world, but first the fear factor must be established, and to establish fear the penalties in question must be fear inducing…and they musty be known far and wide to be consistently implemented against ethics transgressors. No second chances allowed, because victims of first-time transgressors don’t get a second chance to go back in time and hire someone else; the damage is already done. So too, the damage to the transgressor should equally be done. Out with them. Let them try again somewhere else with less stringent industry-entry requirements. This industry does not need simpletons operating within simply because they were able to correctly answer on a piece of paper some abstract questions via utilizing their short-term memory process during the previous night’s cramming sessions—well, currently only eighty percent of the questions correctly anyway. How would a screwed-over client/customer feel when he/she found out that his/her Realtor’s advice was only eighty percent accurate in his/her favour (but was one hundred percent accurate in their Realtor’s favour……….BINGO!………….. COMMISSION!) If one can’t initially achieve at least ninety percent on an exam, then one should (after being allowed—at the teacher’s discretion—to achieve only one, ‘ninety-five per cent correct’ second chance at a rewrite on a totally different exam) be eliminated from the pool of wannabes. Superficially-educated-idiots who don’t know how to spell nor understand the meaning of the word ‘ethics’ are not needed. All that they are good for is keeping the grind-’em-up-mill-effluent here-today-gone-tomorrow constant stream of dues-payers’-recipients (Real Estate Associations’ bureaucrats) in business.