If you break the rules in
Many of us long-time registrants have been awaiting changes in the act for many years. I am pleased, for the most part, that the new “regs” are coming into effect.
Time and space will not allow me to comment on all the changes, so I will highlight only those that I really have had a chance to digest. Before I do that, kudos and slaps on the back to the hard-working committee members who slaved away at the final drafts for several years. You are to be commended on your dedication and commitment.
As an associate broker/manager/ business consultant, the biggest question is why registrants would not want to comply. Even if they are independently wealthy, why risk losing your license, fines, penalties or even a jail sentence? If brokers/managers/corporations do their level best to promote their agents’ education in respect to the act, they will have nothing to be concerned about. So, “caveat emptor!”
The specific number of definitions under the Code of Ethics has been substantially reduced. A “client” is someone who has chosen to be represented under “a representation agreement,” with a brokerage. This is provided that the broker or his representative is providing a service on behalf of the brokerage.
The act states further that agreements can be written, oral or implied. The aspect of fiduciary duty in respect to what is Common Law “is the Representative acting in the Best Interest, in terms of advice and services.” My comment here, and it is a strong one, is: if you are going on the oral or implied basis with your client, then for goodness sake, document it, and have the client initial your notes. You’ll be professional if you do and very glad you did so, if there is any dispute of any kind.
What services do you provide? Make sure you are very, very clear about the services you will render as a professional. As a registrant, you must be sure that the person you are dealing with comprehends that difference/distinction.
The new act imposes strict duties when dealing with clients, especially with multiple clients on a single brokerage. The onus under the new provisions is that the registrant will have to make several disclosures to clients and customers about the services that are being offered. The conundrum is that many of our colleagues either are reluctant to get anything down in writing, or simply say, “That’s not the way I do business.”
You know, back in ’95 (not 1895, although some of you think that I go back that far!), Merv Burgard gave one of the first seminars about Buyer Brokerage at the Ramada Inn in
“Discover the facts, decide how you’re going to act, document it and do it.”
So what’s really new? “A registrant shall not represent more than one client in respect to the same trade, unless all of the clients represented by the registrant to the trade, consent to it in writing.” This is most welcome by both sides, because it crystallizes the fairness of the negotiations.
I’m not going to comment on trust accounts and the changes to them, because they are applicable to the broker owners, but registrants should make themselves aware of the changes anyway. However, the last few areas that I want to touch on are in reference to what I started out with at the beginning of this article. The fines are onerous and should make all registrants more diligent in their daily activities. Be aware that if a registrant is found guilty, his name will be posted to RECO’s website for 57 months!
Misleading/falsifying information/advertising: Registrants who, up to now, may have been getting away with this, beware! The fines should be enough to dissuade anyone from doing this.
Ownership of brokerages: Personally, I get a little nervous about this one change: “Corporate brokers can be owned by non-registrants, provided that all the conditions are met….” A wry comment on this. What is to stop some nefarious, scheming types from forming a legitimate company to do some money laundering? Does RECO have enough “firewalls” to monitor this possibility? (I’m sure that I’ll get a few comments on this one!) And about brokers owning more than one brokerage…hmmm, my own feelings are that there is a potential of conflict of interest.
Many of the changes have been designed to provide greater consumer protection. Many of my colleagues ask, “Well, how are we being protected from consumers who are unscrupulous?” The act, unfortunately, does not provide for these occurrences, but there are other elements of the law that would address these concerns. What the act does now and in the past is to allow the registrant to be more vigilant and more cognizant of their duties and responsibilities and to make them more accountable. Those who subscribe to this philosophy will undoubtedly agree with this viewpoint.
I am pleased that dual agency was addressed. It will be called “multiple representation”. Most of us think in terms of the selling side, but the act is very specific. And now, the brokerage must describe what services it is offering. When to inform the consumer? At the earliest practical opportunity and in all cases, before an offer is accepted. Section 16 of the act, requires further disclosures regarding when a registrant might enter into a multiple representation situation. For more details, see that section of the act. The area of multiple offices doing dual agency is still in effect and the disclosures remain the same. More on this at a later date.
I cannot end this edition from My Desk, without making mention about REM, on their enormous contributions to the real estate industry for the past 16 years. So to all those from Publisher Heino Molls on down, congratulations on a job well done. I am flattered to be accepted by your paper as a contributing columnist and to be so recognized by my peers. Keep up the wonderful work on keeping the industry abreast of all activities and events.
Also, thanks to the many, many readers who responded to my December article dedicated to our late grandson, Luke.
Quote of the month: “Sitting still on the water, waiting to decide which way to go, is the wrong thing to do.” – Fred Brooks, author of Mythical Man-Motion
Stan Albert is an associate broker with Re/Max Professionals in Etobicoke, Ont. and in May 2006, will celebrate his 35th year in real estate. He serves on the Complaints, Compliance and Discipline Committee at RECO, and the Professional Standards Committee at the Toronto Real Estate Board. He is an established trainer and business consultant and can be reached at [email protected]; or www.Trainingforrealestate.com
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