The Real Estate Council of Ontario (RECO) and The REALTOR® Code, Article 11, set clear guidelines for REALTORS® regarding personal trades and property interests. Registrants must act in the best interests of all parties when they are personally involved in a transaction, including all actions that could be perceived as misleading or unfair.
Key Points:
Disclosure of Personal Interest
If a registrant has a personal interest in a property transaction (e.g., they are the buyer, seller, or have a financial interest in the property):
- Mandatory Disclosure: Registrants must disclose their interest in writing to all parties involved in the transaction.
- Consent: Written consent must be obtained from the parties affected BEFORE proceeding with the transaction.
Example: Affiliation with a Builder or Developer
If the REALTOR® is related to or has an association with a builder or developer (e.g., a family relationship - daughter of builder who is a registrant or a financial stake), this must be disclosed to clients in writing.
Using a Registrant for Representation
When engaging in personal trade, registrants are required to either:
- Use another registrant to represent them.
- Clearly disclose their dual role if they choose to represent themselves.
Advertising and Marketing
Registrants must not misrepresent their personal interest in any marketing or advertising materials.
Avoid Conflict of Interest
If a conflict arises, the registrant must disclose the conflict and follow the procedures for informed consent to continue.
Regulatory Oversight and Penalties
Failure to comply can result in disciplinary actions, including fines and suspensions. RECO treats these violations seriously. RECO recommends seeking legal advice if you are unsure how to proceed with a personal trade.
Scenarios:
You are selling your own home:
- What to do: You must disclose in writing that you are a registrant and the seller. Written acknowledgement is required from buyer BEFORE and offer is received.
- What NOT to do: Do not represent the buyer for the purchase of your own home.
Buying a Home (Not Listed by your Brokerage):
- You must disclose in writing that you are a registrant and get acknowledgement from the Seller BEFORE making an offer.
Buying a Seller Client’s Property:
- What to do: You must prioritize the seller client’s best interest and cannot use confidential information for your personal benefit.
- What NOT to do: You cannot represent the seller or purchase the property due to a severe conflict of interest. If the seller works with another brokerage later this would be considered a conflict of interest.
Representing Parents Selling Their Home:
- What to do: You must disclose the family relationship to all potential buyers in writing and get acknowledgement.
- What NOT to do: You cannot represent the buyers for the home, it’s impossible to stay neutral.
What does “related to the agent” mean:
- Spouse of the agent
- Child of the agent
- Agent is a child of the person
- The person is a relative by blood, marriage, or adoption:
- The agent
- The agent’s spouse
- The agent’s child
- The person is associated with the agent as defined under subsection 1 (2) of TRESA
