REALTORS® play a central role in guiding their clients through the twists and turns of real estate transactions, but they are rarely a solo act. Rather they are a part of a larger cast of professionals who work together to ensure their clients’ success in those transactions.
When acting for buyers, REALTORS® are expected to help clients find the property to be purchased, advise them on the appropriate price for the property, help negotiate the price and terms of the purchase transaction, present their offers to the sellers, and at times handle deposit funds paid by their clients.1
When acting for sellers, REALTORS® are expected to help clients advertise and show their property. They could also find buyers, advise on the appropriate sale price, present any offers received, and negotiate the price and terms of the sale transaction.2
Some transactions may appear to be run-of-the-mill, while others may raise unusual questions, whether as a result of client particularities, questions from other parties to the transaction, unusual contractual clauses, or unusual features of a property.
Regardless of the kind of transaction, REALTORS® are expected to spot issues that may require the input of other professionals. They are also required to recommend that their clients engage those professionals, and to work cooperatively with them in a team-based approach to client service. These duties are all contained within the general duty of a REALTOR® to “act with reasonable care and skill.”3
Spotting issues that may fall outside a REALTOR®’s area of expertise demonstrates professionalism and provides value to their clients.
In a recent BC case, the real estate agent’s failure to recommend legal advice to his seller client was found to constitute a breach of the standard of care expected of him.4 The property in the case was an unusual type of strata property, which would have required a complex process to amend the strata plan in order to permit the development of a new home up to the maximum floor area permitted by the city’s zoning bylaws. The Court found there were sufficient red flags for the agent to doubt the information provided by the seller about the property, and that the agent should have recognized the limits of their own expertise and proactively recommended that their clients obtain legal advice (early on in the agency relationship).5
There are many types of professionals a REALTOR® may need to suggest their client consults in the course of a real estate transaction. Some of these are home inspectors, contractors, appraisers, lawyers, accountants, tax advisors, environmental consultants, archaeological consultants, or even other REALTORS® who may be more familiar with a particular geographical area or type of property.
For example, a REALTOR® asked to list a property for a married couple, where one spouse has moved into long-term care, may refer the clients to a lawyer before even taking the listing. This is to ensure that the clients are both competent enough to give instructions, and / or that appropriate documents are prepared to enable the other spouse to sell the property.
A REALTOR® assisting a buyer in purchasing a development property that has an easement, right-of-way, or covenant registered on title may refer the buyer to a lawyer to ensure that the buyer understands the impact of those title charges on their plans for the property.
The REALTOR® may also consider whether the buyer would benefit from obtaining a property survey, if one is not already available from the seller, and from retaining an architect or development consultant familiar with any local planning regulations that might apply. It’s best if this is done early on in the transaction.
When dealing with a property that may have structural or safety concerns, whether disclosed by the seller in a Material Latent Defect form, Property Disclosure Statement, or discovered by a home inspector during the home inspection, a REALTOR® may consider referring their buyer to a contractor, engineer, or other professional to ensure the scope of the concerns is understood before proceeding with the purchase. The same applies to more unusual property types, such as leasehold properties, time-shares, or commercial properties, as well as unusual purchase structures like share purchases, joint ventures, or partnerships, which may lead to potential issues. In these cases, clients will benefit from timely advice from professionals such as lawyers, accountants, or tax advisors.
REALTORS® should recommend legal advice immediately in transactions that appear to be collapsing, or where there is uncertainty about whether the Contract of Purchase and Sale is still “alive.” In another recent BC case, a real estate agent was found negligent for not recommending that her buyer clients seek legal advice immediately when they instructed her to collapse the contract unilaterally. The Court commented that a reasonable REALTOR®, upon receipt of such instructions, should have provided basic advice about the impact of that decision on the buyers’ legal rights (such as the forfeiture of the deposit, and perhaps additional damages), and should have told them to immediately seek independent legal advice.6
It is important that REALTORS® encourage their clients to consult the appropriate professionals and that clients have sufficient time and opportunity to find the right professionals for their particular issues during the transaction, or even proactively, before entering into the transaction.
When referring other professionals, REALTORS® should endeavour to provide their clients with options of multiple qualified professionals with whom they have had successful past working experiences.7 REALTORS® can also provide their clients with a neutral referral service, such as a directory of professionals practicing in the area. Examples include the Lawyer Referral Service,8 or professional association directories for particular professions, such as the British Columbia Association of Professional Archaeologists,9 and more. REALTORS® may wish to make it clear that they are not personally endorsing the other professionals, and that clients should do their own due diligence.10
To minimize their own risk of liability, REALTORS® should document their referrals in writing and should refrain from directly retaining any professionals on behalf of their clients.11 It is best for the client to directly engage the professional, provide them instructions, communicate directly for advice, and negotiate payment for their services. This avoids the risk of miscommunications and any dispute over the scope of the services or over who should pay for the professional’s services.
A REALTOR®’s role in providing real estate services in a transaction is to act as a trusted advisor for their client, coordinating many aspects of the transaction. Working collegially with a client’s other professional advisors will reduce risk, enhance client trust, and produce better outcomes for the client.
The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.
