What happens if the registered real estate professional is a relative of the buyer or the seller? Is this allowed?
This is a simple question, but not such an easy answer. I will give it a go.
On occasion, a registered real estate professional may be related to the buyer or the seller of a home. They also could be the buyer or seller. This is acceptable so long as the real estate professional follows a few rules from the legislation that regulates the real estate brokerage industry.
The general rule is that if the real estate professional is related to the buyer or the seller of the property, he or she has to disclose the relationship in writing to all other parties to the purchase and sale agreement. This rule applies whether or not the other parties to the transaction are clients or customers of the real estate professional’s brokerage.
Similarly, if the real estate professional has some sort of an interest in the property, he or she has to disclose this relationship before an offer is made.
For example, if the real estate professional is related to the seller, the professional has to disclose this to the buyer in writing. Likewise, if the real estate professional is related to the buyer, the professional has to disclose this in writing to the seller.
Consumers and real estate professionals should note that the legislation governing real estate defines “related to” as including someone related by blood, adoption, through a conjugal relationship or even a business relationship.
Furthermore, if the real estate professional, or someone related to the professional, has an interest in the property being bought or sold, then the real estate professional has to disclose this in writing to the buyer or seller.
An “interest” in a property could include the real estate professional owning the property in question.
An “interest” could also include the real estate professional having indirect ownership of the property because of another personal or business relationship.
In all cases, disclosure of the real estate professional’s interest in the property has to be made in writing at the earliest practical opportunity, and before any offer is made.
For you as the consumer, like with any else, feel free to ask your registered professional if they have any personal relationship with the buyer or seller or a business interest in the property. You might also ask them to ask the representative on the other side too. You never know what might come out and might impact how comfortable you are as you consider a particular property.Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.