Solving disputes in a real estate transaction

What’s the best way to settle a dispute in a real estate transaction?

Ah — this question has many layers.

As much as most people do their diligence during real estate transactions, unfortunately sometimes things don’t go according to plan. Different types of issues or disputes arise and there are different approaches to resolve them.

Disputes might arise between a buyer and a seller, between a buyer or seller and an agent, or between agents.

If you are a buyer and have a dispute with the seller — or vice versa — about the terms of an agreement, you can ask your agent to help intervene. Ideally, the two agents are less emotionally involved and will be able to define the problem, and find a way to work it out. Failing a resolution, you might need to seek the advice of a lawyer to help you understand your available options, including all of the risks and implications of those options. RECO does not engage in contractual disputes between buyers and sellers.

If your dispute is with your agent or an agent representing another party, try to work it out with them. You can also seek help from the agent’s brokerage manager, referred to as the broker of record.

Sometimes an agent makes a minor mistake that costs a consumer time and convenience, or some money. Agents and their brokerages typically want to resolve such issues as they rely on references to grow their networks. Be realistic about what the resolution might be; sometimes the issue can be solved without further headache. If you find that you can’t resolve your dispute with the brokerage, ask a lawyer for advice.

If the conduct of the brokerage seems unethical or illegal, you can come to RECO. My colleagues will investigate the matter to assess the agent’s or brokerage’s conduct against their legal obligations and the code of ethics.

You might be wondering how RECO assesses the conduct of agents. We are guided by a code of ethics, which is quite clear about the obligations of agents to their clients and other parties in a real estate transaction.

RECO takes a progressive approach to discipline. Our first step is to educate the agent about proper conduct so the behaviour can be remedied and does not get repeated. If they do re-offend, agents should expect to be disciplined and can face fines of up to $50,000.

Continued unethical behaviour could result in RECO seeking to revoke the agent’s registration, which would prevent them from trading in real estate.

I would like to point out that while RECO takes action to address improper behaviour, it cannot direct or order an agent to compensate a buyer or seller. That authority is with the courts. RECO cannot undo a contract between you and your agent or between you and another party. If you are interested in recovering funds or settling contract disputes, I suggest that you seek the advice of a lawyer.

Because real estate transactions, particularly in hot markets when there are multiple offers, can be very difficult to navigate and often happen very quickly, it’s important that everyone be engaged and informed to make decisions quickly.

Our mandate at RECO is to administer the rules that regulate the conduct of agents and brokerages in the interest of consumer protection.

If you have a question for Joe about the home buying or selling process, please email information@reco.on.ca.


This column is for general information purposes only and is not meant as legal or professional advice on real estate transactions.

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.


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