Real Estate Licensee: Conflicts of Interest

Flashcards on Real Estate Licensee Responsibilities and Conflicts of Interest

What must a real estate licensee do when there is a potential conflict of interest?

Disclose any conditions that could possibly be perceived as a conflict of interest, as the discretion lies with the client.

How should a licensee disclose a conflict of interest?

In an objective manner, presenting both advantages and disadvantages of proceeding despite the conflict. They must include the nature of the conflict and how it impacts agency responsibilities.

What are the key elements of a full disclosure?

1. Nature of the conflict of interest 2. How it prevents fulfilling agency responsibilities 3. Consequences of proceeding or not 4. Advising the client of the option to seek legal advice

What are the consequences of failing to disclose a conflict of interest?

Loss of commissions, RECA investigation and sanction, possible legal action, and permanent damage to the client relationship.

What should a licensee do if a client chooses to proceed despite a conflict?

Seek the client's direction and be prepared to answer questions or provide further information to ensure informed consent.

What does informed consent require from a client?

Understanding the nature of the conflict, options to resolve it, and the implications and consequences of consent.

When must a representation relationship be terminated due to conflict of interest?

If the client refuses to accept the conflict or give consent, the relationship must be terminated-either fully or just for the related transaction.

What is a 'competing client interests' situation?

When clients of the same brokerage have the same goal (e.g., buying the same property), leading to a conflict due to confidentiality and representation duties.

What are the steps when clients of the same brokerage have competing interests?

1. Identify conflict 2. Disclose to each client 3. Obtain consent 4. If consent: proceed with modified agency 5. If no consent: terminate one relationship

What causes 'opposing client interests'?

Clients represented by the same brokerage are on opposite sides of a transaction (e.g., buyer vs. seller or landlord vs. tenant).