Sunday, March 30, 2008

Lawyers Face Changes in The Real Estate Transaction

The Law Society of Upper Canada has recently announced changes for its members regarding the processing of real estate transactions which might be a precursor to future changes governing the activities of REALTORS® as well.
Effective March 31, 2008 amendments to the "Rules of Professional Conduct" governing the legal profession will prohibit a lawyer from acting on behalf of both a Buyer and Seller in the same real estate transaction. In instances where a lawyer is faced with two clients engaged in the same transaction, one of said clients will have to be handed-off to a second lawyer within the firm or referred to another lawyer altogether. Obviously, having one lawyer represent two parties in the same transaction poses a threat re: a conflict of interest. The same however can and has been said of REALTORS®.
In real estate, the common term describing a situation where an agent brings forth a Buyer for one of his/her own listings is Dual Agency or "double-ending. In this scenario, the agent earns both the listing and selling portions of the commission thus doubling their potential income from that sale. In many instances both Buyers and Sellers like this arrangement thinking that (a) the agent in question is the most knowledgeable about the property and (b) a better deal might be had for both parties via the elimination of a second real estate brokerage. While there is some merit to both of these points, the fact is that it takes a very special person with the utmost in integrity to effectively yet impartially represent two parties in a real estate transaction. In short, it can be a situation filled with peril if not handled with the utmost of care.
The formally recognized term describing this relationship is "Dual Agency." When acting as a Dual Agent, a REALTOR® has fiduciary duties to obey, protect and maintain the interests and confidential details of both the Buyer and Seller. The terms of such a relationship must not only be fully disclosed to the parties involved but they must also consent to such an arrangement in writing as well.
Obviously the legal profession has taken issue with their members being able to act impartially and professionally when representing two clients in the same transaction hence their decision to change the respective "Rules of Conduct." Likewise, the Ontario Real Estate Association has similar concerns and it has been rumoured for some time that REALTORS® might someday see the day of "double-ending" eliminated. Given the recent actions of the Law Society, this day may be coming sooner than later.

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Rick relocated to Collingwood from Toronto in 1985 through a transfer with Goodyear Canada. In 1987 Rick was recruited by a major client of Goodyear’s, managing their Canadian business based in Barrie before moving to Chicago in 1992 as Vice President of Sales & Marketing. Upon returning to Canada in 1996, Rick ran an industrial products manufacturing company in Stratford, Ontario. In 1998 Rick returned to Collingwood with his two children. Rick is a licensed real estate Broker with Royal LePAGE Locations North in Collingwood and holds his MVA designation (Market Value Appraiser-Residential). He is an active volunteer in the community serving several years on the Board of Directors with the Collingwood Chamber of Commerce as Treasurer, 6 years on the Board of Directors for the Southern Georgian Bay Association of REALTORS® of which he is the Past President (2008) and currently serves on a committee with the Ontario Real Estate Association. Rick is a diverse executive manager with extensive experience in strategic planning, manufacturing, finance, human resources and quality assurance management.