Humber/Ontario Real Estate Course 3 Exam Practice

What must a brokerage do if there is a serious conflict of interest while representing both the buyer and the seller in the same transaction?

1. The buyer cannot proceed with purchasing the property.

2. The brokerage must cease to represent both parties in this negotiation.

3. The seller must withdraw their listing for 60 days.

4. One salesperson’s employment must be terminated.

5. The brokerage must continue as mediator and resolve the issue.

6. No actions are required as long as informed consent was given initially.

The correct answer is: The brokerage must cease to represent both parties in this negotiation.

When a brokerage represents both the buyer and the seller in the same transaction and encounters a serious conflict of interest, the appropriate course of action is for the brokerage to cease representing both parties. This is essential to uphold the fiduciary duties and ensure that both parties receive fair treatment. Conflicts of interest can compromise the brokerage’s ability to advocate effectively for either party, creating a situation where the interests of one may be detrimental to the other. By withdrawing from the representation, the brokerage can help maintain the integrity of the transaction and protect the rights and interests of both the buyer and the seller. Informed consent, while important, cannot override the ethical obligation to act in the best interests of both clients free from conflicts. Continuing to represent both parties in a conflicted situation might lead to further complications, including a breach of trust and potential legal consequences. Therefore, the decision to cease representation ensures compliance with real estate regulations and fosters a fair negotiation environment.