FAQ – “I am representing my father-in-law in the purchase of a property. I checked Council regulations and he is not an “associate” as defined under the Rules to the Real Estate Services Act. Do I still need to disclose my relationship with him to the seller?”
In this video Steve Jamieson, Managing Broker of RE/MAX Crest Realty Westside, discusses what’s legal, and what’s ethical when it comes to acting as a real estate agent for a family member.
Here’s a brief summary:
Disclosure of Interest in Trade
You will find the Disclosure of Interest in Trade on WebForms and under Forms and Fees on recbc.ca. Listed on the form are the parties who the Council defines as “associate” i.e. for whom disclosure must be made per the Rules to RESA.
Associate – RECBC rule definition
Associate in relation to a licensee means a person who is any of the following:
a) in the case of an individual licensee,
i) a spouse or family partner of the licensee,
ii) a trust or estate in which the licensee, or a spouse or family partner of the licensee, has a substantial beneficial interest or for which the licensee, spouse or family partner serves as trustee or in a similar capacity, or
iii) a corporation, partnership, association, syndicate or unincorporated organization in respect of which the licensee, or a spouse or family partner of the licensee, holds not less than 5% of its capital or is entitled to receive not less than 5% of its profits;
b) in the case of a brokerage that is a corporation or partnership,
i) a director, officer or partner of the brokerage,
ii) a shareholder of the brokerage who holds more than 10% of the voting shares of the brokerage,
iii) a trust or estate
(A) in which the brokerage, or a director, officer or partner of the brokerage, has a substantial beneficial interest, or
(B) for which the brokerage, or a director, officer or partner of the brokerage, serves as trustee or in a similar capacity, or
iv) a corporation, partnership, association, syndicate or unincorporated organization in respect of which the brokerage, or a director, officer or partner of the brokerage, holds not less than 5% of its capital or is entitled to receive not less than 5% of its profits;
principal includes, in relation to the prospective provision of real estate services, a potential principal.
Many governing bodies
As REALTORS® we are governed by more than one entity. Besides the Council, there is the Real Estate Board of Greater Vancouver (REBGV), Canadian Real Estate Association (CREA), British Columbia Real Estate Association (BCREA) and so on. Each of these institutions has their own set of rules and ethical standards to keep us on our toes!
You are expected to comply with all governing bodies, and abide by the “Golden Rule”: “Do unto others as you would have them do unto you.”
Your own brokerage will have its own Policies and Procedures as well. Our group of companies has high professional expectations of its sales associates. Associates will find a copy of the Policy Manual on the Extranet.
CREA’s Code of Ethics, Article 11:
Let’s look at Article 11 of CREA’s Code of Ethics:
A REALTOR® shall not buy or sell, or attempt to buy or sell an interest in property, either directly or indirectly for himself or herself, any member of his or her immediate family, or any other entity in which the REALTOR® has a financial interest, without making the REALTORS® position known to the buyer or seller in writing.
Immediate Family – CREA definition
According to CREA, immediate family means a spouse, son, daughter, parent, brother or sister and includes persons who are in such categories because of marriage, common law relationships, or adoption as well as entities in which such persons have any direct or indirect financial interest.
Yes, your father-in-law falls into the category of immediate family under CREA’s definition and you should disclose this fact. The likelihood of it having an impact on their selling decision is slim. Just get it out in the open so nobody feels deceived for whatever reason.
Remember, all disclosures must be done prior to entering into a contract.
When in doubt, disclose.
Ask yourself if the other party (buyer or seller) knew that this person was related to you, would that have an impact on their selling decision?
Finally, if it feels like you should be checking the regulations, then you should probably disclose. If you are still unsure about what to do, then check with your Managing Broker.
Please note: The Frequently Asked Question video series is used for training purposes within our group of RE/MAX offices. If you are licensed at a different brokerage, you must refer to your own Managing Broker for advice.