Humber/Ontario Real Estate Course 4 Exam Practice

If a salesperson receives a referral fee from a mortgage company, what must they do?

1. Disclose the fee only if the amount exceeds $100.

2. Disclose the fee to the client.

3. Disclose the fee to the buyer only if required by the mortgage company.

4. Only disclose the fee if the client asks about it.

5. Notify their brokerage about the referral fee but not the client.

6. Include the fee in the final sale documentation.

The correct answer is: Disclose the fee to the client.

The correct response is to disclose the fee to the client. This is critical because transparency is a fundamental principle in real estate practices. When a salesperson receives a referral fee from a mortgage company, it represents a potential conflict of interest, and clients must be made aware of such arrangements to ensure informed decision-making. This duty to disclose helps maintain trust in the client-salesperson relationship and aligns with ethical standards within the industry. Clients should have all relevant information, including any financial benefits a salesperson receives, to fully understand the dynamics at play during a transaction. The other options don’t meet the ethical and legal obligations that govern real estate practices. For example, disclosing the fee only if it exceeds a certain amount does not cover all situations and could potentially hide important information from clients. Similarly, limiting the disclosure to just the buyer or only if asked by the client undermines the principle of full transparency. Notifying the brokerage without informing the client does not fulfill the responsibility of clear communication. Lastly, including the fee in final sale documentation without prior disclosure to the client could lead to misunderstandings and distrust regarding the salesperson's motives.