Humber/Ontario Real Estate Course 4 Exam Practice

In a transaction where ABC Realty Inc. represents the seller and another brokerage represents the buyer, what is true?

1. ABC Realty Inc. owes a limited duty of care to the seller

2. Both brokerages owe fiduciary duties to the seller

3. ABC Realty Inc. is the cooperating brokerage

4. The cooperating brokerage owes a limited duty of care to the seller

5. The seller has the primary responsibility to negotiate terms

6. Both brokerages must equally divide the remuneration

The correct answer is: The cooperating brokerage owes a limited duty of care to the seller

In a transaction where ABC Realty Inc. represents the seller and another brokerage represents the buyer, the correct understanding is that the cooperating brokerage—meaning the brokerage representing the buyer—owes a limited duty of care to the seller. This scenario typically involves two brokerages with distinct roles and responsibilities. In real estate transactions, the brokerage representing the seller owes a fiduciary duty to the seller, which includes loyalty, full disclosure, and acting in the best interests of the seller. On the other hand, the brokerage representing the buyer has certain obligations as well, but these do not extend to the same level of fiduciary duty to the seller. The cooperating brokerage's responsibilities are generally limited to fair treatment and acting in a manner that is not detrimental to the seller's interests while negotiating on behalf of the buyer. This limited duty of care means that the cooperating brokerage must adhere to professional standards and not engage in misleading or unethical behavior towards the seller, but it does not encompass the full range of fiduciary duties that the seller's brokerage owes to their client. Such delineation clarifies the boundaries of responsibility in the transaction and ensures that each party's interests are respected according to their respective roles.