Humber/Ontario Real Estate Course 4 Exam Practice

To establish a valid agency relationship, what must be prominently outlined?

1. The method for termination of the agreement

2. Fiduciary obligations and duties

3. Commission structure and payment terms

4. Procedures post-closing of a sale

5. Brokerage’s licensing details

6. Buyer client’s purchase history

The correct answer is: Fiduciary obligations and duties

To establish a valid agency relationship, it is essential to prominently outline fiduciary obligations and duties. This is because fiduciary duties are foundational to the relationship between the agent and the client. They encompass responsibilities such as loyalty, disclosure, confidentiality, obedience, reasonable care, and accounting. By clearly stating these obligations, both parties understand the expectations and legal responsibilities involved in the agency relationship. When fiduciary duties are explicitly communicated, it fosters trust between the agent and the client, which is vital for effective representation. This clarity helps prevent misunderstandings that could arise regarding the agent's responsibilities, ensuring that the client's best interests are always prioritized in accordance with the legal framework governing agency relationships. Other aspects like the method for termination of the agreement, commission structure, and payment terms, while important, do not fundamentally establish the agency relationship as they are more about the practicalities of the relationship rather than the ethical and legal obligations that underpin it. Therefore, while these elements contribute to the overall context of the agency agreement, they do not carry the same weight in defining and establishing the relationship itself as fiduciary obligations and duties do.