Humber/Ontario Real Estate Course 4 Exam Practice

What is the proper course of action if a serious conflict of interest arises in a multiple representation situation?

1. The buyer cannot purchase the seller’s property given the conflict of interest.

2. The brokerage cannot continue to represent both parties.

3. The seller must cancel the listing and wait to re-list the property.

4. One of the salespersons involved must be terminated.

5. Both parties must find new representation.

6. The agreement is automatically null and void.

The correct answer is: The brokerage cannot continue to represent both parties.

In a multiple representation situation, if a serious conflict of interest arises, the proper course of action is for the brokerage to cease representing both parties. This ensures that the interests of both the buyer and the seller are protected and that they receive fair and unbiased representation. When a brokerage represents both a buyer and a seller in a transaction, there is an inherent risk that confidential information could be misused or that one party’s interests may not be adequately advocated due to conflicting obligations. If a serious conflict is identified, continuing to represent both parties could violate ethical standards and regulations governing real estate practices. This scenario emphasizes the importance of transparency and maintaining the trust of clients. It is critical for brokerages to have clear procedures in place to address potential conflicts of interest and act in accordance with legal and ethical obligations. The other options do not fully address the responsibility of the brokerage in managing conflicts, which is why the brokerage's withdrawal from representing both parties is the most appropriate action.