Humber/Ontario Real Estate Course 4 Exam Practice

What must Salesperson Drew do when his corporation, in which he holds shares, wants to buy a property he has listed?

1. Drew must disclose his ownership interest to the seller.

2. Drew need not disclose his interest since he is a minority shareholder.

3. Drew must only disclose if the corporation is a buyer, not if it is a seller.

4. Drew only discloses if the seller inquires about the shareholders.

The correct answer is: Drew must disclose his ownership interest to the seller.

Drew must disclose his ownership interest to the seller because transparency is essential in real estate transactions, especially when there is a potential conflict of interest. As a salesperson, he has a fiduciary duty to act in the best interests of his client, and disclosing any personal or financial interests in the property is critical to maintaining trust and transparency in the transaction. Failing to disclose this information could lead to a breach of his ethical obligations and may result in legal ramifications. The other possible options suggest scenarios that do not align with industry standards and ethical practices. Being a minority shareholder does not exempt Drew from the responsibility of disclosure; regardless of the percentage of ownership, the potential for conflict of interest exists. Additionally, the obligation to disclose is not contingent on whether the corporation is a buyer or seller; it applies in both cases. Lastly, Drew cannot wait for the seller to inquire about shareholders to disclose his interest; proactive disclosure is necessary to avoid any perceptions of impropriety.