Humber/Ontario Real Estate Course 4 Exam Practice

What should ABC Realty Inc. consider while working with a buyer client to buy from a listing brokerage?

1. Both brokerages represent the seller and owe fiduciary duties to the seller.

2. ABC Realty is a sub-agent owing fiduciary duties to both buyer and seller.

3. ABC Realty represents the buyer, owes fiduciary duties to the buyer, and limited duty of care to the seller.

4. The listing brokerage is in a multiple representation capacity owing fiduciary duties to both parties.

5. Neither brokerage has fiduciary duties to the seller.

6. ABC Realty only owes fiduciary duties to the seller.

The correct answer is: ABC Realty represents the buyer, owes fiduciary duties to the buyer, and limited duty of care to the seller.

When ABC Realty Inc. is working with a buyer client, it is essential to understand the real estate agency relationships that govern their actions. The correct choice indicates that ABC Realty represents the buyer and thus owes fiduciary duties to that buyer. This includes loyalty, full disclosure, and acting in the best interests of the buyer throughout the transaction process. In this scenario, ABC Realty, by representing the buyer, aligns its obligations primarily with the buyer’s interests. While it is possible for ABC Realty to have a limited duty of care toward the seller — such as providing necessary disclosures or information that could affect the transaction — the primary fiduciary responsibility lies with the buyer. This relationship ensures that the buyer's needs and preferences are prioritized, fostering trust and transparency in the transaction. Understanding this relationship is crucial because it shapes how real estate professionals navigate transactions, ensuring that all parties understand their roles and responsibilities. When a brokerage represents a buyer, they must maintain clear communication and act in ways that best serve their client's needs, adhering to the ethical standards expected in real estate practice. This structure of representation is also significant as it delineates responsibilities, preventing potential conflicts of interest and ensuring that all parties understand where the broker's loyalties lie throughout the buying process.