Humber/Ontario Real Estate Course 4 Exam Practice

Which dty is a brokerage obligated to fulfill?

1. Owes fiduciary duties to both the buyer and seller in every transaction.

2. Can legally bind a seller to a transaction without their consent.

3. Must serve the client’s best interests in an agency relationship.

4. Is legally required to offer dual agency in all agreements

The correct answer is: Must serve the client’s best interests in an agency relationship.

The correct choice highlights the crucial principle of agency in real estate. In an agency relationship, a brokerage has a fundamental obligation to act in the best interests of its clients. This encompasses duty of loyalty, full disclosure, confidentiality, and accountability, ensuring that the client's needs and goals are prioritized throughout the real estate transaction. When a brokerage serves a client, it manifests as a legal and ethical commitment, meaning the brokerage must advocate for the client's position, provide honest advice, and protect confidential information. This duty is paramount in earning and maintaining trust between the client and the brokerage. The other options reflect misunderstandings of the responsibilities and legal boundaries governing real estate transactions. For instance, an obligation to owe fiduciary duties to both parties in every transaction fails to recognize that fiduciary duties are typically limited to one party (usually the client) in a traditional agency relationship. The legality of binding a seller to a transaction without consent is misleading, as consent is a key component of valid contracts. Finally, while dual agency might be permissible under certain conditions, it is not a universal requirement and can lead to conflicts of interest, thus it is not legally mandated in all agreements.