Real Estate

Double-ended housing deals highlight need for reform

By AdvocateDaily.com Staff

A recent CBC investigation that showed some real estate agents “double-ending” deals in an effort to boost their commissions points to the need for tighter regulation of the industry, says Toronto real estate lawyer Anar Dewshi.

In the residential housing market, it’s typical for buyers and sellers to be represented by their own independent agents, she tells AdvocateDaily.com.

“Agents who represent both the buyer and the seller aren’t prohibited from giving their clients an unfair advantage by manipulating deals or disclosing confidential information,” Dewshi notes.

In its investigation of double-ended deals, the CBC found some agents breaking the rules by offering unfair advantages to potential clients in an effort to secure both ends of a deal.

In Ontario, multiple-representation or double-ending is a more common practice than people might think, points out Dewshi, principal of Dewshi Law Practice.

“But according to the Real Estate and Business Brokers Act’s Code of Ethics (O. Reg. 580/05), agents are required to be fair, honest and to conduct themselves with integrity. Moreover, the Code of Ethics requires agents to promote and protect the best interests of their clients,” she says.

Following the CBC investigation, the Real Estate Council of Ontario (RECO) issued a fact sheet for consumers titled Understanding the Pros and Cons of Multiple Representation, which Dewshi says is a positive step, but what’s required for real change in the industry is an update in regulations.

“The regulatory framework to oversee the conduct, ethics, and professionalism of real estate professionals doesn’t go far enough to protect consumers against agents who skirt their professional responsibility,” she suggests.

Despite a comprehensive regulatory framework, the Real Estate and Business Broker Act and Code of Ethics do not explicitly address the pitfalls of multiple-representation or double-ending, but if the province wants to restore consumer confidence, it should follow Alberta’s example and ban agents from negotiating for both sides, Dewshi says.

“The current system relies on consumer complaints and the integrity of the agents, but consumers aren’t aware that such practices are occurring because it’s happening behind closed doors. Relying on the integrity and ethical responsibly of agents has failed to preclude underhanded practices,” she adds.

Dewshi says beyond a ban on double-ending, RECO could institute other deterrents such as steeper fines and longer suspensions/revocations.

“They could also develop compliance and enforcement measures directed towards regulating multiple representations for example imposing mandatory reporting when agents/brokers negotiate for both a buyer and a seller in any real estate transaction,” she says.

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