In 1987 I was fortunate enough to attend the FIABCI World Conference in Copenhagen. Just in case your real estate acronyms are out-of-date like your FINTRAC manual, FIABCI stands for six words in French I can never remember but which, in English, translate to International Real Estate Federation, a group of over 100 national real estate associations. As CREA is to your board, FIABCI is to CREA – a large, mysterious organization we indirectly pay for.
At that long-ago conference, one of the keynote speakers – Gandalf the Grey perhaps – suggested the future of real estate would benefit greatly from divorce and the resulting new household formations.
I was 42 and my personal “household reformation” was far in the future and so the concept was hazy to say the least. However, looking back I acknowledge the speaker may have been one of the few demographic futurists who got something bang on. To be fair, I suppose if you look at the large clump in the population tree we refer to as baby boomers, it’s not too hard to suggest we – yes I’m a suspect – will do more than other generations of any single activity (weight loss, fitness and adultery – to name two warning signs connected to an original sin!), which explains the current demand for Viagra, Depends and Rolling Stones tours. Hell, even Barry Manilow is on the road. But I digress.
It’s not unusual – Tom Jones anyone? – for couples who decide to separate, to call their Realtor to assist in dividing the inseparable joint tenancy, the home once filled with so many memories and now containing nothing but fear and loathing. For many, I’m sure, the journey concludes without a hiccup. A buyer is found quickly, a price is agreed upon and the once-happy couple get separate cheques from their attorneys.
But then there’s the real world, the world of bitter recriminations following an affair, substance abuse or debt or violence. In these circumstances one partner extends their rejection of the other to any salesperson their ex might select. The result is a co-listing, with one or two brokerages.
Which brings us to agency!
How do you serve a seller comprised of two parties who, in contract and on title, are inseparable? Agency demands the agent be a pipeline of communication, not a filter. When one spouse tells their agent, “I’ve got a new ‘friend’ and we need to sell quickly so we can get on with our lives – but don’t tell my spouse,” what are the agent’s duties?
Consider this excerpt from the Real Estate Council of B.C.’s June 2014 newsletter, reprinted with permission.
“Linda Licensee* at XYZ Realty Ltd. was approached by two past clients, Tom and Trixie, to list their family home for sale. Tom and Trixie were getting a divorce, but they explained to Linda that their relationship was amicable and they were in agreement about selling the property. The listed price was a little on the high side, but they weren’t in a rush. Despite the circumstances, Linda was delighted to represent Tom and Trixie.
“A few days after the listing agreement was signed, Linda called to make the first appointment to show the property. Tom answered and informed her that since Trixie had moved out with her new boyfriend, he no longer wanted to sell the property. He declined Linda’s request for a showing, demanded that she cancel the listing and announced that he was leaving for Hawaii and wouldn’t be in communication at all for several weeks. He then instructed Linda not to tell Trixie anything about his desire to cancel the listing or his planned trip to Hawaii.
“Somewhat taken aback, Linda called Trixie at work, described her conversation with Tom and asked Trixie what she should do. Trixie told her not to worry, she’d calm Tom down. She told Linda to continue marketing the property and asked her to prepare a price reduction and email it to her at work to sign, because she had decided to get the property sold as soon as possible. Trixie directed Linda not to tell Tom of her instructions. She would fill him in when she met with Tom to calm him down.
“Linda complied; the price reduction was signed by Trixie and broker-loaded to MLS. The new price attracted a lot of interest and the next day Linda called the house again to make appointments to show the property. Tom answered the phone. He was outraged.
“He told Linda he had filed a complaint with the Real Estate Council because she hadn’t acted in accordance with his instructions; she had failed to maintain the confidentiality of his information; she had reduced the price of the property without his authorization; and she had failed to act in his best interest, preferring the interests of Trixie over his. His lawyer was commencing proceedings against Linda for failing in her duties to him as a client.
“After alerting her managing broker and advising the Real Estate Errors & Omissions Insurance Corporation of the potential legal proceedings, Linda sat down to reflect on what she could have done to avoid this unfortunate turn of events.”
First thing – change your name! (By the way, * means not her real name, nor is there an XYZ Realty Ltd.)
We get paid the big bucks to do the right things and understanding agency and fiduciary duties is the highest standard to which we are held. We are expected to know what to do. Consider this paragraph from the same article:
“When the designated agent is comprised of more than one licensee, all of those licensees owe fiduciary duties to the client. When two licensees co-list a matrimonial home owned jointly by spouses, each licensee owes fiduciary duties to both spouses. In these cases, the spouses may wish to modify the fiduciary duties of their designated agent through a written agreement, specifying that each licensee will owe fiduciary duties to one of the spouses but not both.”
Modify? How? With what words? How do we handle disputes? Who speaks for the sellers? Yes, the parties may have lawyers and a separation agreement but did they consider selection of and instructions to the listing salesperson in the wording? Will the sellers go back to their lawyers to ask for instruction specific to confidentiality and disclosure? More likely they will turn to their agents to cobble a solution. Reluctant to admit they don’t know how to cobble this particular shoe to fit, they invent. In the field, licensees do their best, managers assess the results, civil courts, real estate councils and insurance companies poke and prod the entrails.
Get it in writing and act accordingly.
Be careful out there!
Marty Douglas, irregular REM columnist, is a past chair of the Real Estate Council of B.C. He currently sits as a director of the Vancouver Island Real Estate Board, serves as an advisor to the Real Estate Council of B.C. and is on CREA’s Realtor Code Task Force. He is an associate broker with Re/Max Mid-Island Realty on Vancouver Island, B.C.
