The Referral Fee Nobody Disclosed
Devon, a salesperson with Cobequid Property Group, is helping buyers Marcus and Lena purchase a duplex in Truro. During their first meeting Devon gives them a brochure about agency relationships and asks them to sign a buyer-service agreement, which they do - an exclusive arrangement for 60 days at 2% plus HST. Unknown to the buyers, Devon's cousin owns the listing brokerage and has promised Devon a $1,500 'thank-you' if the deal closes. Devon never mentions this. Midway through, Marcus asks Devon whether the seller 'seems motivated' and whether the property has any offers. Devon knows there is one other offer coming and says, 'Nothing firm yet, don't worry.' Devon also tells the buyers the seller is 'desperate to move before winter,' which Devon inferred from the listing agent's casual comment.
1. Analyze Devon's disclosure obligations regarding the $1,500 payment and the agency relationship with the buyers.
Read the worked answer
Devon has a conflict of interest that must be disclosed in writing and promptly. A payment from the listing side to the buyer's salesperson is a benefit that could influence Devon's advice - for example, discouraging the buyers from walking away or from negotiating hard. The buyers are entitled to know about it so they can judge Devon's recommendations. Failing to disclose it is a breach of the duty of loyalty and of the disclosure requirements around remuneration and conflicts.
The buyer-service agreement establishes that Devon represents Marcus and Lena. That agency carries fiduciary duties: loyalty, full disclosure, confidentiality, obedience to lawful instructions, and reasonable care. The undisclosed $1,500 cuts directly against loyalty and full disclosure.
The remedy is not to hide it but to put it in writing: explain the source and amount, explain that it does not change the buyers' obligation under their own agreement, and let them decide whether to continue. If the brokerage's policy prohibits such payments, Devon must decline it. Either way, silence is the violation.
2. Evaluate Devon's statements about offers and the seller's motivation. What should Devon have said instead?
Read the worked answer
Both statements are problematic, but for different reasons.
'Nothing firm yet, don't worry.' This is misleading. If Devon knows another offer is coming, saying nothing is firm implies the field is clear and may cause the buyers to delay or soften their offer. Devon must be accurate: he can say he is not aware of a firm accepted offer, but he should not imply no other interest exists if he knows otherwise. He also should not disclose the terms of another buyer's offer without the seller's authorization - the balance is to be truthful about the state of the process without betraying the seller's confidences.
'Desperate to move before winter.' This is speculation dressed as fact. Devon inferred it from a casual comment by the listing agent. Passing it on as fact pressures the seller and misleads the buyers about how low to offer. If Devon has reliable information the seller authorized for release, he can share it; otherwise he should say he does not know the seller's motivation and encourage the buyers to make an offer based on their own analysis.
The professional standard: state what you know, label what you infer, and never manufacture urgency or certainty.