A real estate agent receives a referral fee from a mortgage broker for recommending clients. What disclosure obligation does this create?
Correct Answer
A) Disclose the referral arrangement fully to all affected clients
Any financial benefit received by an agent from third-party referrals must be disclosed to clients as it represents a potential conflict of interest. Clients have the right to know about any financial incentives that might influence their agent's recommendations.
Why This Is the Correct Answer
Option A is correct because Canadian real estate legislation, including TRESA and provincial regulations, requires agents to disclose all conflicts of interest and financial benefits that could influence their professional judgment. Referral fees from mortgage brokers represent a clear conflict of interest that must be disclosed to clients before making recommendations. This ensures transparency and allows clients to make informed decisions about whether to use the recommended services, maintaining the agent's fiduciary duty to act in the client's best interests.
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