An Alberta brokerage is using a designated agency model. During a transaction, the designated buyer's associate inadvertently shares their client's maximum price with the designated seller's associate within the same brokerage. What is the consequence?

Q: What is the correct answer to: An Alberta brokerage is using a designated agency model. During a transaction, the designated buyer's associate inadvertently shares their client's maximum price with the designated seller's associate within the same brokerage. What is the consequence?

The correct answer is This constitutes a breach of the associate's fiduciary duty of confidentiality and could result in disciplinary action by RECA. In designated agency, each associate owes full fiduciary duties exclusively to their client, including strict confidentiality. Sharing the buyer's maximum price with the seller's designated associate — even within the same brokerage — is a serious breach of the duty of confidentiality. This could result in RECA disciplinary proceedings, potential civil liability, and damage to the client's negotiating position.

Q: What background knowledge is needed for this Agency & Professional Ethics question?

Designated agency requires strict information barriers (sometimes called 'Chinese walls') between associates representing opposing parties within the same brokerage. The broker must implement and enforce protocols to prevent confidential information from crossing between designated associates. Failure to maintain these barriers undermines the entire purpose of designated agency.

Q: What is a good way to remember the answer to this Agency & Professional Ethics question?

In designated agency, your colleague representing the other side is like an opposing agent at a different brokerage. Never share client secrets across the designation wall. On the exam, when a question involves information sharing between designated associates, treat them as if they work at competing brokerages. Confidentiality barriers are absolute.

Q: What exam tip applies to this Agency & Professional Ethics question?

Designated agency questions often test whether you understand that confidentiality obligations apply within the same brokerage. Same office does not mean shared information.

Q: How does this Agency & Professional Ethics concept apply in real world practice?

During a coffee break, the buyer's designated associate casually mentions to the seller's designated associate that their buyer client would go up to $520,000. This inadvertent disclosure is a breach of fiduciary duty that could result in RECA discipline and a negligence claim from the buyer, who may end up paying more than necessary.

Question

Agency & Professional EthicsABHARD

An Alberta brokerage is using a designated agency model. During a transaction, the designated buyer's associate inadvertently shares their client's maximum price with the designated seller's associate within the same brokerage. What is the consequence?

Answer Options

A

No consequence, as associates within the same brokerage may share all client information

B

This constitutes a breach of the associate's fiduciary duty of confidentiality and could result in disciplinary action by RECA

C

The transaction automatically becomes void

D

The brokerage must pay the buyer a penalty equal to the commission