Under RECA rules, what must a brokerage do when two of its associates are representing opposing parties in the same transaction?

Q: What is the correct answer to: Under RECA rules, what must a brokerage do when two of its associates are representing opposing parties in the same transaction?

The correct answer is The brokerage must obtain informed written consent from both parties for designated agency or transition to transaction brokerage. Under RECA rules, when a brokerage has associates on both sides of a transaction, informed written consent from both parties is required. The brokerage may proceed under designated agency (each associate maintains fiduciary duties to their client) or transition to transaction brokerage. Both options require transparent disclosure and written consent.

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

In-house transactions where both parties are represented by the same brokerage are common in Alberta real estate. RECA provides two frameworks: designated agency (separate associates with full fiduciary duties to each client) and transaction brokerage (even-handed service without fiduciary duties). Both require informed written consent from all parties.

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

Same brokerage, both sides = written consent needed. Choose designated agency (separate fiduciary duties) or transaction brokerage (even-handed, no fiduciary). When exam questions describe in-house conflicts, look for the answer requiring informed written consent and offering designated agency or transaction brokerage as solutions.

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

Questions about in-house conflicts almost always have the correct answer involving written consent and a choice between designated agency or transaction brokerage.

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

A brokerage's associate lists a downtown condo. Another associate in the same brokerage has a buyer client interested in that condo. The broker explains both designated agency and transaction brokerage options to both clients, obtains written consent, and designates each associate to represent their respective client.

Question

Agency & Professional EthicsABMEDIUM

Under RECA rules, what must a brokerage do when two of its associates are representing opposing parties in the same transaction?

Answer Options

A

One associate must withdraw from the transaction

B

The brokerage must obtain informed written consent from both parties for designated agency or transition to transaction brokerage

C

The brokerage must refer one party to a competing brokerage

D

The transaction automatically becomes void