CBRCanada Brokers ReviewsPublic records, plainly explained
RecordsMustafa ZiaGuidesSourcesAboutSubmit a record

Guide · Conflicts of interest

When your agent is the buyer

An agent is allowed to buy a client’s property. Everything depends on disclosure. This guide explains the rule, shows a disclosure that RECO found inadequate, and tells you what a good one contains.

The rule

Ontario’s real-estate legislation has long required a registrant who proposes to acquire an interest in a client’s property, directly or indirectly, including through a corporation, to disclose that interest in writing before the client is bound, and to obtain written acknowledgement. Under the Code of Ethics this also engages the duty to promote the client’s best interests (section 4) and the ban on conduct a reasonable person would call unprofessional (section 39).

An inadequate disclosure, from the record

In March 2017 Mustafa Zia presented his own clients with two offers from “Buyer A”, a corporation of which he was sole director, officer and a shareholder. He encouraged them to accept the second. At acceptance they signed a Registrant’s Disclosure of Interest form that read, in part:

“Please be advised that, if the proposed Offer is accepted, I will be either directly or indirectly acquiring an interest in your Property. […] EXPLANATION: RREA is the director of the corporation purchasing the property.”

RECO v. Mohammed Mustafa Zia, Agreed Statement of Facts, para. 17(a)

The form existed. It was still a breach. RECO found he had not “clearly” disclosed his interest: the sellers learned who the buyer was from their lawyer afterwards. A disclosure that a client cannot understand is not a disclosure. Read the full decision.

What a proper disclosure contains

  • The registrant’s own name, not an abbreviation or a form code.
  • The nature of the interest: buyer, shareholder, director, lender, relative of the buyer.
  • The name of any corporation involved and the registrant’s role in it.
  • A plain statement that the registrant will profit if the deal closes.
  • Delivery before you decide, with time to take advice, not in the stack of papers at signing.

What to do if you suspect it

Ask directly, in writing: “Do you, or any company or person connected to you, have any interest in this buyer?” Ask for the buyer corporation’s name and look it up in the Ontario Business Registry. Have your own lawyer review the offer before you sign, not after. If the answer turns out to have been false, you can complain to RECO, and the deal may be rescinded, as happened here by mutual release.