As a registrant, it is vital for you to understand this dif-ference, as well as the duties of care that a brokerage and its representatives owe to each.

“The key difference is from the point of view of consumers,” says Brian Hoffman, an instructor at the Ontario Real Estate Association. “They must know up front what our obligations as REALTORS® are to them and what services we provide. If they are our clients, we will look after their best interests, but if they are customers, we aren’t obliged to provide that same level of service because the duty of care to clients trumps the duty to customers.”

A duty of care is defined as the obligation owed to clients and customers, as established by an objective standard. Your level of obligation to these two groups is different, particularly as it relates to the representation agreement.

For clients, the duty of care involves everything that is done (or ought to be done) by the agent (i.e., the broker-age). A relationship is established through a representation agreement. As such, the brokerage owes the client fiduciary obligations under agency/common law, and

regulatory obligations, as set out in the Real Estate and Business Brokers Act, 2002, and associated regulations.

For customers, your duty of care is more limited due to the absence of a representation agreement. However, a customer may enter into a service agreement with a brokerage. The duties owed to customers include honesty, providing accurate information and responding to ques-tions and performing functions to which the brokerage has agreed.

“We don’t have the same obligation to respect confiden-tiality with a customer that we do with a client,” says Hoffman, a Thornhill REALTOR® who has worked in the field for 30 years.

“If a customer inadvertently reveals something to me, he may not realize that this could hurt his interests because I must provide full disclosure to my client. For example, if a customer tells me his motivation, he may not know that I’m obliged to share details with my seller because

The difference between a client and a customer is a crucial one in real estate.

Duty of care to clients and customers

The Real Estate Council of Ontario (RECO) recently announced changes to the way that mandatory continuing education is delivered to real estate registrants in the province, effective Aug. 1. As of that day, the structure will change to an update course that is offered exclusively online and administered directly by RECO. The new program will replace the existing RECO Update Courses and credit system offered by the Ontario Real Estate Association (OREA). It will focus solely on regulatory compliance, legislative changes and industry issues.

RECO’s new program will run parallel to the current program offered by OREA for two years, beginning

Aug. 1, 2013 through July 31, 2015. This means OREA will continue to deliver existing CE courses throughout the transition.

The new mandatory programming will complement all additional programming offered by OREA and by real estate boards in classrooms across the province. RECO will offer an update course plus two electives required for each two-year cycle, at a cost of $44 per cycle. Reg-istrants across the province can take these online courses anywhere at any time, and they will have consistent, equal access to course content.

During the two-year transition period, RECO will con-tinue to recognize continuing education courses offered as part of OREA’s current continuing education program.

InsideFirst steps as a REALTOR® and working mompage 2

Seniors' accessibilitytax creditpage 3

Property tax dispute leads to appeal courtpage 4

HotsheetShoe cover dispensers keep floors cleanIf you want floors and car-pets to stay clean at open houses, an automatic shoe cover dispenser may inter-est you. In a climate where snow, rain and mud regularly threaten to mess up entranceways, the Real Estate Booteez dispenser keeps out dirt by auto-matically issuing plastic booties over footwear from cartridges of 25 pairs each.Visitors simply insert each foot into the dispenser with-out even sitting down. No electricity is required. Visitwww.realestatebooties.com, email info@realestateboo-ties.com or call 1-775-356-7703.

Market Watch Brief mild correction forecast Fewer homes are expected to trade hands in the first half of 2013, which should slow the pace at which home prices rise, according to a new survey. The aver-age national home price is predicted to be 1% higher by the end of 2013 com-pared to 2012, according to the Royal LePage House Price Survey and Market Survey Forecast released recently. The average home price increased between 2 and 4 per cent in the last quarter of 2012, and the survey noted that although the volume of sales slowed in the second half of last year, house prices held firm for the most part. To view the full report, visit www.royallepage.ca and look in Media Room.

March 2013

EDGEREA

LTO

R®

Changes announced to continuing education

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My first steps as a REALTOR® and working mom

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The transition phase allows registrants to choose between the current OREA program and RECO’s new program.

After the transition, OREA will continue to offer professional development opportunities. These will not be part of the renewal process. The association will provide educational and learning opportunities relevant to REALTORS®, giving them the skills and abilities to keep them on the cutting edge in their work. These learning opportunities will give members the market knowledge, real-world tools and updates

on current issues that they need to conduct their day-to-day business with the highest standards of professionalism.

According to Ron Abraham, president of the Ontario Real Estate Association, “These changes provide OREA and real estate boards with an opportunity to offer members the education they want and need, on the learning platform of their choice, in addition to courses required to fulfill regulatory requirements.”

For more details from RECO, see www.reco.on.ca.

by Ayn MacDonald

When I started working as a real estate administrator, I was 19 years old, didn’t own property and definitely didn’t have kids. I had a nine-to-five job and was ready to take on the world.

Seven years later, I had bought a condo, got married, had a baby, and subsequently divorced. Around that time, I decided that working in a business and owning it were different – and I wanted to run the business. I soon learned that this presented a number of challenges.

My first memory as a working mom is the day I decided to prospect door-to-door in a snowstorm. My toddler was taking his first steps and we were both taking a leap of faith – he was learning to walk and I was honing my prospecting skills. I knocked on doors and introduced myself: “Hi. My name is Ayn. I’m in the neighbourhood today. Are you interested in knowing what your home is worth?”

It seemed like my son and I were both learning to walk and talk – knees a little shaky, hands a little clammy, not quite sure if we would succeed. I remember making handmade seed packages for prospects and then

packing them up to clear the table to make space for a dinner my toddler would fling on the floor – and then doing all of it over again the next day.

My first listing came from someone I had met through my son’s play dates. Our kids were around the same age and the parents felt I could get the job done. A few days after the listing went on the market, we had an offer. It was irrevocable until 11:59 that night and it came in at 10 p.m. I had to make a quick decision: Either let the deal die or put my sleeping son into his car seat and drive over to the client’s home to get signatures. Luckily my son was young enough that he fell right back to sleep in his car seat while my clients signed the deal on the front porch.

Two years later, I’ve learned a few things about work-life balance. Now, I tell my clients upfront that I’m a mom and that sometimes means I have to wear two hats. It may mean showing houses with my three-year-old in tow. I set all my irrevocable times for 7 p.m. If the rush is on, I make it happen at 6 p.m., not 11:59 p.m. I’ve also learned to keep snacks and toys in my car emergency kit – they always come in handy.

I now have five babysitters on speed dial. They understand my schedule and my house now has a lockbox. It sounds crazy, but I actually schedule time to play with my child. I tell my clients that I have an important meeting and have to go. The biggest learning curve of all was figuring out how to juggle and manage my schedule. This has taught me to say, “Sorry, I just can’t make it across town and through traffic in five minutes.”

I now know that when it comes to selling real estate and being a mom, life happens. I work hard for my clients, night and day, but being a mom is sometimes paramount. Each day gets a little easier. I hope that as my son grows up, he realizes that my work enables me to help people and families like ours. I’m lucky to love what I do and to have flexibility and support from family and friends to help me be a great real estate salesperson – and more importantly, a great mom.

Ayn MacDonald is an Ottawa salesperson, member of the OREAYoung Professionals Network and guest writer on the OREA blog.

I now have five babysitters on speed dial.

RECO announces changes to continuing education

Page 3

My first steps as a REALTOR® and working mom Tax credit supports accessibility for seniorsA tax credit to help Ontario seniors make modifications in their homes to improve accessibility is now available.The Healthy Homes Renovation Tax Credit Act, 2012, was passed at Queen’s Park. It created a permanent, refundable personal income tax credit to help seniors aged 65 and older with the cost of permanent home modifications to help improve accessibility in their homes.

The credit is worth up to $1,500 each year, calculated as 15 per cent of up to $10,000 in eligible home renovation expenses. It can be claimed by seniors who are home owners and tenants, as well as people who share a home with a senior relative.

The new tax credit will help create jobs essential to the health of the province’s housing marketing, encourage the use of

professional contracts and deter underground economic activity. It will also help seniors remain in their homes longer.

Through the Ontario Real Estate Association, REALTORS® in the province advocated for a home renovation tax rebate

for home owners. In April 2012, OREA appeared before the provincial government’s Standing

Committee on Finance and Economic Affairs to support the rebate. Although OREA feels

that the new tax credit is narrow in scope, it is a good first step towards a larger rebate program.

Seniors or people living with a senior family member can claim the tax credit on their annual personal income tax return. Eligible expenses incurred on or after October 1, 2011, qualify for the credit. For

detailed information on qualifications and the application process, contact the Ontario

Ministry of Finance at 1-866-668-8297 or visit www.fin.gov.on.ca.

...continued from page 1

I’m representing my client’s best interests. A customer should limit what he tells me. If he then wants to make an offer on my seller’s property, I’m representing the client’s best interests, not the customer’s.”

The relationship with the consumer should be established and clarified from the start, says Hoffman. “It’s vital to address this right off the bat and explain in detail the difference between client and customer,” he says. “People must understand our obligations and duties and the ser-vices we provide. If they are a client, we will look after their best inter-ests, but if they are a customer we aren’t required to give that same level of service and they should understand that.”

Note that two duties are owed to both clients and customers: (1) exer-cising care and skill, and (2) ensuring honesty.

You as a REALTOR® have general and fiduciary obligations to clients. The general obligations owed to clients are as follows:

1. Exercise care and skill: have the requisite knowledge and skills; provide complete and accurate information; recommend relevant experts, where applicable

2. Negotiate favourable terms: advance the client’s interests by assistingin negotiations; draft favourable terms and conditions for agreements arising from the negotiations

3. Maintain confidentiality: maintain confidentiality regarding all matters(e.g., client’s personal information, client’s motivation for buying/sell-ing, and the amount to be paid or accepted during negotiations)

4. Disclose information: disclose information pertinent to the client(e.g., actual or potential conflicts of interest); disclose matters relating to the transaction

5. Ensure honesty: demonstrate honesty of intent in all dealing

6. Act in person: perform duties personally, unless otherwise instructed

7. Obey instructions: obey the client’s instruction, unless it’s not lawful(e.g., the client asks you to create a misleading advertisement regard-ing the property)

8. Perform mandate: perform the mandate as set out in the representationagreement; act only within specified authorities; seek clarification if you are uncertain about said authorities.

The fiduciary obligations owed to clients are as follows:

1. Maintain utmost loyalty: the client’s interests come first and are bestachieved in single representation (i.e., you represent the interest of only one party to a transaction)

2. Avoid conflicts of interest: be aware of situations that may lead to conflicts of interest, such as: representing two or more clients at the same time (multiple representation); acquiring the client’s property; selling your own property to the client

3. Disclose conflicts: discloseany personal or third-party interests thatdo or might conflict with the client’s interests; disclose the exact nature and extent of the conflict(s), in writing and signed by the client

4. Do not make secret profit: do not make a profit at the client’s expense(e.g., providing improper advice, accepting payment from another party without the client’s knowledge and written consent)

5. Do not misuse confidential information: do not use confidential information (e.g., confidential details about the client, the property, and/or the transaction) for your own interests, to harm the client, or to interfere with the client’s endeavours.

The Real Estate Council of Ontario has produced a video on represen-tation that addresses these issues. Visit www.reco.on.ca and look under Industry Professional to watch the video.

Clients require a greater duty of care

RECO announces changes to continuing education

Previous decisions have viewed this right as a chose in action, (a legal term referring to the right to bring a lawsuit to recover money), and not one that accompanies the land. An assessment appeal is a chose in action that is not assigned by operation of law. Instead, that right must be expressly assigned if it is to pass from seller to buyer. For legal assignment to occur, the seller would have had to specifically assign that right to the buyer in writing.

The act’s previous language – “the city shall refund any overpayment” – is vague and relieves the city of responsibility for determining who is entitled to the refund. Although the act’s stated purpose is to “streamline processes” related to the tax roll, it appears that the language makes for administrative convenience for the city. Its responsibility is limited to paying the refund to the owner, as shown on the tax roll on the adjustment date. Any entitlement dispute is thus between claimants and not between one or more claimants and the city. The act does not affect ownership rights nor does it purport to.

The appeal court reversed the lower court’s decision, giving the refund of $251,166.43 to the seller, who owned the building from 2003 to 2006. Since the property was sold on Oct. 19, 2006, the seller agreed that the buyer should receive the post-closing portion of $22,397.11.

80 Mornelle Properties v Malla Properties 2010 ONCA 850

MERV’S COMMENTS

The seller overpaid taxes on the property when he owned it. Moreover, it was the seller who took steps to have the property taxes reassessed. The right to proceeds from the assessment appeal was a chose in action, and in this case a personal right belonging to the seller. That right did not run with the property. Since the seller never assigned that right to the buyer, the seller is entitled to the refund. The City of Toronto Act, 2006, does not amount to a juristic reason entitling the buyer to keep the refund. If buyers want a right to refunds for periods prior to their ownership, they must negotiate for this and it must be set out clearly in the APS.

The owner of a Toronto apartment building appealed his property tax assess-ment. Before the city made a decision on the taxes, he sold the property. He continued to pursue the appeal and was ultimately successful when the city agreed to a reassessment. The property was reassessed in November 2008, and the city decided that a refund of $251,166.43 was owed for the period from 2003 to 2006.

The city paid the refund to the buyer. It did so because the City of Toronto Act, 2006, provides that property tax refunds are to be paid “to the owner of the land as shown on the tax roll on the date the adjustment is made.”

Who is entitled to the refund – the seller or the buyer? The lower court judge decided that the act gave the buyer a juristic reason to retain the refund. (A juristic reason is an explanation based upon law for the enrichment of one to the detriment of another.)

The previous owner appealed this decision. The Court of Appeal noted two ways in which the right could pass to the buyer on closing: under the terms of the agreement of purchase and sale (APS), or as a result of the operation of real property legislation. Immediately prior to closing, the seller had the right to proceeds from the tax appeal. But what kind of property right is it? Is it a right that attaches to the land, or is it a personal right belonging to the seller?

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LEGALBEATProperty tax dispute leads to appeal court

To: REALTORS®

From: Mervin Burgard, Q.C.Memo

Items can be viewed before voting Members of the Ontario Real Estate Association who wish to examine proposed amendments to the OREA By-law prior to the Annual Assembly meeting can access the material on the OREA website. The meeting will take place on Wednesday, March 6. (See item at right.) Voting delegates are representatives of real estate boards selected by their respective boards. To preview the proposed By-law amendments that will be presented to voting delegates for consideration at the Assembly, go to the Members section of www.orea.com and see “2013 Proposed Amendments to OREA By-law.”

OREA website a hitThe OREA website continues to attract more viewers with features that make it faster and easier to find what you need. In 2012, the site received 13 million page views compared to 6 million in 2011, an increase of 117 per cent. The visit duration (time people spent on the site) also grew dramatically in 2012

compared to the previous year. People stayed an average of 6 minutes com-pared to 4 minutes in 2011, an increase of 50 per cent. Moreover, they viewed an average of 6.09 pages on the site compared to 3.47 pages a year earlier. The number of unique visits rose in 2012 to 624,879, up more than 120,000 over the previous year, a 24 per cent increase. Visit www.orea.com.

OREA events in March The OREA Open Forum, Annual Assembly Meeting and REALTORS Care Foundation Annual General Meeting will take place on Wednesday, March 6. These events are part of the 2013 OREA Leader-ship conference taking place March 5 to 7 at the Sheraton Centre Hotel, 123 Queen Street West, in downtown Toronto. This year’s conference is titled Rock Solid Leadership. For more information, visit www.orea.com/conference.

OREA NEWS

Address inquiries or comments about REALTOR® EDGE newsletter to: Editor: Mary Ann Gratton • Writers: Sue Gargiulo, Ayn MacDonald, Mary Ann Gratton REALTOR® EDGE • Ontario Real Estate Association • 99 Duncan Mill Road, Don Mills, Ontario M3B 1Z2 1-800-265-6732 • Email: orea@orea.com

Website: www.orea.com • OREA Real Estate College • 1-866-411-6732

REALTOR® EDGE newsletter is published 11 times a year by the Ontario Real Estate Association. The newsletter aims to provide practical and useful news and information about the real estate industry to members of the association. The opinions expressed in the newsletter are not necessarily those of the publisher. Submissions from the real estate community are welcome, including letters to the editor, opinion pieces, events and news. The newsletter reserves the right to edit, based on space restrictions and/or suitability, and/or to refuse submitted material for inclusion in the newsletter without reason. All rights reserved. Reproduction in whole or in part without the express written permission of the publisher is prohibited. Contents are copyright of the Ontario Real Estate Association.

Who gets the tax refund if the building sells before the city’s reassessment is done?