Humber/Ontario Real Estate Course 3 Exam Practice

Who owes fiduciary duty to the seller in a transaction involving a listing brokerage and cooperating brokerage?

1. The listing brokerage owes a limited duty of care along with fiduciary and regulatory obligations.

2. Both brokerages owe fiduciary duties to the seller.

3. The cooperating brokerage owes a comprehensive duty of care to the seller.

4. The cooperating brokerage owes a limited duty of care to the seller but a full duty of care to the buyer.

The correct answer is: The cooperating brokerage owes a limited duty of care to the seller but a full duty of care to the buyer.

In real estate transactions, the key concept regarding fiduciary duties lies in understanding the roles of the listing and cooperating brokerages. The listing brokerage, which represents the seller, has a fiduciary duty to the seller that includes loyalty, full disclosure, due diligence, and accounting, to ensure the seller's interests are prioritized throughout the transaction. The cooperating brokerage, representing a buyer, does not owe a fiduciary duty to the seller. Instead, their primary obligation is towards their own client—the buyer. As such, the cooperating brokerage's responsibilities to the seller are limited. They may have to adhere to certain regulatory obligations but do not engage in the fiduciary relationship that is present between the seller and the listing brokerage. This clearly defines the nature of the relationship and the expectations between the parties involved. Therefore, the correct answer highlights that the cooperating brokerage owes a limited duty of care to the seller while maintaining a full duty of care to their own client, the buyer. This understanding is crucial for all parties involved in a real estate transaction to ensure clarity of responsibilities and obligations.