Recognizing inconsistencies, asking the right questions and managing uncertainty before it becomes a transaction problem.

Real estate transactions depend on information. Buyers and sellers provide details about their circumstances, property ownership, financing, property conditions and expectations. Their real estate representatives use that information to provide advice, prepare agreements, negotiate terms and coordinate the activities required to complete a transaction. Much of this information is provided through ordinary conversations, often before any supporting documents have been reviewed.

Most of the time, the information is accurate, or any misunderstanding can be resolved through a straightforward discussion. Occasionally, however, something doesn’t quite add up. A statement may conflict with an available document, an explanation may change as the transaction progresses, or an important detail may not be consistent with other information already obtained.

These circumstances do not necessarily suggest that someone is being dishonest. People make mistakes, misunderstand questions, rely on assumptions or simply may not know the answer. What matters is how the real estate professional responds when something appears inconsistent.

This is where experience and professional judgment become particularly valuable. Knowing when to ask another question, when to seek supporting information and when a concern requires further attention can make an important difference to the outcome of a transaction.

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When Something Doesn’t Quite Make Sense

Consider a homeowner who tells their REALTOR® that the roof was replaced five years ago. Later, when reviewing the available invoice, the agent discovers that the work involved repairs to only part of the roof. The seller may have misunderstood the work performed or simply remembered the circumstances incorrectly. There is an inconsistency, but that does not necessarily mean the seller intended to mislead anyone.

Now consider a commercial property where the seller provides financial information indicating a particular level of rental income, but the leases and rent collection records suggest something different. The discrepancy may involve outdated figures, rental concessions, unpaid rent or an error in how the information was prepared.

In either situation, the agent should not immediately conclude that the information is false. Equally, it would be unwise to disregard the inconsistency simply because the client appears confident in their explanation.

The appropriate response is to recognize that something requires clarification before the information is relied upon or communicated to another party.

The distinction between an innocent mistake, an unsupported assumption and a deliberate misrepresentation is important. Each can affect a transaction, but the legal consequences and the responsibilities of those involved may be quite different.

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Experience Changes the Questions We Ask

One of the things experience teaches us is that the information we receive is not always the same as the information we need.

A seller may describe a property as a legal duplex because two families have occupied it for many years. From the seller’s perspective, that explanation may seem entirely reasonable. However, longstanding occupancy does not necessarily establish that the property complies with municipal zoning, building or other applicable requirements.

Similarly, someone selling a business may identify certain equipment as part of the transaction without realizing that the equipment is leased, financed or owned by another party.

Neither situation necessarily involves an attempt to mislead anyone. Nevertheless, both could create significant difficulties if the information is incorporated into an agreement or relied upon by a buyer without further clarification.

An experienced REALTOR® should recognize when a statement raises an additional question. Sometimes the answer is easily established through a document or public record. In other circumstances, the matter may require assistance from a lawyer, accountant, engineer, municipal authority or another qualified professional.

The objective is not to independently investigate every statement made by a client. It is to recognize which information is material to the transaction and when reasonable verification is necessary.

Professional Insight — Information Provided Is Not Always Information Established

There is an important distinction between accepting information from a client and establishing that the information is sufficiently reliable for its intended purpose. Experience helps us recognize when a statement requires clarification, supporting documentation or specialized advice before it becomes the basis for a contractual representation or an important decision.

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Asking Better Questions Without Making Accusations

When something appears inconsistent, the way a REALTOR® approaches the conversation can be just as important as the question itself.

Clients may become defensive if they believe their honesty is being challenged, particularly when the discrepancy is the result of an innocent misunderstanding. A more constructive approach is to explain what has been identified and why clarification would be helpful.

For example, when reviewing the financial information for an investment property, an agent might say:

“The rental income shown on the financial statement doesn’t appear to match the amounts in the leases. Can we review the figures together so that we’re comfortable with the information being provided to prospective buyers?”

This approach does not suggest wrongdoing. It simply identifies the difference and invites the client to help explain it.

The same principle can be applied when questions arise about ownership, property improvements, financing, corporate authority or other circumstances that may affect the transaction.

Clients generally appreciate understanding why additional information is necessary. Explaining the possible consequences of relying on an incorrect assumption often makes the request for clarification easier to understand.

In my view, asking appropriate questions is not about creating obstacles. It is about helping clients recognize matters that may otherwise become problems after an agreement has been signed.

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Knowing When Information Needs to Be Verified

Not every discrepancy requires the same response. The importance of the information, the surrounding circumstances and the potential consequences should influence how much additional verification is appropriate.

A minor difference concerning the approximate age of an appliance may be resolved through a simple explanation. A discrepancy involving ownership, legal occupancy, property conditions, financial performance or signing authority may require considerably more attention.

For example, suppose a seller advises that extensive renovations were completed with the necessary permits. If the available documentation does not establish that those permits were obtained or that the required inspections were completed, the agent should be cautious about representing the renovations as fully approved.

The same consideration applies to investment properties where financial statements do not reconcile with leases, or to business transactions where a person claims authority to sign on behalf of a corporation without providing information supporting that authority.

Sometimes the necessary clarification is relatively straightforward. A copy of a permit, corporate authorization, lease or financial record may resolve the concern. Other circumstances require specialized professional advice.

REALTORS® are not expected to provide legal opinions, engineering assessments or accounting certifications. Their responsibility is to recognize when such expertise is necessary, explain the significance to their client and avoid making unsupported representations.

Ontario’s real estate regulatory requirements reinforce the importance of taking reasonable steps to determine material facts and ensuring that information communicated during a transaction is accurate and not misleading.

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Why Documentation Matters

Conversations are an essential part of real estate representation, but when an important inconsistency has been identified, relying solely on someone’s recollection of the discussion can create problems later.

Consider an agent who questions a seller about whether a basement apartment was legally approved. The seller responds that the previous owner completed the work and that the apartment has been rented for years. If the agent subsequently advertises the property as containing a legal apartment, the seller’s explanation may not be sufficient to support that representation.

A more appropriate approach would be to document the explanation, identify what remains uncertain and determine what additional information may be necessary before making a statement about the property’s legal status.

The value of documentation is not simply that it creates a record of what the client said. It should also help explain what the agent identified, what clarification was sought, what advice was provided and how the matter was addressed.

This is particularly important when several professionals are involved in a transaction or when questions arise months or even years after closing.

However, recording an inaccurate statement in the transaction file does not make it acceptable to repeat that information to a prospective buyer. The professional still needs to consider whether the representation can reasonably be supported.

Professional Insight — Documentation Should Reflect Professional Judgment

A well-maintained transaction file should do more than demonstrate that documents were completed and signed. Where a material concern arises, it should provide a reasonable record of the information considered, the questions asked, the advice given and the decisions made. That record can become particularly valuable if the circumstances of the transaction are subsequently questioned.

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What Happens When the Explanation Still Doesn’t Add Up?

Occasionally, reasonable questions have been asked and supporting information requested, yet the concern remains unresolved.

This is where professional judgment becomes particularly important.

Consider a buyer who provides different explanations about who will be supplying the deposit or who will ultimately own the property. There may be perfectly legitimate reasons involving family assistance, corporate ownership or financing arrangements. Nevertheless, where the explanations remain inconsistent, the agent may need to make further inquiries rather than simply accepting the most recent explanation.

Depending on the circumstances, this may also engage the brokerage’s obligations concerning client identification, beneficial ownership and anti-money-laundering compliance.

A similar concern arises when a seller insists that an agent advertise a property feature or make a contractual representation that the available information does not support.

In these situations, it is important to distinguish between the client’s instructions and the professional responsibilities of the REALTOR®.

A client may provide instructions about how they wish to proceed, but those instructions do not relieve the agent of the obligation to comply with applicable legislation and professional standards.

Where a material inconsistency remains unresolved, the agent should explain the concern and its possible consequences. Depending on the circumstances, the matter may need to be referred to the Broker of Record, the client’s lawyer or another qualified professional before proceeding.

There may also be situations where the agent or brokerage must reconsider whether the proposed instructions can lawfully and responsibly be carried out.

This does not mean that every unanswered question should prevent a transaction from moving forward. The response should be proportionate to the significance of the concern. However, when information is material to the agreement or may expose others to foreseeable consequences, simply ignoring the issue is rarely a sound professional decision.

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Recognizing When a Concern Goes Beyond the Transaction

Some inconsistencies may raise concerns beyond ordinary contractual obligations.

For example, unexplained third-party payments, inconsistent identification information or uncertainty concerning beneficial ownership may require additional consideration under the brokerage’s anti-money-laundering procedures.

These circumstances should not automatically be interpreted as evidence of unlawful activity. Real estate transactions can legitimately involve international funds, family contributions, trusts, corporations and other arrangements that are not immediately familiar to everyone involved.

The responsibility is to recognize when the circumstances warrant further assessment and to follow the brokerage’s established compliance procedures.

Where applicable, this may involve additional client identification, verification of beneficial ownership, enhanced scrutiny or consideration of whether a suspicious transaction report is legally required.

Agents should not attempt to conduct their own criminal investigations or make accusations based on incomplete information. Matters involving financial crime compliance should be addressed through the brokerage’s designated procedures, with appropriate attention to confidentiality and restrictions on disclosing suspicious transaction reporting activity.

The broader principle is that unusual circumstances should prompt informed consideration, not automatic conclusions.

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When Should the Broker of Record Become Involved?

An experienced agent will resolve many questions through ordinary communication and reasonable verification. However, some circumstances warrant the involvement of the Broker of Record, particularly when the issue may affect the brokerage’s legal or regulatory obligations.

For example, an agent may be uncertain whether information supplied by a client can responsibly be used in advertising, whether a material fact has been adequately established, or whether a client’s instructions would require a representation that appears misleading.

Involving the Broker of Record provides an opportunity to consider the issue from a broader brokerage perspective, including the applicable professional standards, potential contractual consequences and whether independent legal advice should be obtained.

The Broker of Record may also be better positioned to determine whether the matter should be addressed through the brokerage’s compliance procedures or whether continuing with the proposed transaction presents an unacceptable concern.

Importantly, seeking guidance should not be viewed as a sign that the agent lacks experience or competence. Recognizing when additional advice is appropriate is itself an important part of sound professional judgment.

Where a concern remains material and unresolved, the agent should not simply proceed in the hope that it will be resolved later.

The objective is to establish a reasonable basis for the next decision, rather than allow uncertainty to become someone else’s problem after the transaction has progressed.

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What Consumers Should Understand

Although much of this discussion concerns professional responsibilities, buyers and sellers also have an important role in ensuring that transactions proceed on reliable information.

Clients may occasionally wonder why their REALTOR® is asking for documentation, questioning a particular statement or recommending that something be confirmed by a lawyer or other professional.

In many cases, those additional steps are intended to protect the client’s interests and help prevent an assumption from becoming a contractual problem.

For example, a seller may genuinely believe that an improvement was completed with the appropriate approvals, or a buyer may believe their financing arrangements are sufficient to complete a purchase. Asking for clarification does not necessarily mean the agent doubts their honesty. It means the information may have implications that deserve consideration before decisions are made.

Clients should also recognize that circumstances can change during a transaction. Financing arrangements may be revised, property conditions may become known, or new information may emerge that affects previously provided statements.

When that happens, advising the REALTOR® promptly allows the implications to be considered while there may still be practical options available.

Informed representation works best when information flows openly in both directions and the parties understand why particular questions matter.

Professional Insight — Knowing When to Ask for Help

Good professional judgment includes recognizing the limits of one’s knowledge and authority. A REALTOR® who identifies a potential concern and recommends appropriate verification or specialized advice is not complicating the transaction unnecessarily. In many circumstances, those additional steps are precisely what helps protect the client’s interests and prevent a manageable issue from becoming a much larger problem.

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The Value of Professional Judgment

Real estate transactions involve numerous decisions, many of which depend on information provided by people with different experiences, expectations and levels of familiarity with the process.

Not every statement requires investigation, and not every inconsistency indicates a serious problem. The challenge is recognizing which matters deserve clarification and understanding the possible consequences of proceeding without it.

Experience helps real estate professionals identify these circumstances, but it is the application of that experience through reasonable inquiries, appropriate verification, sound documentation and informed decisions that creates value for clients.

Sometimes that means asking one more question before preparing an agreement. At other times, it means recommending specialized advice, reconsidering how information is presented or recognizing that a proposed course of action should not proceed until an important issue has been resolved.

For consumers, this is an important part of understanding what professional representation should provide. The value of an experienced REALTOR® extends beyond marketing properties, arranging viewings, preparing contracts and negotiating transactions. It also includes helping clients recognize and manage circumstances that might otherwise negatively affect the outcome.

For me, professional advisory is about providing clients with the information they need to make informed decisions, because smarter real estate decisions lead to better outcomes.

This article provides general information concerning professional responsibilities and transaction risk management in Ontario real estate. It is not legal advice. Disclosure, verification, regulatory and reporting obligations depend on the circumstances of each transaction. Qualified legal, accounting, technical or other professional advice should be obtained where appropriate.

Professional and Regulatory References

• Real Estate Council of Ontario — RECO Bulletin 1.1: Professional Conduct
• Real Estate Council of Ontario — RECO Bulletin 7.3: Material Facts
• Real Estate Council of Ontario — RECO Bulletin 7.4: Facts a Seller Has a Legal Obligation to Disclose
• Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) — Suspicious Transaction Reporting and Real Estate Sector Guidance

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Written by Rodney Harvey, Broker of Record at Konfidis, Brokerage providing advisory-focused commercial, industrial, investment, and real estate brokerage services across Oshawa, Durham Region, and Ontario.

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