Why professional representation sometimes means saying no, even when doing so comes at a cost.
When someone engages a REALTOR®, there is a reasonable expectation that the agent will represent their interests, provide professional advice, negotiate favourable terms and help them achieve their real estate objectives. These responsibilities are fundamental to the relationship between a client and their real estate representative. However, there is an important distinction between acting in a client’s best interests and agreeing to everything the client asks.
Over the years, I have encountered situations where clients have asked me to take actions that I could not reconcile with my professional obligations. Most of these experiences have occurred during commercial real estate transactions, where negotiations can extend over several months, substantial amounts of money are involved, and considerable work may be completed before a transaction produces any compensation.
These experiences have influenced how I approach new client relationships. I now make a point of explaining my commitment to ethical representation at the outset, not because I expect clients to behave improperly, but because I believe both parties should understand the standards under which we will be working together.
Professional ethics are often discussed as a matter of honesty and integrity, but their significance becomes much more apparent when maintaining those standards involves a difficult decision, particularly one that may come at a financial cost.
When a Client’s Instructions Create a Professional Conflict
A REALTOR® has an obligation to promote and protect their client’s interests, but those responsibilities exist within the legal and professional framework governing real estate transactions in Ontario. A client may decide what price they are prepared to accept, what terms they wish to negotiate or whether they want to proceed with a particular transaction. Even when the agent disagrees with those decisions, the client’s instructions may be entirely legitimate.
The difficulty arises when the requested action would require the agent to provide misleading information, conceal something that must legally be disclosed or otherwise participate in conduct that conflicts with applicable laws or professional standards.
For example, there is nothing inherently improper about a buyer and seller negotiating a change to an agreed purchase price. However, preparing an additional Agreement of Purchase and Sale that intentionally misrepresents the actual transaction price to a lender is a very different matter.
Similarly, a seller may have legitimate reasons for maintaining confidentiality concerning certain information about their property or business. That does not extend to withholding information where there is a legal obligation to disclose it.
These distinctions are not always apparent to clients, particularly when their attention is focused on completing the transaction. Part of the REALTOR®’s responsibility is to explain where those boundaries exist and why a particular instruction cannot be followed.
When Doing the Right Thing Has a Financial Consequence
One of the more difficult experiences in my commercial real estate practice occurred after I had spent approximately three months working with a client toward a transaction. Considerable time and effort had been invested, expenses had accumulated, and I had every expectation of continuing to represent the client’s interests through to completion.
It was at that stage that I was asked to prepare additional transaction documentation showing a higher purchase price than the amount actually negotiated, for the purpose of obtaining financing.
The issue was not whether the parties could legitimately renegotiate the transaction. The concern was that the proposed documentation would misrepresent the transaction to the lender. Financing decisions depend on reliable information concerning the purchase price, the amount being borrowed and the financial circumstances of the transaction. Providing documentation intended to create a misleading impression about those matters raised concerns that I could not disregard.
In another commercial transaction, I encountered a client who wanted information withheld from a prospective buyer despite the existence of a legal obligation to disclose it. Although the circumstances were different, the underlying professional concern was similar. Complying with the request would have meant participating in conduct that I believed was inconsistent with my responsibilities.
These were not disagreements about negotiating strategies or differences of opinion concerning the best way to complete a transaction. They involved requests that crossed boundaries I was not prepared to compromise.
In the situation involving the extended engagement, I concluded that continuing the representation was no longer appropriate. The consequence was that I had to absorb the expenses incurred during approximately three months of work, without the compensation that might otherwise have resulted from completing the transaction.
That experience reinforced something I have come to appreciate throughout my professional career: ethical decisions are not always convenient, and they are certainly not always without financial consequences.
Professional Insight — Integrity Matters Most When Something Is at Stake
It is relatively easy to explain the importance of ethical conduct when there is nothing to lose. The real test often comes when maintaining those standards means declining a client’s instructions, giving up a potential commission or walking away from work already performed. A professional’s financial interest in completing a transaction cannot become the justification for participating in dishonest or unlawful conduct.
Establishing Expectations Before Representation Begins
Experiences such as these have changed the way I approach prospective clients. I now make a point of explaining that I conduct my real estate practice ethically, and that while I am committed to protecting their interests, there are professional boundaries that I will not cross.
I do not see this as questioning a client’s character or suggesting that someone may be dishonest. Most clients expect their REALTOR® to act responsibly and appreciate knowing that their representative is committed to maintaining professional standards.
Rather, the discussion helps establish a common understanding of what the relationship involves. Clients are entitled to expect competent advice, diligent representation, confidentiality and a genuine commitment to their objectives. In return, the agent must be able to rely on reasonably accurate information and instructions that can be carried out lawfully.
This becomes particularly important in commercial and business transactions, where substantial time may be spent reviewing properties, preparing financial analyses, conducting research, negotiating terms and coordinating other professionals. If the relationship breaks down after several months because the client’s expectations are inconsistent with the agent’s professional obligations, the consequences can be considerable.
Discussing ethical expectations at the outset does not guarantee that difficult situations will never arise. However, it creates an opportunity to address misunderstandings before significant commitments have been made.
It also reinforces an important distinction: a REALTOR® is engaged to provide professional representation, not simply to carry out instructions without exercising independent judgment.
Recognizing the Difference Between a Misunderstanding and an Improper Request
Not every questionable instruction is necessarily an attempt to mislead someone. Clients may misunderstand legal requirements, make assumptions based on previous experience or simply be unaware of the consequences associated with a particular request.
A seller may believe that an apartment is legally authorized because it has been rented for many years. A business owner may assume that projected revenue can be presented as existing income because they are confident the business will achieve those results. A property owner may believe that information should remain confidential without realizing that certain circumstances create a legal obligation to disclose it.
In these situations, the REALTOR® has an opportunity to explain why the distinction matters.
For example, anticipated rental income can sometimes be presented as a projection, provided it is accurately identified and supported by reasonable assumptions. It should not be represented as income currently being received when that is not the case.
Similarly, a client who wishes to restructure a transaction for financing purposes may have legitimate options available. The appropriate approach is to involve the lender and legal advisors so that the transaction documents accurately reflect the agreement and relevant information is properly disclosed.
The objective is not simply to tell the client that something cannot be done. It is to understand what the client is trying to accomplish and determine whether there is a lawful and appropriate way to achieve that objective.
There are, however, circumstances where an instruction is plainly improper. Fabricating competing offers, knowingly misrepresenting property information, concealing legally required disclosures or altering transaction documents to mislead a third party are not acceptable negotiating practices.
A REALTOR® should be able to explain that distinction clearly, without making unnecessary accusations or allowing the discussion to become confrontational.
What Happens When the Client Continues to Insist?
Occasionally, an agent may explain the concern and suggest an appropriate alternative, only to discover that the client remains determined to proceed with the original request.
This creates a difficult professional situation because the agent must consider obligations that extend beyond the client’s immediate instructions.
In Ontario, REALTORS® are subject to professional standards and legislation that prohibit certain forms of misrepresentation and misconduct. A client’s instruction does not relieve the agent of those obligations, even when the client is prepared to accept the consequences personally.
Where the matter cannot be resolved through discussion, the agent should involve the Broker of Record and consider whether further legal or professional advice is necessary. The circumstances, instructions received and advice provided should also be appropriately documented.
If the client continues to insist on conduct that cannot lawfully or ethically be carried out, ending the representation may become necessary.
However, terminating a representation agreement requires its own consideration. The agreement is a contract between the client and the brokerage, and its termination provisions, outstanding obligations and financial consequences must be addressed. An agent’s decision to refuse an improper instruction does not automatically terminate the agreement or eliminate its contractual requirements.
For this reason, decisions concerning termination should be coordinated with the brokerage and, where appropriate, legal counsel.
The important principle is that an existing representation agreement does not obligate a REALTOR® to participate in prohibited conduct. At the same time, the professional must address the contractual relationship responsibly rather than assuming it can simply be disregarded.
Protecting the Professional Relationship and the Investment in Services
One of the lessons I took from my experience was the importance of establishing not only ethical expectations, but also a clear understanding of the services being provided and the expenses associated with those services.
Commercial transactions can involve substantial research, travel, financial analysis, marketing, document preparation and negotiation before a transaction reaches the point where compensation becomes payable.
If representation ends because the client insists on an improper course of action, the brokerage or agent may be left with expenses that cannot be recovered.
Depending on the nature of the engagement, a properly prepared representation agreement may address reasonable expenses, reimbursement arrangements, termination provisions and the financial responsibilities of the parties.
These provisions should be discussed openly and documented appropriately before significant expenses are incurred. They must also comply with applicable legal requirements and cannot be assumed to create an automatic right to recover every cost associated with an unsuccessful engagement.
The purpose is not to penalize clients for disagreements or create unnecessary barriers to obtaining professional representation. It is to establish reasonable expectations concerning the professional services being provided and the financial commitments associated with them.
Even with a carefully prepared agreement, there may be circumstances where an agent must accept a financial loss rather than compromise their professional obligations.
Professional Insight — Clear Expectations Help Manage Professional Risk
Establishing ethical boundaries, defining the scope of representation and discussing reasonable expenses at the beginning of a relationship can help prevent misunderstandings later. These conversations are not simply administrative formalities. They contribute to a professional relationship in which the client and brokerage understand their respective responsibilities before substantial commitments are made.
Why These Decisions Matter to Consumers
Although the examples discussed involve clients making improper requests, the potential consequences are not limited to the REALTOR®.
A lender relying on misleading purchase documents may make a financing decision based on inaccurate information. A buyer who receives incomplete or misleading financial statements may overpay for a business or investment property. A purchaser who is denied information that must legally be disclosed may enter into an agreement without understanding circumstances that could materially affect the transaction.
The consequences can include financial losses, failed closings, contractual disputes, litigation and regulatory or criminal investigations, depending on the nature of the conduct.
Importantly, those consequences may also affect the client who originally requested the improper action.
A REALTOR® who refuses to participate in such conduct may be protecting the client from making a decision that could create far greater difficulties than the inconvenience of changing their approach.
This is one of the less obvious benefits of professional representation. Clients do not always need an agent who agrees with them. Sometimes they need an experienced advisor who is prepared to explain why a proposed course of action may be inappropriate and recommend a better alternative.
For consumers, the willingness of a REALTOR® to maintain appropriate professional boundaries should be viewed as a positive characteristic rather than an obstacle to achieving their objectives.
Professional Integrity Is Part of the Value of Representation
Real estate transactions can involve substantial financial commitments, competing interests and pressures to achieve a particular result. Those pressures may be especially apparent in commercial transactions, where negotiations can continue for months and the parties may have already invested considerable time and resources.
However, the importance of maintaining ethical standards does not change because the transaction is complicated, the commission is substantial or the client has a strong preference for a particular outcome.
Experience has taught me that professional representation is not simply about knowing how to structure an agreement, negotiate favourable terms or bring a transaction to completion. It also involves recognizing when a proposed course of action is inappropriate and having the judgment to address the concern before it causes harm.
Sometimes that can be accomplished through a straightforward conversation. At other times, it may require specialized advice, a change in approach or, in more difficult circumstances, ending the professional relationship.
Professional Insight — Sometimes the Best Advice Is No
Professional loyalty does not mean unquestioning agreement. A REALTOR® who explains why an improper instruction cannot be followed, and who is prepared to recommend a more appropriate course of action, is fulfilling an important part of their professional responsibility. Sometimes the most valuable advice a client receives is advice they did not initially want to hear.
For me, the experience of having to walk away from months of work reinforced the importance of establishing ethical expectations before representation begins. It also confirmed that professional integrity must be maintained even when doing so has a financial consequence.
For consumers, understanding these boundaries is part of appreciating the value of professional representation. A good REALTOR® should be committed to helping clients achieve their objectives, but that commitment must be guided by sound judgment, honest communication and respect for the obligations that govern the transaction.
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 ethics, representation agreements and real estate transactions in Ontario. It is not legal advice. Professional obligations, disclosure requirements, potential misconduct and termination of representation agreements depend on the circumstances and applicable legal requirements. Qualified legal advice should be obtained where appropriate.
Professional and Regulatory References
- Real Estate Council of Ontario — Professional Conduct Guidance and Ontario Code of Ethics
- Real Estate Council of Ontario — Bulletin 2.3: Representation Agreements
- Real Estate Council of Ontario — Bulletin 7.4: Facts a Seller Has a Legal Obligation to Disclose
- Trust in Real Estate Services Act, 2002 (TRESA)
- Ontario Human Rights Code
- FINTRAC — Real Estate Sector Guidance
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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