Real Estate Council of Alberta Fundamentals Practice Exam

In a Common Law agency relationship, where does the conflict of interest extend to?

1. Only the individual agent

2. Only the clients involved

3. The whole brokerage

4. The real estate market

The correct answer is: The whole brokerage

In a Common Law agency relationship, the concept of conflict of interest extends to the entire brokerage due to the fiduciary duties owed by the agent to their clients. This means that when an agent represents a client, they have a legal obligation to act in that client's best interests. If there is a conflict, it implicates not only the individual agent but also the brokerage as a whole because the brokerage is responsible for the actions of its agents. This is particularly important as brokerages are required to supervise their agents and ensure adherence to the ethical standards and legal obligations that govern agency relationships. If one agent in a brokerage has a conflict of interest, it can affect the perception and trust in the entire brokerage, potentially impacting other clients and agents as well. Understanding that the entire brokerage could be implicated in a conflict of interest helps to maintain a higher standard of conduct and transparency in the real estate market, underscoring the importance of ethical considerations in client-agent relationships.