Real Estate Council of Alberta Fundamentals Practice Exam

What must happen for a transaction brokerage to legally proceed if there is a conflict of interest?

1. All clients must agree verbally

2. A written agreement must be obtained

3. Agents must disclose all personal interests

4. Only one client must consent

The correct answer is: A written agreement must be obtained

For a transaction brokerage to legally proceed in the event of a conflict of interest, a written agreement must be obtained from all parties involved in the transaction. This requirement ensures that all clients are fully informed about the nature of the conflict and have given their explicit consent, which is essential for maintaining transparency and trust in the brokerage relationship. A written agreement provides a clear record of the clients' understanding and acceptance of the situation, which helps protect both the clients and the brokerage in case any disputes arise later. It also upholds the ethical standards and legal obligations that real estate professionals must adhere to, particularly around issues of loyalty and confidentiality. In contrast, relying on verbal agreements may not provide sufficient legal backing or clarity, as it can lead to misunderstandings or disagreements about what was agreed upon. Thus, the emphasis on a written agreement highlights the importance of clear communication and documented consent in real estate transactions.