Should the Government Ban “Double-Ending” in Real Estate Deals?

The practice of “double-ending” has become commonplace in Toronto’s real estate market.

Earlier this year, the government of Ontario launched the Fair Housing Plan, a multi-phase effort to update various aspects of real estate and residential tenancy law in the province. This included an upcoming review of the practice known as “double-ending”, in which a real estate agent represents both the buyer and seller in a transaction.

Currently, there’s no rule against realtors double-ending in Ontario. But one does not require a depth of knowledge about real estate law to see why the practice is questionable.

Ontario real estate agents are governed by a body called the Real Estate Council of Ontario and the Real Estate and Business Brokers Act. The law prevents realtors from manipulating deals or using confidential information to give clients an unfair advantage.

However, the freedom to double-end deals gives agents ample opportunity to violate those rules.

The problem is conflict of interest. When it comes to a real estate transaction, buyers and sellers have entirely different interests. Sellers want to maximize their profit, while buyers want to get the best bang for their buck. The seller’s ideal price is not what’s best for the buyer.

That’s part of why people retain realtors in the first place. Real estate agents are meant to protect their clients’ interests and help them negotiate the best deal.

When your clients’ interests are directly opposed, there’s no way you can represent both of them to the fullest.

Law societies have recognized this for centuries. Avoiding and managing conflicts of interest is one of a paralegal or lawyer’s most important duties. Here in Ontario, the rules for both professions expressly forbid a licensee from representing both sides of a dispute, regardless of how friendly the opposing parties claim to be.

This is also true for lawyers practicing real estate law. There’s an exception for lawyers acting for relatives transferring properties from one to another, but the Law Society still cautions against this.

While a single realtor can represent both the buyer and seller, those parties will have to retain separate law firms for the same transaction. The double standard is clear.

The first phase of the review ended on July 24, with the government ending public comment on the issue. We’ll wait and see whether they’ll tackle double-ending before the next election. If the Liberals drag and delay on this issue, I expect the practice will live on, as the Progressive Conservatives are traditionally friendlier with the real estate industry than their colleagues in government.

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