Managing conflicts that arise after agency has begun

By Rosalyn Lau and Brandon Piva, Twining, Short & Haakonson
June 2025

Real estate agents often develop long-standing relationships with their clients, supporting them with buying and selling their homes over the years. Working with multiple clients can lead to circumstances where duties owed to one client may conflict with duties owed to another.

Knowing what a conflict of interest is, how to identify when you’re in one, and how to handle it properly are all crucial to protecting your clients, as well as to protecting yourself from regulatory complaints and legal liability.

What is a conflict of interest?

In Mulligan v. Stephenson, 2016 BCSC 1941, the Court confirmed that a conflict of interest arises when there is a substantial risk that a licensee’s representation of the client would be materially and adversely affected by the licensee’s own interests or by the licensee’s duties to another current client, a former client, or a third person.

Real estate agents owe fiduciary duties to their clients, including acting in the clients’ best interests. When a conflict arises, it becomes impossible to uphold this duty of acting in the best interests of the client equally or impartially.

Your professional obligations will be triggered even where no actual conflict exists, in any situations where there is a perceived or potential conflict.

The best practice in these situations is to act proactively and transparently. You must inform your clients of the potential or actual conflict immediately, and in writing. This helps protect both your clients and yourself from future disputes.

Some conflicts are not immediately apparent and arise unexpectedly after a client-agent relationship has already begun. Below are some common scenarios of such conflicts that can arise mid-way through a relationship:

Scenario 1: Two clients competing for the same property

SCENARIO: You have two separate potential buyers searching for properties. You showed a property to buyer A, who passed on it. You then showed it to buyer B who decides to make an offer to purchase. Before buyer B submits an offer, buyer A changes their mind and wants to make an offer as well.

CONFLICT: You owe duties to both buyers A and B, but their interests are directly opposed. A conflict arises the moment both buyers intend to purchase the property, as their interests compete. If you agree to act for Buyer B, you will have confidential knowledge of Buyer A’s budget, strategy, and motivations and vice versa. Representing both clients would create a direct conflict of interest.

SOLUTION: You must disclose and explain the conflict in writing to both clients immediately and inform your managing broker. You cannot continue representing both clients in this transaction. You should provide both clients with the BCSFA’s form “Resolving Conflict of Interest Between Clients: Understanding Your Options” (referred to as the Agreement Regarding Conflict of Interest Between Clients form on the BCFSA website) and ensure your clients understand the content.

If one of your clients wants you to continue representing them in this transaction, you need consent from the other client and must complete the “Agreement Regarding Conflict of Interest Between Clients” form.

KEY: If you cannot obtain written consent from both clients, you cannot act for either of them in this transaction and should refer both clients to other real estate licensees who can represent their interests.

Scenario 2: Diverging client objectives for the same property

SCENARIO: You represent a couple who are selling a property that they own jointly. During the listing, the couple separates. One client wants to reduce the asking price for a quick sale, and the other wants to hold out for a higher price.

CONFLICT: You owe fiduciary duties to both clients equally. You cannot advocate for one client’s pricing goal over another. Their interests have diverged, and you cannot act in the best interests for both at the same time.

SOLUTION: If the couple cannot resolve their differences among themselves, you must advise them of the conflict in writing immediately, explaining that you can no longer represent either of them and recommending that each client seek independent legal advice. You must cease acting for both clients as you won’t be in a position to market or assist with the sale of a jointly owned property where the two owners are unable to agree on your instructions.

KEY: This is NOT a situation where you would be able to continue to represent one of the owners while releasing the other.

Scenario 3: Immediate family’s interest in a client’s property

SCENARIO: You listed a property for sale for a client. Mid-way through the listing, you learn this property would be an ideal investment for an immediate family member who has been looking for similar properties.

CONFLICT: Even if your family member is represented by another licensee, there is at least a perceived conflict that you may prioritize your family’s interest (to purchase at a lower price) over your client’s interest (to sell at the best price).

SOLUTION: You must disclose this potential conflict in writing to your client and provide your client with the BCSFA Disclosure of Interest in Trade (Buying or Selling) form. While this form must be used when a licensee or their associate (see definition of “associate” on the form) has an interest in the transaction, it is also best practice to use this form when an immediate family member, such as your child, sibling, or parent, are involved. The nature of the relationship should be specified on the form.

KEY: You should strongly encourage your client to obtain independent legal advice and independent professional advice regarding the fair market value of the property being sold.

Practical tips for avoiding conflicts of interest

Once a potential conflict is identified, you must cease acting for your client(s) and you should assist them in finding new, arms’ length, representation. The only exception is if you obtain your clients’ informed and written consent to continue acting for one of them.

“Informed” means your clients must have the opportunity to ask questions and seek independent legal advice, and this should also be documented in writing for your protection.

Conflicts of interest often arise unexpectedly in evolving circumstances which is why these situations require the licensees to act quickly and be transparent with the affected clients by:

Identifying the nature of the conflict – to whom do you owe fiduciary duties? Are their interests in conflict with those of another client or those of a third party closely connected to you? Could your ability to act in one client’s best interest be reasonably perceived as impaired by your duties to another?
Communicating promptly and clearly – disclose the conflict in writing as soon as it’s identified because full disclosure is essential to ensure clients understand the issue and their options.
Providing the required BCSFA form – to all affected clients with the Resolving Conflicts of Interest Between Clients: Understanding Your Options helping clients understand the implications and available options.
Encouraging independent legal advice – clients should be encouraged to consult a lawyer to fully understand their rights and risks. This is especially important where clients wish for you to continue representing them despite a conflict.
Informing your managing broker – of the conflict to ensure they’re apprised of the situation and can provide guidance. Where appropriate, consult a lawyer for legal advice.
Terminating representation unless consent is obtained – you cannot continue to act for the affected clients unless all of them give informed and written consent to you continuing to represent one of them.
Completing all necessary BCFSA forms – including the Agreement Regarding Conflict of Interest Between Clients form, where applicable.

By remaining vigilant, honest, and communicative, you can manage conflicts effectively while protecting your clients’ interests. This, in turn, helps safeguard your professional standing, and can reduce the risk of being involved in legal disputes.

Additional Resources: