While most BC real estate transactions complete without issue, we all know that some transactions wind up in a dispute between the buyer and seller.

In these cases, licensees are sometimes asked to assist one of the parties in resolving the dispute, often in the form of swearing an affidavit – a written statement provided under oath or affirmation that can then be used as evidence during a court proceeding – for one or other of the parties. Asking for the licensee’s evidence makes sense of course: the licensee was present throughout the transaction and often has evidence that can help determine what occurred, and assist with settling or resolving the dispute.

Requests for affidavits can come either from a licensee’s client or another party involved in the transaction. When a request comes from a client, it’s natural for licensees to want to assist. After all, the licensee’s reputation is directly related to their client’s opinion of them and the licensee often has a direct financial interest in ensuring that the transaction completes in accordance with their client’s interests.

Maintaining your fiduciary duty: it’s ok to say no

Different considerations apply where the request comes from the opposing party, but although it’s less common for licensees to offer assistance to opposing parties, it does happen.

In either case, it’s crucial for licensees to remember that, although you may want to help your client or assist both parties to resolve a dispute, you must also protect yourself. No matter who makes the request, there is no obligation to provide an affidavit and the licensee can always, and often should, just say “no.”

When a request is received from a non-client, licensees must remember that they owe their client fiduciary duties, including the duty of loyalty and confidentiality. As such, our advice is that licensees should not provide assistance to a non-client. By offering assistance to a non-client this way, you may risk liability for breaching your fiduciary duty, or face exposure to discipline from the British Columbia Financial Services Authority (BCFSA) for acting in a manner contrary to your client’s best interest.

Theoretically, a licensee could provide an affidavit for a non-client if they first obtain the consent of their client. However, not only is it unlikely that the client would consent in such circumstances but, agreeing to provide affidavit evidence to a non-client (even with the client’s consent) could still expose you to liability risk or disciplinary action if the affidavit is used for a purpose that is against the client’s interests.

In circumstances where the request for the affidavit comes from a client or a former client, licensees should consider a number of potential concerns including:

1. Could swearing the affidavit lead to the licensee becoming a defendant in the litigation? Even if you didn’t do anything wrong and haven’t been involved in the dispute, parties involved in litigation can sometimes be caught up in the emotion of a lawsuit and may choose to name people as defendants even where there is no evidence to support the claim. Therefore, even if you believe you did everything properly in the transaction, providing affidavit evidence may trigger one of the parties to formally add you as a defendant or third party in the action.
2. Will providing the affidavit result in further involvement and other procedural steps? When you swear an affidavit, you expose yourself to the potential of being cross-examined on the affidavit. This can lead to a licensee spending more time and effort on the dispute than initially anticipated and put you in the position of a witness under cross-examination.
3. Will the affidavit become public? It’s important to remember that affidavits, if filed with the court, become public information that can be accessed through the court file. If the dispute concerns a matter of public interest, the licensee should understand that the affidavit evidence could be published through the media and draw more attention to their involvement with the case.

If you get to yes: next steps

If a licensee decides that, despite these concerns, they’d like to provide an affidavit to a client or former client, the licensee should first speak to their managing broker to get an outside opinion on any additional aspects of the risk they may not have considered.

If, after talking to their managing broker, the licensee and brokerage agree the licensee should swear an affidavit, the licensee should speak to their own independent lawyer before proceeding with swearing an affidavit as well as get legal advice regarding the evidence to be provided. Giving evidence under oath is a serious matter and should not be taken lightly. Don’t simply sign an affidavit drafted by your client’s lawyer – make sure every single word is accurate and truthful. Don’t hesitate to point out any inaccuracies, no matter how small, as you’re responsible for what you sign.

When swearing an affidavit, it’s vital to be aware of these legal principles:

1. Use direct evidence only – the evidence must be the direct evidence of the licensee only and never include second-hand information that they’re not directly aware of, such as what might have happened at a meeting they did not attend or a phone call they were not part of.
2. Stick to the facts – because the evidence is being given under oath, it must be accurate and completely true. Licensees should never guess or speculate about facts they’re not 100% certain of nor include your opinion. Restrict your statement to factual information only, such as things you did, saw or heard.

Risk management tips:

1. Avoid providing any assistance to a non-client involved in a lawsuit, particularly where the dispute also involves the licensee’s client or former client.
2. Consider the risks of providing affidavit evidence and strongly consider refusing.
3. If considering providing affidavit evidence, speak to a managing broker before committing to do so.
4. If there is a claim or potential claim against the licensee, contact E&O at reception@reeoic.com and speak with a staff lawyer before you agree to provide any evidence.
5. Only provide affidavit evidence with the assistance of independent legal advice and in accordance with the principles outlined above.
6. Remember that you’re never obligated to provide an affidavit. Even if you initially agree to do so, you can always change your mind if it appears there is a risk to proceeding.