Brokerage ABC Mortgage Inc. has a policy where it preferentially uses a specific appraiser with whom the Principal Broker’s spouse has a business relationship. How should this potential conflict of interest be managed when advising clients on mortgage valuations?

Question: Brokerage ABC Mortgage Inc. has a policy where it preferentially uses a specific appraiser with whom the Principal Broker’s spouse has a business relationship. How should this potential conflict of interest be managed when advising clients on mortgage valuations?

Answer options: ✅ The brokerage must disclose the relationship to clients and obtain their informed consent, while also ensuring the appraiser's independence and fair market value assessments.

• The brokerage is allowed to mandate the use of this appraiser as long as the appraisal costs are absorbed by the brokerage.
• The Principal Broker’s spouse must divest their business relationship with the appraiser immediately.
• Only clients who are considered 'sophisticated investors' need to be informed of this relationship.

Correct answer: The brokerage must disclose the relationship to clients and obtain their informed consent, while also ensuring the appraiser's independence and fair market value assessments.

Explanation: Any potential or perceived conflict of interest must be disclosed to clients, and their informed consent obtained. The brokerage must also ensure that the chosen appraiser acts independently and provides unbiased valuations, consistent with provincial broker regulations.