A real estate broker is approached by a former client seeking to purchase a property. This broker previously represented the seller of the property in a different transaction a year ago. The information gained from the previous representation could potentially benefit the buyer in the current negotiation. What specific ethical consideration must the broker address?

Question: A real estate broker is approached by a former client seeking to purchase a property. This broker previously represented the seller of the property in a different transaction a year ago. The information gained from the previous representation could potentially benefit the buyer in the current negotiation. What specific ethical consideration must the broker address?

Answer options: ✅ Obtaining informed consent from both the former seller and the current buyer due to potential for conflict of interest and use of confidential information.

• Refusing to act for the buyer due to a perceived conflict of interest.
• Proceeding with the sale but ensuring that the buyer does not know about the prior relationship.
• Only disclosing the previous relationship if it directly relates to the property being sold.

Correct answer: Obtaining informed consent from both the former seller and the current buyer due to potential for conflict of interest and use of confidential information.

Explanation: Section 6 of the Code of Ethics (O. Reg. 580/05, now TRESA) requires a registrant to disclose any existing or potential conflict of interest to all parties involved and obtain informed consent. Using confidential information from a previous relationship to benefit a new client would be a breach, necessitating full disclosure and consent.