Dealing with Divorcing Clients – Fiduciary Obligations

As a professional, dealing with clients who are undergoing a divorce is always very difficult. Recently there was a local news story highlighting some these issues (http://www.chbcnews.ca/kelowna+lawyer+suspended+from+practice/6442483996/story.html)

As Agents where we know a client is undergoing a divorce it is important to get clear and unequivocal instructions from “your client”. Realtors and Lawyers owe a duty of care to their clients, this includes, in the context of a Divorce, duties of:

1) Full Disclosure – to BOTH parties (for example, cc the other spouse on ALL emails)
2) Undivided Loyalty – You cannot favor the interests of one spouse over another
3) Confidentiality – Without your client’s permission, you have to keep your conversations with both spouses confidential and not publicly disclose that information (ie; the fact that they are getting a divorce).

A caveat – the fact that there is an ongoing divorce proceeding MUST be disclosed to the lawyer representing the separating parties (who also must keep the information confidential) as this effects the legal work that needs to be done at closing.

Failure to ensure that both spouses are “on board” will quickly “scuttle” a real estate deal. For Realtors this means getting CLEAR and UNEQUIVOCAL instructions, preferably written, from both spouses. This is even true where only one spouse is “on title”.

At Pihl Law Corporation, upon file opening we always ask all our clients whether they are aware of a pending family dispute among the parties as this is such an important issue. Both spouses must sign and approve an “Order to Pay” which sets out all deductions from the purchase price (including commissions and legal fees).

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