As professional advisors, REALTORS^® often encounter clients experiencing various forms of vulnerability, such as diminished capacity, coercion, or abuse. REALTORS® have both ethical and legal duties under BC law and professional regulations related to dealing with vulnerable clients. In this article, we will explore how to identify vulnerabilities, respond appropriately, and use available resources.

Vulnerability in Real Estate

Vulnerability can take many different forms. For example, one may have clients dealing with cognitive decline, mental illness, substance abuse, isolation, language barriers, financial dependency, and trauma. These vulnerabilities can be temporary, intermittent, ongoing, or increasing. Elderly clients in the early stages of Alzheimer’s or dementia may have capacity one day and lack it the next. Likewise, if a client has recently experienced a stressful or traumatic event, this can temporarily impair their judgement until they’ve had a chance to process the event.

This topic is extremely important because vulnerable clients are at risk of exploitation, coercion, or poor decision-making. REALTORS® have the duty to act in their client’s best interest, recognize misconduct, and report abuse to their managing broker or British Columbia Financial Services Authority (BCFSA).¹ In BC, several laws exist to protect vulnerable individuals, including:

• Adult Guardianship Act:² defines abuse and neglect. It also outlines the powers of designated agencies.
• Representation Agreement Act³ and Power of Attorney (POA) Act:⁴ clarify decision-making authority.
• Public Guardian and Trustee Act:⁵ establishes the Office of the Public Guardian and Trustee, which is responsible for the protection of adults who cannot manage their own affairs.

Spotting Red Flags

In this article, we will address three common risk areas: capacity issues, coercion and duress, and abuse.

Capacity Issues

Capacity is the ability to understand information and appreciate its impacts and consequences. In BC, legal capacity also requires being 19 years of age or older (the age of majority in BC). Legal capacity needs to be considered on a case-by-case basis with consideration for the specific type of transactions, agreements, and decisions. It should also be noted that legal capacity is different from capacity as determined by a medical provider. To have legal capacity in the real estate context, a client must understand the contract, listing agreement, or any other documents being signed. They must also understand the consequences of their decisions and the implications of entering into any agreements. REALTORS® may need to recommend a legal or medical assessment in these situations.

Red flags for capacity issues include memory loss, confusion, inconsistent statements, or an over-reliance on others. For example, clients may look to others for responses regularly, as opposed to answering on their own.  If you spot any of these red flags, start asking your client simple, open-ended questions and see how they respond. You may need to take your client aside to ask these questions independently to ensure they are not relying on cues from those around them to answer the questions. If it’s unclear whether the client has capacity, you may need to recommend that they obtain a legal or medical assessment (although recognizing that the medical assessment may not be indicative of legal capacity). If you don’t believe your client has capacity, you should pause the transaction, consult with your managing broker, and see if there is a valid power of attorney agreement in place.

Coercion and Duress

Coercion or duress is pressure that overrides free will. This pressure can be emotional, financial, reputational, or physical.

Red flags for coercion or duress include your client always deferring to others, seeming afraid or reluctant to speak, and others answering on their behalf or preventing private meetings. If you believe someone may be coercing your client, or your client is acting under duress, you should try to ensure you are having private, independent conversations with your client and only taking instructions directly from them (ideally confirming those instructions in person). You should also confirm that their instructions and actions are voluntary. This often means asking your client open-ended questions, taking a deeper dive into their responses and intentions, and evaluating their answers. You may ultimately need to consider withdrawing if necessary. 

Abuse

Abuse can take many forms. A few common examples are elder, domestic, and financial abuse. Elder abuse involves the neglect, control, or exploitation of older adults. This abuse is often perpetrated by family members or caregivers. Domestic abuse can involve physical or emotional abuse. It is typically carried out by members of a household, often at the hands of a spouse, parent, or child. Domestic abuse can be used to force parties into real estate transactions or could involve using housing decisions to control or isolate individuals. Financial abuse can occur in various forms, such as the misuse of a POA, forced sales, or asset stripping.

Red flags to look out for with abuse include unexplained transactions, rapid ownership changes, client confusion, or third-party dominance. If you believe someone may be subject to abuse, be alert and ask neutral questions of the parties and refer the victim to professionals (legal, medical, social workers). If necessary, report to the Public Guardian and Trustee, police, or other agencies.

Best Practices

REALTORS® should develop a toolkit of strategies they can consistently apply to assist them when dealing with vulnerable clients. These strategies include:

• communication tools,
• due diligence and documentation,
• pausing or declining transactions,
• seeking advice from a professional or your managing broker, and
• how and when to report.

Communication Tools

When working with vulnerable clients, it is important to use plain language and avoid jargon. A good strategy for determining if a client understands what is being said is to ask them to paraphrase the information in their own words. Offering to include a trusted advisor in all communications and meetings can also help guard against undue influence.

Due Diligence and Documentation

Documentation is very important when dealing with vulnerable clients. Be sure to document meeting details, including attendees, what was said, and any observations you made. Send a summary to your client of key points that were discussed during the meeting and ask them if they want to clarify or discuss anything further. If necessary and appropriate, bring in a trusted member of your team to meetings and have them record notes as well. Ensure you retain copies of all POAs or assessments you receive during the transaction. When a POA is involved in a transaction, exercise extra caution. Always request and review the original POA document and confirm its authenticity before proceeding. While a detailed POA analysis is beyond the scope of this article, REALTORS® are encouraged to review BCREA’s resource for further guidance.⁶

Pausing or Declining Transactions

Occasionally, you will need to pause or decline a transaction. If capacity is unclear and no legal representative is available, you will need to pause the transaction until an assessment of your client can be completed. If the assessment determines that the client lacks legal capacity, you will need to determine if a legal representative has been appointed, such as a POA, a committee, or the Public Guardian and Trustee. Depending on the stage of the transaction, you may need to seek assistance in having a legal representative appointed if there isn’t a POA already appointed, or you may need to decline entering into an agency relationship with the client. If coercion or abuse is suspected and remains unresolved, you may need to pause or decline initiating an agency relationship with the client. Additionally, you may need to pause or decline initiating an agency relationship if the client appears at risk and won’t accept support or independent legal advice in the transaction.

Seeking Advice from a Professional or Your Managing Broker

One of the best strategies you can utilize when dealing with vulnerable clients is to discuss the situation with your managing broker. Your managing broker can assist you and ensure you are following the proper procedures while also providing support, guidance, and advice. Depending on the situation, it may be important to obtain advice from a lawyer, social worker, Public Guardian and Trustee, or medical professional.

How and When to Report

The Real Estate Services Rules require you to report misconduct to your managing broker by those in your brokerage, other licensees, and by unlicensed individuals working at a brokerage.⁷ You also have an ethical duty to report the misconduct of any real estate professional or unlicensed brokerage employee.⁸ If you believe one of the parties noted above is involved in the misconduct of a vulnerable client, you must report to your managing broker and / or the BCFSA.

If you suspect diminished capacity, coercion and duress, or abuse with any of your clients or transactions, you should speak to your managing broker for guidance and assistance on next steps. You may also want to reach out to other professionals, such as lawyers, social workers, and medical professionals, who may assist you with determining how and when to report.

You must report any suspected illegal activity or risks to safety.

• Emergencies: Call 911.
• Elder abuse or self-neglect: Contact a designated agency under the Adult Guardianship Act (one of the five regional health authorities, Providence Health Care, or Community Living BC).⁹
• Misuse of POA or representation agreements: Report to the Public Guardian and Trustee.
• Support services:
  • Seniors Abuse & Information Line: 1-866-437-1940
  • VictimLinkBC: 1-800-563-0808

Conclusion

REALTORS® have a duty to protect vulnerable clients. Early recognition of a concern, clear communication, and collaboration with professionals are key. When in doubt, it is important for REALTORS^® to document concerns and seek advice from their managing broker or a professional. Supporting vulnerable clients requires compassion, professionalism, and trust.

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	1.	BCFSA Licensee Obligation to Report Misconduct Guidelines.
	2.	Adult Guardianship Act, RSBC 1996, c. 6.
	3.	Representation Agreement Act, RSBC 1996, c. 405.
	4.	Power of Attorney Act, RSBC 1996, c. 370.
	5.	Public Guardian and Trustee Act, RSBC 1996, c. 383.
	6.	Powers of Attorney: A Minefield for REALTORS®.
	7.	BCFSA Licensee Obligation to Report Misconduct Guidelines.
	8.	Ibid.
	9.	Designated Agencies Regulation.

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