Assignment 5

Question 1

1. Which of the following is a FALSE statement regarding a real estate board’s discipline committee?
   (1) The function of the discipline committee is to provide compensation to members of the public who have suffered a loss due to a member’s breach of the ethics of the real estate industry.
   (2) The decision of the committee must be in writing and specify any discipline imposed.
   (3) It must be proven that a board member has broken a rule of professional conduct before disciplinary action is taken by the committee against the member.
   (4) The purpose of the committee is to protect the interests of the public and to safeguard the integrity of the board’s members.

Answer 1

1. Answer: 1
   The function of the disciplinary committee is to protect the interests of the public and to safeguard the integrity of the board’s members. This includes deciding upon disciplinary measures and ensuring that members understand the ethical rules and the spirit and intent of their application. It also reports the misconduct of members and in this way has a deterrent effect. The committee does not provide compensation to members of the public.

Question 2

2. Suspension or cancellation of a trading services representative’s membership in a real estate board due to a breach of the Code of Ethics:
   A. means that the person can no longer participate in MLS® listings.
   B. means that the licensee will no longer be permitted to work as a representative.
   C. suggests that the licensee may also be subject to disciplinary proceedings by the Real Estate Council.
   D. means that the licensee has violated the Real Estate Services Act.

Answer 2

2. Answer: 4
   Once a licensee’s membership has been cancelled or suspended from a board, the licensee may no longer participate in the MLS® (which is conducted by the board); however, the licensee may still operate as an independent licensee. While it is not necessary for the Real Estate Council to discipline a licensee who has already been disciplined by a board, in circumstances where the licensee’s actions are in violation of the Real Estate Services Act, the Council may discipline. A real estate board can discipline its members for violations of the Code or Standards: a violation of the Real Estate Services Act is not necessary.

Question 3

3. Which of the following figures most accurately represents the percentage of Canadian licensees who are also members of a real estate board?
   (1) 99%
   (2) 90%
   (3) 50%
   (4) 75%

Answer 3

3. Answer: 1
   99% of all real estate licensees across Canada are members of a real estate board. This means that the vast majority of licensees are REALTORS7 and are subject to the REALTOR7 Code.

Question 4

4. Which of the following duties are members of British Columbia real estate boards required to meet?
   A. A member shall only provide service within the member’s area of expertise.
   B. Every member has a duty to carry on business according to the Real Estate Services Act.
   C. A member has a duty to protect the interests of the client and to prefer fairness towards the client over any other party.
   D. A member has a duty to be honest to the profession.
   (1) D only
   (2) A, B, and C only
   (3) A, B, and D only
   (4) All of the above

Answer 4

4. Answer: 3
   All of the responses are duties of members of a real estate board under the Standards of Business Practice except for the duty to deal fairly with the client first. A member has a duty to deal fairly with all parties, and not to favour the client over any other party.

Question 5

5. Which of the following statements regarding the ethics of advertising is NOT embodied in the Standards of Business Practices?
   (1) The duty not to discredit a competitor
   (2) A prohibition against false or misleading advertising
   (3) A prohibition against advertising the rate of commission usually charged
   (4) A prohibition against advertising a property contrary to the Seller’s request

Answer 5

5. Answer: 3

There is no prohibition against advertising the rate of commission that will be charged.

Question 6

6. Which of the following are TRUE statements regarding a real estate board’s MLS® rules and regulations?
   A. The MLS® rules and regulations are followed in addition to the Real Estate Services Act and the Code of Ethics and Standards of Business Practice.
   B. The MLS® rules and regulations are enforceable under the by-laws of the real estate board.
   C. Real estate boards across British Columbia require that real estate professionals seeking to participate in the MLS® adopt the rules and regulations of the board in which that person is, or seeks to become, a member.
   D. An objective of the MLS® rules and regulations is to regulate the conduct of cooperating members.
   (1) A, B, and C only
   (2) A, B, and D only
   (3) A, C, and D only
   (4) All of the above

Answer 6

6. Answer: 4

All of the statements are true.

Question 7

7. Which of the following forms of discipline is NOT open to the disciplinary committee of a real estate board?
   (1) Suspension of the licence
   (2) A reprimand
   (3) Suspension of membership privileges
   (4) The costs of the hearing

Answer 7

7. Answer: 1
   A real estate board’s disciplinary committee is not entitled to revoke or suspend the licence of a member. Only the Real Estate Council, the licensing body, has that power.

Question 8

8. There are a number of provisions of the Real Estate Council Rules and the Standards of Business Practice which overlap. Which of the following pairs of provisions DO NOT have substantially the same meaning? You might have to review portions of Chapter 2, the specified provisions in the Council Rules, the Standards of Business Practice to properly answer this question.
   (1) Article 2 of the Standards of Business Practice and section 5-10 under the Council Rules
   (2) Article 5 of the Standards of Business Practice and section 5-1 under the Council Rules
   (3) Article 10 of the Standards of Business Practice and section 5-4 under the Council Rules
   (4) Article 20 of the Standards of Business Practice and section 5-5 under the Council Rules

Answer 8

8. Answer: 3
   Article 10 of the Standards of Business Practice requires members to encourage parties to a transaction to seek the advice of outside professionals where appropriate. Section 5-4 requires delivery of signed

acceptances to all parties to a transaction. All other pairs deal with overlapping subject matters and complement each other.

Question 9

9. Which of the following is not a specified obligation under the Code of Ethics and Standards of Business Practice?
   (1) To avoid injuring directly or indirectly the reputation of any person
   (2) To keep informed regarding new real estate developments
   (3) To render opinions based only on training, qualifications, experience and knowledge
   (4) To protect the public from misrepresentations in transactions concerning real estate

Answer 9

9. Answer: 1
   The Standards of Business Practice and the Code of Ethics only require that a Member not injure the reputation of other Registrants (i.e., other licensees).

Question 10

10. Which of the following penalties can a real estate board’s disciplinary committee impose on a real estate board member who has breached the board’s bylaws?
    A. A fine
    B. A garnishing order for the member’s wages
    C. Suspension of the use of the Multiple Listing Service®
    D. Imprisonment for offences which are also criminal in nature
    (1) A, B, and C only
    (2) B and D only
    (3) A and C only
    (4) All of the above

Answer 10

10. Answer: 3
    A real estate board’s disciplinary committee may impose the following penalties on its members: a reprimand; a suspension of membership privileges; a fine of a monetary amount set by the hearing panel; payment of the costs of the hearing; expulsion from membership in the board; and an order that the member attend and successfully complete certain real estate courses. Expulsion from a board will disentitle the suspended member from using the board=s Multiple Listing Service7. A committee does not have the power to impose prison sentences, nor can it issue garnishing orders.

Question 11

11. According to the REALTOR® Code, in the event that a dispute occurs between REALTORS® of different brokerages regarding the compensation earned in connection with a real estate transaction, which of the following is the preferred avenue of dispute resolution?
    (1) Filing a civil lawsuit
    (2) Arbitration
    (3) Mediation
    (4) Filing a complaint to the Real Estate Council

Answer 11

11. Answer: 2
    The REALTOR7 Code (articles 23 and 24) specifies arbitration as the preferred method of dispute resolution, should a controversy or dispute occur between REALTORS7 of different brokerages. Negative publicity is harmful to the profession as a whole. Litigation may invite this kind of publicity and is best avoided.

Question 12

12.	Janet Jones, a vendor whose house is currently listed with Fred Washington at Northern Realty, initiated a complaint to the Business Practices Committee of the Fraser Valley Real Estate Board against Tina Coppolla, a real estate licensee employed with Eager Beaver Realty. In her complaint, Janet stated that in a telephone conversation Tina was aggressive to the point of rudeness in attempting to convince Janet to transfer the listing on her property to Tina’s brokerage. Janet was also appalled at the unethical comments that were made about Fred and Northern Realty. After learning of these events, Fred’s manager at Northern Realty has joined in the complaint against Tina.
You are the Chairperson of the Business Practices Committee conducting the hearing to determine the outcome of the complaint against Tina. If Janet’s evidence is accepted, which of the following articles of the Standards of Business Practice would you find Tina to have breached?
A.	Article 3
B.	Article 4
C.	Article 19
D.	Article 20
(1)	A and C only
(2)	C and D only
(3)	C only
(4)	B and C only

Answer 12

12. Answer: 2

Only Articles 19 and 20 apply to this situation.

Question 13

13. Which of the following statements concerning various articles of the Standards of Business Practice are TRUE?
    A. The duty of a REALTOR® is to protect and promote the interests of his or her client is expressed in Article 3.
    B. REALTORS® are required to comply with the rules and regulations of their own real estate boards according to Article 17.
    C. Article 7 requires a REALTOR® to fully disclose to all parties to the transaction those expenses for which each party to a transaction is responsible.
    D. Article 8 requires a REALTOR® to disclose any benefits the REALTOR® or his/her firm may receive as a result of recommending real estate products or services to a party.
    (1) B and C only
    (2) A and D only
    (3) A, B, and D only
    (4) All of the above

Answer 13

13. Answer: 3
    Statements A, B and D are correct. Article 7 only requires that the member inform the Asigning party@ regarding the type of expenses related to the real estate transaction.

Question 14

14. Joe is a trading services representative employed by Goodwork Realty. Joe and his brother Jim each hold a 50% share of J&J Property Holdings Ltd. J&J Property Holdings Ltd. currently owns a large house in the Kerrisdale area which it has listed with Goodwork Realty. During the listing and with the permission of J&J Holdings, Joe advertises the home in a local publication as “a beautiful Victorian home on a 70’  150’ lot with brand new appliances”. Reading the advertisement, Karen Kimble approaches Joe who then displays the home to her. Soon after, Karen purchases the house from J&J Property Holdings Ltd. When Karen takes possession she discovers that the appliances have been replaced with old equipment and the dimensions of the lot are in fact 60’  130’. Joe never revealed his interest in J&J Property Holdings Ltd. to Karen.
    Based on the above facts, which of the following Articles of the Standards of Business Practice have been breached by Joe?
    (1) Articles 2, 6, 9, 11 (2) Articles 3, 4, 5, 6, 12
    (3) Articles 3, 4, 11, 15
    (4) Articles 4, 6, 15, 18

Answer 14

14. Answer: 3
    The Articles which Joe breached are as follows:
    Article 3 - protect and promote interests of client; deal fairly with all parties
    Article 4 - obligation to discover facts and avoid error and misrepresentation of facts Article 11- shall not acquire or sell an interest in property without written disclosure Article 15 - true presentation in all advertising

Question 15

15. Cathy owns and operates a small greenhouse business in the lower mainland. After twenty years in the greenhouse business, Cathy decides to sell the operation and retire. She approaches ABC Realty which agrees to list her operation. Bill is a representative with one year of experience who is employed by ABC Realty. Eager to prove himself, Bill quickly finds a purchaser for Cathy’s greenhouse. However, Bill has never been involved in the sale of a business before. As a result, Bill does not properly arrange the sale of the greenhouse, and fails to ensure that all financial commitments between the parties are in writing. However, for reasons other than Bill’s flawed preparation of the sale, the purchasers pull out of the sale. Two months later Cathy finally sells the greenhouse at a sale price 30% lower than the amount offered by the first purchasers. Cathy is currently considering legal action against the first purchasers, against Bill and against ABC Realty. She has further filed a complaint against Bill and ABC Realty with their real estate board.
    Which of the following statements is TRUE based on the above facts?
    (1) Bill has breached articles 3, 6, 12 and 13 of the Standards of Business Practice.
    (2) Bill and ABC Realty have breached articles 2, 5, and 26 of the Standards of Business Practice.
    (3) Bill has breached articles 6 and 12 of the Standards of Business Practice.
    (4) Since the initial sale fell apart for reasons other than Bill’s inexperience, Bill has not breached the Standards of Business Practice.

Answer 15

15. Answer: 3
    The Articles which Bill has breached are as follows:
    Article 6 - ensure the terms, conditions, obligations and commitments of the parties to the agreement are in writing.
    Article 12 - skilled and conscientious service

Question 16

16. Which one of the following statements regarding professional ethics is TRUE?
    (1) A real estate licensee abiding by the law may be in breach of his or her professional ethical duties.
    (2) When faced with an ethical dilemma, a real estate licensee will always be able to consult the Real Estate Services Act and determine the proper course of action.
    (3) The Real Estate Services Act sets the highest level of ethical conduct required of most real estate professionals.
    (4) None of the above

Answer 16

16. Answer: (1)
    Legal rules are expressed in general terms and do not cover all possible situations. The law, including the Real Estate Services Act, will not provide an answer to all ethical dilemmas. Ethical obligations impose a standard of conduct which reaches a higher moral level than what is merely legal. As such, it is possible to fully abide by the law and yet breach ethical duties. The Real Estate Services Act sets the minimum level of ethical conduct required by law.

Question 17

17. Ali is a real estate licensee acting for the seller, Tom. In preparation for selling his home, Tom performed significant renovations, including constructing a large deck; however, Tom never applied for a building permit for the deck, as legally required by the municipality. If the municipality discovers the deck, it will have to be removed at a significant expense, as it does not comply with current zoning restrictions. Tom told Ali in writing not to disclose the fact that the deck is in violation of zoning restrictions to any buyer interested in his home. To fulfill all ethical duties, which one of the following courses of action must Ali take?
    (1) Ali should not disclose the lack of a permit, even if asked by a potential buyer.
    (2) Ali should disclose the lack of a permit to all potential buyers.
    (3) Ali should disclose the lack of a permit only if a potential buyer specifically asks if a permit was obtained prior the deck’s construction.
    (4) None of the courses of action above will fulfill all of Ali’s ethical obligations.

Answer 17

17. Answer: (4)
    Ali has conflicting duties. Ali has a duty to follow the client=s instructions but also has a general duty to provide accurate information to purchasers. None of the options allow Ali to fulfill both of these duties. If Tom is insistent on not disclosing the fact that the deck did not have a permit and does not comply with current zoning, Ali should refuse to act for him.

Question 18

18. Larry, Michael and Irvin are joint tenants in an urban condominium. Larry decides to sell his portion of ownership but does not want Michael or Irvin to know. Larry approaches LeBron, an up and coming real estate licensee. LeBron has recently completed his licensing course and is well aware of all his ethical duties. Which one of the followings statements made by LeBron is FALSE?
    (1) “If I act as a licensee for you, I owe you a duty to keep certain information confidential.”
    (2) “If I act as a licensee for you, my duty to keep information confidential exists only until the transaction is completed.”
    (3) “If I act as a licensee for you, my duty to act in your best interest must be balanced with my duty to act fairly with other parties.”
    (4) “If you require me to do something that is illegal, I will not act as a licensee for you.”

Answer 18

18. Answer: (2)
    If a licensee has a duty to keep certain information confidential, this duty exists even after the transaction is complete. A licensee has ethical and legal obligations not to act for someone who is instructing them to do something illegal.

Question 19

19. A licensee is approached by a well-known, and highly paid, professional athlete who is desperately looking to purchase a luxurious penthouse property near the downtown stadium. Coincidentally, the licensee happens to be the listing representative for a property that fits that exact description. The athlete insists that his identity not be disclosed to the seller – he wants his name to remain undisclosed because he fears that if his identity were known, the seller may request a higher price for the property. There is an open house scheduled for the following day. What must the licensee do in this situation?
    (1) The licensee should tell the athlete to have their solicitor present the offer on his behalf in order to avoid the ethical duty of being required to disclose his identity to the seller.
    (2) Full disclosure must be made by the licensee to a seller of all information known to him or her relevant to the client’s affairs, and this includes the identity of the potential buyer.
    (3) Ethically, the licensee should disclose the identity of the potential buyer, but legally there is no requirement to do so.
    (4) Until an actual offer is presented, it is not relevant for the seller to know the identity of the purchaser, and no disclosure is required.

Answer 19

19. Answer: 2
    This scenario highlights the conflict of interests that can arise for a listing representative who has a buyer who would like to keep their identity from the seller. Once the potential buyer=s identity is known to the licensee, the licensee=s fiduciary duty creates an ethical, and legal, requirement to disclose that identity and all other information that might be relevant to the seller. This duty arises as soon as the information is known, not once the offer is made. If the athlete had used their solicitor to approach the licensee initially (so that the licensee never met the athlete), the licensee would not have known the identity of the seller and therefore couldn’t have disclosed it.

Question 20

20. John owns a condominium in Kitsilano, in an area in which many of the condominium developments are known to have suffered leaks. Despite being an inexperienced licensee working on your first sale, John has agreed to list the property with you. Soon after the property is listed, you show the townhouse to Jennifer, a prospective purchaser. Jennifer loves the townhouse and wants to buy it. Jennifer informs you that the funds for the purchase are currently held in a complicated blind trust managed by an offshore corporate trustee. She says not to worry and that with your help the financing can be arranged within a week. Based on your understanding of your ethical obligations, and assuming your seller is in agreement, what steps should you take before a contract of purchase and sale is drafted?
    A. Make appropriate inquires to determine whether the condominium has been subject to leaks.
    B. If you have knowledge of unrepaired and undiscoverable leaking in the condominium, disclose this information to Jennifer.
    C. Unless you are familiar with this type of financing, you should get assistance from a colleague or decline to act for John.
    (1) A only
    (2) A and B only
    (3) A and C only
    (4) All of the above

Answer 20

20. Answer: 4
    A licensee=s duty to ascertain all the facts as well as the duty to provide accurate information to third parties suggests that the proper course of action would include options A and B. If a licensee is unable to perform a service with a high degree of skill and expertise, the licensee should either get assistance or decline to act for the client.