assignment 6

Question 1

Which of the following is the BEST description of the relationship between professionalism and ethics?

1. Ethics is a crucial element of the larger concept of professionalism.
2. Ethics is a core concept in the Real Estate Services Act, while professionalism is not.
3. One can be both unprofessional and ethical at the same time.
4. Professionalism and ethics are the exact same thing.

Answer 1

Correct Answer: 1

Option (1) is correct because ethics is a key component of the concept of professionalism.

Option (2) is incorrect because professionalism and ethics are both core concepts in the Real Estate Services Act.

Option (3) is incorrect because if a person is unprofessional, they are likely also acting unethically.

Option (4) is incorrect because ethics is the group of morals that govern a person’s behaviour, while professionalism refers to the overall competence of a professional, which includes ethics.

Question 2

Which type of misconduct, as described in the Real Estate Services Act, focuses more on the overall professionalism of a licensee, over and above technical compliance with legislation and the Real Estate Services Rules?

1. Professional misconduct
2. Lapse of character
3. Breach of civility
4. Conduct unbecoming a licensee

Answer 2

Correct Answer: 4

Option (4) is correct because conduct unbecoming a licensee is conduct that is contrary to the interests of the public; undermines public confidence; or brings the real estate industry into disrepute.

This is above and beyond technical compliance with legislation and the Real Estate Services Rules (the “Rules”).

Option (1) is incorrect because professional misconduct is concerned with technical compliance with legislation and the Rules.

Options (2) and (3) are incorrect because lapse of character and breach of civility are not types of misconduct explicitly mentioned by the Real Estate Services Act.

Question 3

Which of the following is one of an individual licensee’s roles in building and maintaining trust in the real estate profession?

1. Acting in accordance with broader ethical principles
2. Establishing strong practice standards for licensees
3. Creating education initiatives and opportunities
4. Setting stringent standards to enter and remain in the profession

Answer 3

Correct Answer: 1

Option (1) is correct because acting in accordance with broader ethical principles is an individual licensee’s role in building and maintaining trust in the real estate profession.

Options (2), (3), and (4) are incorrect because they are each examples of the regulator’s role in building and maintaining trust in the profession.

Question 4

What is the “Headline Test”?

1. A test that clients of a licensee can use to determine whether the licensee’s actions were professional
2. A test that the British Columbia Financial Services Authority uses to determine whether a licensee has committed professional misconduct
3. A test that licensees can use to evaluate whether a decision or action aligns with their overall professionalism, that considers how they would feel if their decision or action were to appear as a headline of a newspaper or news site
4. A test that is set out in the Real Estate Services Rules that licensees must follow in their fulfilment of their duties to clients

Answer 4

Correct Answer: 3

Option (3) is correct because the “Headline Test” refers to a decision maker evaluating their own decisions and actions by considering how they would feel if the decision or action were to appear as a headline in a newspaper or news site.

Option (1) is incorrect because the “Headline Test” is not used by clients of a licensee, but by licensees themselves.

Option (2) is incorrect because the British Columbia Financial Services Authority determines if a licensee has committed professional misconduct by deciding whether the licensee has acted contrary to the Real Estate Services Act, not by imagining what might happen if their actions were reported in the media.

Option (4) is incorrect because the “Headline Test” is not a test set out in the Rules.

Question 5

Which of the following is NOT an area of law where duties owed by licensees to their clients arise?

1. Contract law
2. Agency law
3. Public law
4. Tort law

Answer 5

Correct Answer: 3

Option (3) is correct because public law is the law related to the relationship between individuals and the government. It does not govern the relationship between a licensee and their client.

Options (1), (2), and (4) are incorrect because they are areas of law where duties owed by licensees to their clients arise.

Question 6

Ava is representing Gerome in the sale of his property. Ava receives an offer for Gerome’s property that is $100,000 below the listing price. Gerome tells Ava that he wants to accept the offer. Rather than informing the buyer of this fact, Ava tells the buyer that Gerome will not accept anything less than $85,000 under the list price. She does this because she truly believes that the buyer will be willing to pay more, which is better for Gerome, and she wants him to be completely satisfied with her representation of him. Which of the following duties, set out in the Real Estate Services Rules, has been breached?

1. The duty to maintain confidentiality
2. The duty to use reasonable efforts to discover relevant facts
3. The duty to avoid conflicts of interest
4. The duty to follow lawful instructions

Answer 6

Correct Answer: 4

Option (4) is correct because Ava has breached her duty to follow lawful instructions when she did not accept the offer on Gerald’s behalf after he instructed her to do so.

Option (1) is incorrect because Ava did not reveal any confidential information of Gerome to the buyer.

Option (2) is incorrect because Ava did not have to discover relevant facts in this scenario.

Option (3) is incorrect because there is nothing in this fact scenario that suggests conflicting interests.

Question 7

Jiaxin is assisting Harvey in the sale of his property. Jiaxin receives an offer for Harvey’s property from a good friend of hers; however, she does not mention her relationship to Harvey when she presents the offer to him. Jiaxin has likely breached all of the following duties, set out by the Real Estate Services Rules, EXCEPT the duty to:

1. maintain confidentiality
2. act in the client’s best interests
3. disclose conflicts of interests
4. disclose all known material information

Answer 7

Correct Answer: 1

Option (1) is correct because the fact scenario does not suggest that Jiaxin has disclosed any of Harvey’s confidential information.

Option (2) is incorrect because Jiaxin has not acted in Harvey’s best interests by withholding the fact that the offer is from her friend.

Option (3) is incorrect because Jiaxin has breached the duty of disclosing conflicts of interest by not advising Harvey that the offer comes from her friend, with whom she has a personal relationship.

Option (4) is incorrect because the duty to disclose all known material information requires the disclosure of any information that might impact the client’s decision, which includes the identity of the offeror and whether the licensee has any relationship with the offeror.

Question 8

Licensees who accept clients involved in transactions outside of their area of expertise primarily risk breaching:

1. the duty of full disclosure.
2. the duty to obey lawful instructions.
3. the duty to act with reasonable care and skill.
4. the duty of confidentiality.

Answer 8

Correct Answer: 3

Option (3) is correct because when acting outside of their area of expertise, licensees risk breaching the duty to act with reasonable care and skill for their clients.

Option (1) is incorrect because the duty of full disclosure involves disclosing information to a client that is known to the licensee, not dealing with transactions beyond their expertise.

Option (2) is incorrect because acting according to a client’s lawful instructions is breached when a licensee acts outside off their scope of authority or the express instructions of their client.

Option (4) is incorrect because the duty of confidentiality involves keeping client information confidential unless otherwise required to disclose the information. It does not apply to accepting a new client in an area outside of one’s expertise.

Question 9

Kamal, a licensee, is faced with an ethical dilemma relating to something that one of his clients is asking him to do. As part of his thinking about the dilemma, Kamal writes down the names of everyone that would be impacted by any decision he makes to resolve the dilemma. Which step of the Framework for Ethical Decision Making is Kamal applying?

1. Identify the stakeholders
2. Consider the situation and identify the potential ethical issues
3. Evaluate each alternative in terms of ethical consequences
4. Specify feasible alternatives for evaluation

Answer 9

Correct Answer: 1

Option (1) is correct because identifying who would be impacted by either the current situation and/or Kamal’s decision is a part of identifying stakeholders.

Option (2) is incorrect because considering the situation and identifying the potential ethical issues involves determining the relevant facts, what ethical issues are at play, and what legal and ethical duties are owed.

Option (3) is incorrect because evaluating the alternatives involves determining if the acts are in compliance with the Real Estate Services Rules, and if broader ethical expectations are being met.

Option (4) is incorrect because specifying feasible alternatives involves determining what courses of action are possible in the situation, and what short- and long-term considerations are relevant.

Question 10

Which of the following is NOT an explicit obligation found directly in the Real Estate Services Rules?

1. Maintaining the confidentiality of your client’s information
2. Advising your clients to seek independent professional advice on matters outside of your expertise
3. Doing unto others as you would have them do unto you
4. Acting in the client’s best interests

Answer 10

Correct Answer: 3

Option (3) is correct because the Golden Rule of “Do unto others as you would have them do unto you” is not an explicit obligation found in the Real Estate Services Rules (the “Rules”).

It is instead a guiding principle for behaviour, as well as a component of other ethical codes, such as the Canadian Real Estate Association’s REALTOR® Code. Options (1), (2), and (4) are incorrect because they are all explicit obligations that are found in the Rules.

Question 11

In most cases, where should licensees first report an instance of misconduct observed within their brokerage?

1. To the British Columbia Financial Services Authority
2. To their managing broker
3. To the Real Estate Errors and Omissions Insurance Corporation
4. To their real estate board

Answer 11

Correct Answer: 2

Option (2) is correct because if a licensee wants to report an instance of misconduct, under section 29 of the Real Estate Services Rules, they should first notify their managing broker.

Option (1) is incorrect because, while licensees are not precluded from reporting directly to the British Columbia Financial Services Authority, in most cases, reports of misconduct should first be directed to their managing broker.

Option (3) is incorrect because the Real Estate Errors and Omissions Insurance Corporation is contacted when a licensee has a claim or potential claim made against them for an error or omission, not when a licensee wishes to report suspected misconduct.

Option (4) is incorrect because not all licensees belong to the same (or any) real estate board, so reporting misconduct to the board may not result in any action.

Question 12

Which ethical duty in the Real Estate Services Rules imposes a responsibility to non-clients upon licensees?

1. The duty to use reasonable efforts to discover relevant facts
2. The duty to act honestly
3. The duty to disclose all known material information
4. The duty to have written service agreements

Answer 12

Correct Answer: 2

Option (2) is correct because section 33 of the Rules imposes the common law standard of negligence, and the requirement to act honestly, upon licensees when providing real estate services to both their clients and to non-clients.

Options (1) and (3) are incorrect because they are duties owed by licensees to their clients, not to non-clients.

Option (4) is incorrect because the requirement for a written service agreement does not apply to non-clients.

Question 13

The final step of the Framework for Ethical Decision Making is to:

1. evaluate each alternative in terms of ethical consequences.
2. specify feasible alternatives for evaluation.
3. make and justify your choice.
4. identify the stakeholders.

Answer 13

Correct Answer: 3

Option (3) is correct because the fifth and final step in the Framework for Ethical Decision Making (the “Framework”) is to make and justify your choice.

Option (1) is incorrect because evaluating the alternatives is step four of the Framework.

Option (2) is incorrect because specifying feasible alternatives for evaluation is step three of the Framework.

Option (4) is incorrect because identifying the stakeholders is step two of the Framework.

Question 14

Evelyn is a new licensee in the Vancouver area who has an extensive network due to her previous career. She has been flooded with business, to the point that she is feeling overwhelmed. In this situation, what professional duty is MOST at risk of being breached?

1. The duty to only act within the scope of authority given by the client
2. The duty of confidentiality
3. The duty to act with reasonable care and skill
4. The duty to disclose all known material information

Answer 14

Correct Answer: 3

Option (3) is correct because if a licensee takes on too many clients at once, they are at risk of not being able to provide real estate services with reasonable care and skill.

Option (1) is incorrect because acting within the scope of authority given by a client is likely not related to how many clients a licensee has.

Option (2) is incorrect because there is nothing to indicate that having many clients will cause Evelyn to breach her duty of confidentiality to each client.

Option (4) is incorrect because the duty of disclosure is not the most likely duty to be breached, based on the facts.

Question 15

Licensees demonstrate integrity by having accountability for their actions by:

1. exhibiting professional courtesy to fellow licensees.
2. not disclosing a client’s personal information, bottom line, or motivation without authorization.
3. reporting their own mistakes to their managing broker.
4. providing clients with information on how to get additional expertise/advice when needed.

Answer 15

Correct Answer: 3

Option (3) is correct because a licensee who reports their own mistakes to their managing broker is taking accountability for their actions, and therefore demonstrating integrity.

Option (1) is incorrect because exhibiting professional courtesy to fellow licensees is an example of behaving professionally, not demonstrating accountability specifically.

Option (2) is incorrect because not disclosing a client’s personal information is an example of maintaining confidentiality, not having accountability for their actions.

Option (4) is incorrect because providing clients with information on how to get additional expertise when needed is an example of showing integrity by acting with due care and diligence, not by having accountability.

Question 16

Which of the following is an exception to the professional duty to maintain the confidentiality of a client’s information?

1. The licensee is required by law to disclose the information
2. The licensee only discloses the confidential information to another person orally (rather than in writing)
3. The licensee feels that disclosure is in the best interests of the client
4. The licensee discloses the confidential information by an honest mistake

Answer 16

Correct Answer: 1

Option (1) is correct because one exception to the duty of confidentiality owed to a client is when a licensee is required by law to disclose the information. The other exception to this duty is when a licensee has been authorized by the client to disclose the information.

Option (2) is incorrect because disclosing confidential information orally, rather than in writing, is still a violation of the duty of confidentiality.

Option (3) is incorrect because even if the licensee feels that revealing the information is in the client’s best interest, the duty of confidentiality prevents them from doing so.

Option (4) is incorrect because even if a licensee makes an honest mistake and reveals confidential information, this is still a breach of their client’s confidentiality.

Question 17

Which of the following is NOT an example of a conflict of interest in the real estate industry?

1. A buyer’s agent is acting for two couples who are both looking for very similar residential properties in the same area, and they both have expressed interest in the same property.
2. A commercial agent has been offered sizable referral fees by a renovation company specializing in office space renovations in exchange for recommending clients who have recently purchased office space through the commercial agent.
3. A listing agent’s client is not in a hurry to sell and wants to be patient to wait for an offer at or near the asking price, but the listing agent is hoping to sell more quickly in order to get the deal wrapped up before their vacation begins.
4. A licensee purchases property for themselves from an unrepresented seller.

Answer 17

Correct Answer: 4

Option (4) is correct because a licensee who purchases a property for themselves from an unrepresented seller has a duty to disclose their status as a licensee, but does not have a conflict of interest.

Option (1) is incorrect because a licensee who has two clients interested in the same property cannot act in the best interests of both clients, so there is a conflict of interest.

Option (2) is incorrect because a licensee who will receive remuneration for recommending a specific company is in a conflict of interest as they may value receiving the referral fee more than acting in the best interests of their client.

Option (3) is incorrect because a licensee who wants to sell a client’s property quickly is in a conflict of interest, as they may advise their client to take a lower offer instead of waiting for one closer to the asking price.

Question 18

Which of the following is TRUE with respect to the duty to report?

1. In all cases, a licensee should first report misconduct to their managing broker.
2. The duty to report reflects the idea that the integrity and reputation of the real estate industry is a shared responsibility between the regulators and licensees.
3. The general duty to report is a unique duty to real estate licensees, not shared by other professions.
4. The British Columbia Financial Services Authority will not assist licensees in deciding whether they should report certain misconduct, as this is the responsibility of the licensee to decide.

Answer 18

Correct Answer: 2

Option (2) is correct because the duty to report reflects the fact that maintaining the integrity of the real estate profession is the shared responsibility of the British Columbia Financial Services Authority (BCFSA), and members of the profession. The shared duty to report helps to hold every member of the profession to the highest standards.

Option (1) is incorrect because while licensees should generally report incidents of misconduct to their managing broker, if they are concerned about how their managing broker is handling an instance of misconduct, or it is their managing broker who committed the professional misconduct, they should report directly to BCFSA.

Option (3) is incorrect because the general duty to report is shared amongst other professions, including lawyers, chartered professional accountants, and health care professionals.

Option (4) is incorrect because if a licensee is unsure of whether to report misconduct, they may consult with BCFSA for further guidance about the conduct observed.

Question 19

You are a licensee who has been hired to list a property for a seller who is about to leave town for a vacation. The seller sternly tells you in writing that they want to relax on their vacation and do not want to be contacted about any offers for their property until they are back in town in seven days. On the second day of their vacation, you receive a very strong offer for their property that is only open for acceptance for 24 hours. Which of the following is TRUE?

1. Because the offer will expire before the seller returns from vacation, you must contact them to communicate the offer.
2. This situation demonstrates the fact that, sometimes, a licensee’s duties under the Rules conflict with each other.
3. Not communicating the offer to the seller immediately is a serious breach of the duty to avoid conflicts of interest.
4. Telling the buyer’s agent that the seller instructed you not to present them with any offers until they return from their vacation is a clear breach of the duty of disclosure.

Answer 19

Correct Answer: 2

Option (2) is correct because, in this situation, you are obeying the client’s lawful instructions by not contacting her while she is on vacation, and there is no conflict with the duty to present offers in a timely manner, as your client has specifically instructed you not to contact her. However, you may not be acting in the client’s best interest by not presenting the offer to her.

Option (1) is incorrect because the client has clearly communicated that she is not to be disturbed while on vacation, so you should not communicate the offer to her.

Option (3) is incorrect because there is no conflict of interest present in this scenario.

Option (4) is incorrect because the duty of disclosure relates to what a licensee discloses to a client, not what a licensee discloses to a third party.

Question 20

John owns a condominium in Kitsilano that he is looking to sell. 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, an unrepresented prospective purchaser. Jennifer loves the townhouse and wants to submit an offer right away. 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, what should you do before a contract of purchase and sale is drafted?

1. Delay the sale so that you can learn more about this type of financing, in order to act in the best interests of your client
2. Refuse to present the offer to John, as it would be a risky transaction for him
3. Recommend to Jennifer that she should officially contract you to be her agent, so that she is better protected in this transaction
4. Seek assistance from a colleague or decline to act for John, in order to meet your duty to advise your client to seek independent professional advice on matters outside your expertise

Answer 20

Correct Answer: 4

Option (4) is correct because you have an ethical obligation to advise your client to seek independent professional advice on matters outside of your expertise. You should get assistance from a colleague or decline to act for John, as this is your first sale and you are likely unfamiliar with blind trusts and the financing help Jennifer needs.

Option (1) is incorrect because delaying the sale so that you can learn more about the type of financing is not necessarily acting in the best interests of your client, as it may be in John’s best interest to complete the sale quickly and no other buyers are interested in his condominium.

Option (2) is incorrect because refusing to present the offer to John would be a breach of the duty to act in John’s best interests, and a breach of the duty to present offers in a timely manner.

Option (3) is incorrect because acting for Jennifer in this transaction would be a type of dual agency, which would be both a conflict of interest and a contravention of the Real Estate Services Rules.