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Real Estate > Chapter 2 RESA (& REDMA) > Flashcards

Chapter 2 RESA (& REDMA) Flashcards

1
Q

What is RESA and REDMA?

A

RESA = Real Estate Services Act
REDMA = Real Estate Development Marketing Act
These two statues were established in 2004 and came into force by 2005.

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2
Q

Purposes of REDMA. Name 2.

A

REDMA imposes requirements related to marketing on developers who sell various forms of real estate developments, such as strata lots, cooperatives, shared interests, and timeshares to….

  1. Consumer protection focus - to protect purchasers from requiring developer to disclose all material facts about the development

  2. To enable a efficient and profitable operation of real estates, a key economic driver in BC
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3
Q

What is RECBC? Its power was transferred on year 2016 to whom?

A

Real Estate Council of BC.

Transferred to the Superintendent of Real Estate.

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4
Q

In year 2021, RESA was amended substantially again to integrate ____ and _____ with the ______.

A

RECBC (Real Estate Council of BC)
OSRE (Office of the Superintendent of Real Estate)
BCFSA (BC Financial Services Authority)

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5
Q

What does BCFSA do? Who is the chief executive officer of BCFSA?

A

Oversight of credit union, trust companies, insurance companies, mortgage brokers, and pension plans.

In year 2021, RESA’s amendment gave power to BCSFSA to make changes or create Real Estate Services Rules.

Superintendent is the chief executive officer of BCFSA.

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6
Q

Purpose of RESA:

A

To ensure those who are offering real estate related services to the public do so in a responsible matter.

Elaboration from text book; RESA….

  1. ensure that licensee meets minimum competency
  2. setting a certain standard to ensure appropriate conduct of behavior
  3. appointing BCFSA and empowering the Superintendent to perform key regulatory functions under RESA
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7
Q

Activities that require a license mentioned in RESA:

A
  1. rental property management services
  2. strata management services
  3. trading services
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8
Q

Give 3 examples of rental property management services.

A
  1. trading services in relation to the rental of the real estate
  2. collecting rents / security deposits
  3. manage the real estate on behalf of the owner
    - - making payments to third parties
    - - negotiating or entering into contracts
    - - supervising employees or contractors hired or engaged by the owner
    - - managing landlord and tenant matters
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9
Q

Give 2 examples of strata management services.

A
  1. collect or hold strata fees, contributions, or levies
  2. exercise delegated powers and duties of a strata corporation or strata council, including
    - - making payments to third parties on behalf of the strata corporation
    - - negotiate or enter contracts on behalf of the strata corporation
    - - supervise employees or contractors
    - - enforce bylaws or rules of the strata corporation
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10
Q

Who are exempted from the license under RESA?

Exemptions within RESA.

A
  1. A person acting under the authority of court
  2. A trustee in bankruptcy / liquidator
  3. Administrator of an estate
  4. A trustee of will
  5. a financial instituition
  6. a practising lawyer
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11
Q

What is a strata corpepration?

A

A legal entity create by the deposit of a strata plan in the land title office.

The corporation’s responsibilities are set out in the Strata Property Act and include duty to manage, repair, maintain and. insure common property and common assets.

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12
Q

What are trading services?

A

Activities related to purchase and sales transactions, lease transactions, and assignment of lease and contract (of transaction)

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13
Q

Interests in real property such as cooperative interest, shared interest in land or time share interest are defined in….?

A

REDMA - Real Estate of Development Marketing Act

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14
Q

Give 2 downsides of listing one’s own property for sales.

A
  1. Transactions are not covered by the Indemnity Plan, the mandatory errors and omissions insurance coverage for all licensees in BC
  2. Buyer will make allegations that the licensee abused their position and experience as a licensee and took advantage of the buyer
    - Licensee must provide the buyer with a disclosure of their personal interest in the trade (as the seller)
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15
Q

Exemptions within the requirement to be licensed. Give 2 examples.

A
  1. Employees of a principal that are providing real estate services to or on behalf of that principal
  2. collection agents acting in the course of their business
  3. individuals in mining and oil and gas activities
  4. Governments and gov. corporations.
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16
Q

Who are exempted from needing a license with respect to trading services?
Give 3 examples

A

1 . employees of the developer

  1. notaries
  2. appraisers
  3. auctioneers
  4. accountants in relation to purchasing and sales of business
  5. notaries
  6. individuals who refer others to a licensee / provide generation information to assist owners to sell or publish the information contained in an ad of real estate
  7. agents of expropriating authorities
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17
Q

The employees of developers are exempted to have licenses under what requirements? (as defined in REDMA)

A
  1. is only permitted to provide trading services on behalf of their developer employer,
  2. must disclose in writing to potential buyer that the employee is not licensed under RESA but is only acting on the developer’s behalf and not as the behalf of the principal
  3. The discloser must be made promptly before entering any agreement
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18
Q

As a licensee, if you are a strata lot owner and you want to sit in a strata council member (in a building where you own a unit), what should you do?

A

RESA considers sitting on a strata council to be a strata management service, thus is a type of real estate service. However RESA permits under section 96 that licensee who is also a strata lot owner to serve as a strata council member, or otherwise provide strata management services voluntarily.

steps
1. disclose in writing to the strata corporation that even though you are licnsed under RESA you are not acting as a licensee under section 96

  1. A copy of the written disclosure must be provided to the mangaging broker of your brokerage.
    * no authority to withdraw any funds from the strata corporation and cannot receive remuneration for it
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19
Q

What cannot an unlicensed assistant do? Name 3

A
  1. host an open house or solicit sellers or buyers
  2. show a property to a client or prospective buyer
  3. provide advice or guidance to a consumer regarding a real estate contract
  4. make or negotiate an offer
  5. communicate with consumers regarding real estate transaction
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20
Q

What can an unlicensed assistant do?

A
  1. complete contract forms with information approved by a licensee
  2. answer the phone, take messages, forward calls
  3. perform office filing and bookkeeping
  4. draft documents for approval and signature by licensee
  5. place or remove signs of property
  6. witness signatures
    7, arrange for repairs on a rental property

*unlicensed assistants of property management licensees are permitted to show rental properties)

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21
Q

What is an agency? Definition of it is?

A

A relationship in which one person is authorized by another person (“the principal”) to act on their behalf in dealing with third parties.

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22
Q

What is the limit per license amount for the Real Estate Errors & Omissions Insurance Fund under the Indemnity Plan?

And how much is the deductible fee payable by each license?

A

$1 million

$2000

*However if a claim was dismissed at trial, the E&O insurance corporation had incurred legal costs in defending the matter

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23
Q

Will the Errors and Omissions Indemnity Plan cover any fines, sanctions or penalties imposed on a licensee by BCFSA?

A

No. Pay from pocket if you get disciplinary penalty

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24
Q

RESA continues 2 corporations that were established before RESA. What are they?

A
  1. Errors and Omissions Insurance Corporation (E&O)

2. Real Estate Compensation Fund Corporation (“Special Compensation Fund”)

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25
Q

What is the Special Compensation Fund?

A

RESA requires the Compensation Fund Corporation to establish a fund known as the Real Estate Special Compensation Fund.

Intended to provide compensation to persons in relation to a real estate transaction for funds that were misappropriated, or intentionally not paid or accounted for by a licensee, officers or directors of a brokerage, or employees or independent contractors of the brokerage.

Funded by assessment from licensees, paid as part of the licensing fees paid to BCFSA.

The loss:

  1. misappropriation of funds
  2. intentional failure to pay
  3. fraud
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26
Q

Keywords of fiduciary

A
  • trust , obliged , act solely, benefit
    A person who holds a position of trust with respect to someone else and is obliged by virtue of the relationship of trust, to act solely on behalf of other person’s benefit
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27
Q

Key fiduciary duties are….? (name 3)

A
  1. The duty of loyalty
  2. The duty fo avoid conflicts of interest
  3. The duty of full disclosure
  4. The duty of confidentiality
  5. The duty to obey lawful instructions
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28
Q

What is BCFSA?

A
  • British Columbia Financial Services Authority
  • A Crown regulatory agency
  • regulatory responsibilities
  • the financial services sector
  • real estate services, real estate development marketing
    others: mortgage brokerage, credit unions, pensions plans, trusts and insurance companies

History
- early 2021, BCFSA was integrated with RECBC and OSRE (former regulators under RESA) to create a single regulator of BC financial service sector

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29
Q

What is the main objective of BCFSA?

A

Strengthen consumer protection in the real estate services industry to ensure that members of the public can have confidence in the standards of practice provided by licensed real estate professionals.

Keywords: consumer protection, confidence in standards of practice, licensed real estate professionals

30
Q

What are the roles of Superintendent?

A

RESA places in the Superintendent a number of key powers and duties, such as:

  1. all licensing applications must be made to the Superintendent
  2. the chief of executive officer of BCFSAA who is appointed by the BCFSA Board of Directors
  3. carry out investigations and disciplinary functions

*must fulfill duties under RESA
就是RESA的头和执行官

31
Q

From what perspective can you explain to your clients about Special Compensation Fund?

A

Special Compensation Fund protects the client so that if their funds (such as a deposit ) are misappropriated, they will receive compensation through the Special compensation Fund. Or if they are owed payment intentionally by licensee, or fraud.

32
Q

Name two real estate organizations

A
  1. CREA - Canadian Real Estate Association
    - national organization
    - licensees and real estate boards across the country + provincial real estate associations
    Mission: real estate watchdog of federal gov over national legislation
    - Realtor code (rules and conducts must be abide if you want to be known as realtor)
  2. BCREA - BC Real Estate Association
    - 10 member boards+ 23000 Realtors
    - provincial issues, government relations, forms, continuing professional courses, network
    * PDP (professional development program) - a continuing program required for membership in a real estate board
    - provide economic forecast and presentation on topics such as housing and mortgage rate forecasts, quarterly and yearly sales activities
  3. Real Estate Boards

Each licensee has option to become a member of one of the 10 local real estate boards which include:

  • Association of interior Realtors
  • BC Northen real estate board….(by area)
  • ** Real estate board manage listings of real estate through the MLS (Multiple Listing Service)
  • ** Membership is not a MUST but in order to access MLS and use the Realtor trademark, you must join as member
  1. REIBC (Real Estate Instituition of BC)

Focus on advancing the standards of education and professional development of its member. “RI” indicating professional members ho meet the education and experience standards set by REIBC

  1. REIC (Real Estate Instituition of Canada)
    Advance opportunities. The resource centre, awarding professional designations, networking opportunities, promote real estate industry.

Designation granted by REIC - FRI (Fellow of Real Estate Institute), CLO (Certified Leasing Officer), CPM (Certified Property Manager), …etc

6.

33
Q

What is the Realtor Code?

A
  1. History and purpose
  2. Code of ethics - 1 page
  3. Guiding principle - golden rule: do unto them as you would have them do unto you
  4. Standards of Business practice - 29 articles

It is amended time to time in accordance with the needs of the changing real estate market

34
Q

Under section 7 of RESA, can managing brokers, associate brokers, and representative accept remuneration in relation to real estate services other than their brokerage?

A

No. they are tied on to single brokerage only (except managing broker may be licensed in respect of multiple brokerages )

35
Q

Services agreements will be between…
A. Client and individual licensee or
B. Client and the brokerage

A

B. Client and the brokerage.

Brokerage provide real estate services through managing broker, associate broker and representative.

36
Q

What should all branch offices of brokerage should have?

A

A brokerage license + a managing broker

The brokerage license depends on the license of the managing broker and the services provided by the brokerage will be bound to the types of license (strata management / rental property management / trading services - could be one or more or all)

37
Q

Why do brokerages have policies in place? And such as what policies?

A

Most common would be for licensees to report probs as soon as possible so it allows the brokerage to take steps to minmize the damage resulting from the licensee’s misconduct.

The policies is to mitigate the risks of having vicarious liability (where brokerage may be held liable if wrongs were committed by the licensee who is acting on behalf of the brokerage)

38
Q

Within 120 days after the end of each fiscal year of the brokerage, what should the brokerage file? Name 3.

A
  1. financial statements
  2. accountant’s report
  3. brokerage activity report
39
Q

What are the responsibilities of a managing broker?

A
  1. exercise of the rights of the brokerage
  2. performance of the duties of the license
  3. control and conduct real estate businesses
  4. supervision of the associate brokers and representatives under the brokerage
40
Q

Who is the associate broker?

A

A licensee who meets the educational and experience requirements to be a managing broker but who is providing real estate services under the supervision of the managing broker.

41
Q

Is trading services licensee be allowed to prepare a lease agreement with a prospective tenant?

A

Yes. However cannot enter into this contract or any other contract on behalf of the property owner.

A trading services licensee also cannot

  1. collect rent from tenants
  2. sign tenant agreement, negotiate contracts (other than preparing the lease agreement),
  3. conduct move-in inspection,
  4. supervise contractors hired by the owner
  5. Manage landlord-tenant matters.

All these above are not within the scopes of “trading services”.

42
Q

If you help your client who is a landlord to find a tenant, can you get remuneration as a trading services licensee?

A

Yes because finding a prospective tenant is within the scopes and you can get remuneration as long as it is within the scope of “trading services”.

However, you cannot get paid monthly as continuing property management services are not permitted, you can charge the extra service (and the agreement should have the extra service written) and charge an upfront lump sum fee for assisting the client in finding a tenant and facilitating the relevant trade in real estate.

43
Q

Can Trading Services licensee collect security deposits from tenants on behalf of a property owner? Can Rental Property Management licensee do the same?

A

Yes for both.

One other services shared by both licensees would be to assist landlord to find tenants.

44
Q

Can Rental Property Management Licensee help a prospective tenant to find a property to rent?

A

No. But Trading Services Licensee may.

45
Q

As a trading services licensee, if you own a property and you want to rent it, whom should you disclose in writing to?

A

First, you may provide the services in your own name and not through a brokerage.

Then you should disclose in writing to:
1. tenant
2. your family member that you are representing
3. managing broker
that you will be providing the rental property management services on your own behalf or on behalf of a family member, and not as a licensee.

And you should provide it for free.

46
Q

What is a trust account?

A

An account where money is deposited by one for the benefit of another. The money is devoted to a particular purpose and cannot be used for other purposes.

The principal = the party whose money is with the brokerage

47
Q

What should the licensee promptly pay or deliver the money to brokerage that should be placed in the trust account?

A
  1. Money received from a principal
  2. Remuneration

Except for cheques, drafts or money orders payable to third parties, these don’t need to go into the trust account. This is approved by RESA.

48
Q

Once money is deposited into the brokerage’s trust account. Under what circumstance may the brokerage is permitted to withdraw? Name 3

A
  1. To pay to whomever the principal deposit the money for
  2. Court order (dispute arisen between the parties over the right to it)
  3. Remuneration to licensee
  4. Interest paid to the Real Estate Foundation
  5. Money paid into the trust account by mistake
49
Q

Who may file a complain to BCFSA if the person believes that a licensee have committed professional misconduct or conduct unbecoming a license?

A

Any person, whether the person is a licensee or not.

Professional misconduct = 不规范的service, 和RESA冲突的 , 不合格的
Unbecoming a licensee = 严重影响public / industry的

50
Q

What is a consent order?

A

An order made by BCFSA against a licensee in cases of professional misconduct or conduct unbecoming a licensee where the licensee has consented to the order rather than disputed the notice of hearing.

51
Q

What if someone file a complaint against a licensee regarding professional misconduct or conduct unbecoming a licensee… what happens to the process?

A

If it is minor issue… maybe you will just get a notice from BCFSA, and write a written undertaking saying you will comply.

If it is more serious, it will enter a formal disciplinary process:

  1. get a notice 21 days in advance stating the nature of the complaint, time and place set for the hearing, and that BCFSA will proceed the hearing with or without the licensee
  2. if you agree to just take the order and does not want to dispute the allegations, you can just sign a consent order, which is an agreement with BCFSA - no need for hearing then.
  3. If you want to dispute, a discipline hearing will be held. Before a hearing, there might be a pre-hearing conference to help make sure that all parties are fully prepared.
  4. Outcome: dismiss / sanctions
  5. If you get a order from BCFSA and want to appeal - go to Financial Services Tribunal within 30 days of decision
  • may call on witnesses
  • hearings can be written or oral or both forms
52
Q

What is an urgent order?

A

An order made by BCFSA against a licensee in cases of professional misconduct or conduct unbecoming a licensee in situations where it would be detrimental to the public interest to proceed through the traditional route of completing a full investigation or holding a discipline hearing.

53
Q

How much would BCFSA require the licensee to pay a discipline penalty ?

  1. brokerage maximum amount
  2. licensee maximum amount
A
  1. Brokerage or former brokerage - 500k
  2. Licensee - 250k

*PER CASE!!!!

So if you break rules dealing with 5 clients, it will be 250k * 5

54
Q

Definition of offences to RESA.

A

A person or corporation who have offenses that may cause conviction (监狱！)

on top of the fine … the corporation is 1.25 million and the subsequent conviction is 2.5 million. The individual is 1.25 (not more than 2 years), the following is 2.5 million (not more than 2 years of prison)

Offenses are :

  • failing to hold a real estate license
  • fail to pay funds into a trust account (拿了钱卷走)
  • improperly withdrawing money from trust account
  • interfering with an investigation
  • fail to comply with an order of BCFSA
  • making a false statement in a record required by BCFSA
55
Q

How much is the maximum of administrative penalties under RESA and what other penalties might come with it?

A

Max of 100k. Penalties also may require the licensee to complete specific courses or training, and may involve restrictions or conditions on one’s license.

56
Q

What is the intention of having administrative penalties?

A
  1. promote compliance with legislative requirements
  2. a measured response to certain non - compliance - contribute to a progressive discipline system (惩罚的SOP)
  3. an intermediate step between a letter of advisement (warning) and disciplinary action initiated by a Notice of Discipline Hearing
57
Q

What actions are specified as offences under section 118 of RESA?

A
  1. failing to hold a real estate license
  2. interfering with an investigation
  3. fail to comply with an order of BCFSA
  4. make false statements in a record required by BCFSA
  5. fail to pay funds into a trust account
  6. improperly withdrawing money from the trust account
58
Q

There are 6 types of development properties Name 5. What act regulates the marketing within BC that applies to these properties?

A
  1. Subdivisions
  2. Strata properties
  3. Cooperatives
  4. Time share Interest
  5. Shared Interests in Land
  6. Residential leasehold complexes

REDMA = Real Estate Development Marketing Act

59
Q

What is the purpose of REDMA?

A

Protect purchasers by requiring devleopers who market to to:

  1. meet any preliminary requirements of approvals to be marketed
  2. pay cost of utilities or other related services to ensure the purchaser’s title upon purchase
  3. file a disclosure statement required by BCFSA
60
Q

If you are acting on behalf of a developer, what should you verify?

A
  1. a disclosure statement has been filed with BCFSA before offering any sale
  2. provide the disclosure statement to the purchaser to obtain the written statement from the purchaser
  3. review the deposit provisions in agreement to see if they are consistent with the deposit provisions in the disclosure statement
  4. know that REDMA applies to properties outside BC if those properties are marketed and sold in BC
61
Q

What is a subdivision ?

A

A land that is divided into lots or parcels. A subdivided lot in a development property is a DEVELPMENT UNIT.

62
Q

What buildings are exempted from the requirements of REDMA (obtaining a disclosure statement)?

A
  1. marketing of dev. units zoned for industrial / commercial purpose
  2. leases of 3 years or less
  3. sales or leases subject to Securities Act requirements
  4. subdivision lots within municipalities
63
Q

What is cooperative interest?

A

An interest held in a cooperative association, either as a shareholder, partner or member which includes RIGHT TO OCCUPY LAND.

The shares can be sold. It is also exempted from the registration requirements of the securities act. By selling a share, which is accompanied by the right to occupy land, it will be a selling of a cooperative interest.

企业买的 lot, 有土地权

64
Q

What is Time Share Interest?

A

Right of recurring use of land on a periodic basis

It is not necessary that the person acquire an interest in the land.

65
Q

What is Shared Interest in Land?

A

The purchaser buy or lease th eland with another person.
They then enter into an agreement, each hold a shared interest on the land.
The title is not subdivided.

66
Q

What is a Leasehold Unit?

A

Leasehold units in a residential leasehold complex is a development unit (thus requires the disclosure statement).

Sale of life leases usually are for seniors

67
Q

Recission vs. Termination

A 
Resciss = 撤回
Termination = 终止

In the law of contracts, a rescission amounts to the unmaking, or an undoing of a contract from the beginning, as opposed to a termination.

68
Q

Can the rescission rights be contracted out, or waived?

A

No. REDMA provides that whether the title tot the dev. unit has been transferred, a purchaser may have right to rescind the purchase agreement with a written notice, allowing them to back out of the purchase agreement without penalty.

69
Q

Three main reasons to rescind rights from purchase agreement

A
  1. 7 days (from the date of purchase agreement was made, or from the date that the developer obtain the written statement from purchaser
  2. Failure to deliver a disclosure statement to the purchaser
  3. Failure to deliver an amendment to a disclosure statement to the purchaser

(no later than one year after the transfer of the title)

70
Q

Failure to comply with REDMA is an offence. FOr a corporation and for individual, what is the range of penalty?

A

Corporations
1.25 million , 2.5 million for subsequent offences (DOUBLE)

Individual

  1. 25 million + up to 2 years of imprisonment
  2. 5 million for subsequent + up to 2 years of imprisonment

Additionally, BCFSA has the power to order a developer to cease marketing units or to pay an admin penalty for up to 500k (0.5 million) in the case of corporation, or up to 250k (0.25) for an individual.

71
Q

Real estate licensees who fail to comply with REDMA may be disciplined by BCFSA. What are some of the failures of compliances? Name 3 out of 5.

A
  1. accepting remuneration directly from the developer and not the brokerage
  2. allowing or assisting the developer to breach REDMA by receiving, placing or releasing deposits not in accordance to REDMA
  3. failing to recommend legal advice to purchasers where the amount of the deposit to be paid to the developer contravened (conflict with the rights of) REDMA
  4. marketing out of province dev. units in BC without a disclosure statement file with BCFSA
  5. when act on behalf of the developer, include a waiver of the recession rights under REDMA (This is a. no no no… you cannot waive away the rescission rights of purchaser, it cannot be contracted out of )

Real Estate (12 decks)

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