Chapters 2, 9 & 11 Flashcards
RE Services Act of BC, Professional Ethics, Writing & Contracts
What is the purpose of the Real Estate Services Act (RESA)?
To protect the public
What are the two pieces of legislation authorized by RESA?
- Real Estate Services Regulation
- Real Estate Services Rules (BCFSA)
What are the three main types of real estate services defined by RESA?
- Rental Property Management
- Strata Management Services
- Trading Services
What are some of the roles of the BC Financial Services Authority (BCFSA)?
To regulate real estate professionals:
- Administer rules & regulations
- Ensure compliance of the act
- Issue & renew licenses
- Hold hearings to investigate
- Ensure licensees have education & knowledge
Who is the chief executive officer of the BCFSA?
The Superintendent of Real Estate.
- All licensing applications must be made to the superintendent
What does the Real Estate Foundation do?
- Non-profit corporation managed by 5 members
- Undertakes real estate education and research
- Receives interest from brokerages’ trust accounts
LAW REFORM
What is the purpose of the Real Estate Errors and Omissions Corp (E&O)?
To protect licensees from financial loss due to errors
- Fees are collected by the RE council
- 7 directors (4 appointed by council, 3 appointed by BCREA)
What are the criteria for a representative providing trading services?
- 19 years of age
- Consent to a criminal record check
- Good reputation
- Meet educational and experience requirements
What is the maximum compensation paid out by the Real Estate Compensation Fund Corp?
$100,000.
What activities are permitted for unlicensed assistants?
- Unlocking a property for viewing
- Office filing and bookkeeping
- Witnessing signatures
What is a trust account in real estate?
An account held by brokerages as a stakeholder, for transaction funds.
What are the available sanctions for licensees under RESA?
- Reprimand
- Suspend or cancel license
- Impose restrictions
- Enroll in courses
What does the Real Estate Development Marketing Act (REDMA) require from developers?
- Obtain necessary approvals
- Title assurance and utilities
- Disclosure statements
What is a ‘material change’ in the context of real estate development?
Any change that may affect the value, price, or use of a unit or development.
What does Development Property include?
- 5 or more subdivision lots in a subdivision, unless each lot is 64.7 ha or more
- 5 or more bare land strata lots in a bare land strata plan
- 5 or more strata lots in a stratified building
- 5 or more time share interests in a time share plan
- 5 or more leasehold units in a residential leasehold complex
- 2 or more cooperative interests in a cooperative association
- 2 or more shared interests in land in the same parcel of land
Development Property refers to various types of land ownership and management situations that involve multiple lots or interests.
List the exemptions for developers marketing to sell in a single transaction.
• Developer who markets to sell in a single transaction
• Units zoned and used for industrial or commercial purposes
• Leases of 3 years or less
• Sales or leases subject to Securities Act requirements
• Certain subdivision lots within municipalities
These exemptions allow developers to operate without certain restrictions under specific conditions.
True or False: A developer is required to provide a disclosure statement to purchasers.
True
If a developer fails to provide a disclosure statement, it can result in legal consequences for the developer.
What is the role of ethics in professional conduct?
Ethics recognizes that it is possible to do wrong without breaking any civil or criminal law.
What is part of the BCFSA’s role?
Addressing licensee misconduct to uphold and protect the public.
What constitutes professional misconduct?
Focused on competency in practice and technical breaches of legislation.
What is conduct unbecoming a licensee?
Conduct outside the core business that undermines public confidence
What is a licensee’s highest duty?
To protect the General Public.
What should a licensee do if a seller insists on not disclosing a material defect?
Withdraw from representing the seller.
What are common law contractual duties of a licensee?
Fulfill all obligations within contracts with clients.
What are tort law duties?
Avoid the commission of torts against clients and act with reasonable care and skill.
eg: don’t be negligent
What are agency and fiduciary duties?
Duty of trust & loyalty
What is the Headline Test?
A test to evaluate how a decision would appear as a headline.
What is the duty to report misconduct?
Licensees must report any misconduct they observe, regardless of whether the licensee is part of their brokerage.
What is the Code of Ethics’ golden rule?
Do unto others as you would have them do unto you.
What are the penalties for misconduct?
Reprimand, suspension, fines, expulsion, and education courses.
What is the safest practice for disclosures?
Ensure that disclosures are in writing.
How long does a licensee’s duty of confidentiality last?
It lasts indefinitely.
What must a licensee do if they discover the misconduct of a colleague at their brokerage?
They must report it to their managing broker.
What should a licensee do if they discover misconduct of a licensee at a different brokerage?
They have no explicit duty to report but should talk to their managing broker.
Is it true that the only code of ethics for real estate licensees are the duties contained in the Rules made under the Real Estate Services Act?
False. Professional real estate associations often have their own codes of ethics.
What must a licensee do when a conflict of interest arises?
They must promptly and fully disclose the conflict to their client.
Should licensees answer all of their client’s questions even if they doubt their expertise?
False. Licensees should refer a client to a competent professional if they have doubts.
From what two key sources are duties to clients derived?
Common law and legislation.
What is a licensee’s failure to meet their obligations as a trusted professional seen as?
A breach of professional ethics.
If a client does not understand a disclosure, what should the licensee do?
Have a further conversation with the client to ensure they understand.
What does Section 59 of the Law and Equity Act state about contracts dealing with land?
Contracts dealing with Real Estate must be in writing to be enforceable.
What are listing contracts?
Contracts between a vendor and a real estate brokerage that should obtain a title search and verify information.
What is the risk of loss in a Contract of Purchase and Sale at common law?
The risk of loss or damage of the state of the title passes to the buyer at the time the contract is signed.
What are the technical requirements for a Contract of Purchase and Sale?
- Names and occupations of the parties.
- Description of the property being sold.
- Description of the price and related financing.
- Protection of personal information.
- Terms and conditions, warranties.
What is a condition precedent?
A subject clause in an agreement that depends on a contingent event that is not certain to occur.
What is the goal of successful negotiations?
To achieve an optimal outcome for both parties with minimal wasted resources and preservation of the relationship.
What is the difference between conditions and warranties in a contract?
Conditions are fundamental terms allowing termination and/or damages, while warranties are minor items allowing for damages but not termination.
What is the deposit requirement for a binding contract?
A binding contract can be created without a deposit, but typically a deposit of 5-10% is standard.
What is the Doctrine of Merger?
It limits the remedies available to the parties after completion of a contract.
What is a Builders’ Lien?
A claim registered against the title to land by a contractor for work done or materials supplied. A claimant has 45 days to file a lien.
What is the purpose of the Competition Act?
To hold business actors accountable for misleading or anti-competitive pricing.
What are the obligations of real estate licensees under PCMLTFA?
- Client identification process.
- Receipt of funds record.
- Large cash transaction record.
- Suspicious transaction report.
What are the penalties for failing to comply with PCMLTFA obligations?
Criminal charges, penalties of up to 5 years imprisonment, fines of up to $2 million, or both.
CREA (BCREA)
- Voluntary
- 11 boards
- Each board manages MLS
- Enforces Code of Ethics
When may a licensee appeal to the Financial Services Tribunal
Within 30 days of BCFSA’s decision.
