Module 5

Question 1

5 associated regulations with REBBA

Answer 1

General (includes regulations on registration, trust money, brokerage structure, and management)

Other (includes regulations on educational requirements, insurance, records, andother matters)

Code of Ethics- procedures and programs resulting from RECO’s bylaws to enhance consumer protection. Allows for stronger enforcement on items such as registration and education requirements, insurance, handling of trust money, management of a brokerage, and record-keeping.

• O. Reg. 568/05: Delegation of Regulation-Making Authority to the Minister
• O. Reg. 581/05: Delegation of Regulation-Making Authority to the Board of the Administrative Authority

Question 2

Three different areas REBBA affect commissions

Answer 2

Section 36 of the Act identifies allowable ways to charge a commission
•Section 23 of O. Reg. 567/05 identifies the circumstances under which a brokerage is entitled to charge or collect a commission
•Section 9 of the Code states that commissions cannot be indicated as fixed or approved

Question 3

List the exemptions to registration as set out in REBBA

Answer 3

• An auctioneer auctioning the property, equipment, livestock, etc., of a retired farmer
• A full-time salaried employee working at a new home builder’s site and representing the builder innegotiations
• A lawyer settling an estate and selling a parcel of land on behalf of the estate
• A financial institution disposing of a property under a mortgage default
• A property owner selling their home privately
• A property manager leasing an apartment on behalf of a landlord

Question 4

Identify the requirement that a registrant be notified in writing regarding registration to be eligible to trade in real estate

Answer 4

Once a salesperson’s application has been approved and the registration takes effect, an electronic copy of their registration certificate is available via the MyRECO Certificate mobile app.
The Act also requires a brokerage and a salesperson to be registered at the time of providing services relating to a trade to make a claim for commission or other remuneration.

Question 5

Identify the requirement that a registrant be notified in writing regarding registration to be eligible to trade in real estate

Answer 5

A salesperson must be notified in writing that they are registered with RECO before trading in real estate. A salesperson can obtain an electronic version of their registration certificate.

Question 6

Identify the requirement that an individual be registered with RECO at the time of providing real estate services to clients or customers to make a claim for commission or other remuneration

Answer 6

A salesperson must be registered or exempt from registration at the time of providing services to be eligible to make a claim for commission.

Question 7

Identify the requirement for a brokerage to designate a broker of record

Answer 7

A broker of record ensures that the brokerage and all employees comply with REBBA. The broker of record does so by taking an active role in the management of the brokerage, ensuring there are adequate levels of supervision, and taking steps to address non-compliance issues.
The brokerage must provide the Registrar with the name of the broker of record in writing. If the broker of record changes, the brokerage must notify the Registrar within five days of the change.

Question 8

State how the financial position of an applicant can affect registration

Answer 8

having regard to the applicant’s financial position or the financial position of an interested personin respect of the applicant, the applicant cannotreasonably be expected to be financially responsiblein the conduct of business,”
–Act, Subsec. 10(1)(a)(i)

Registrant has to disclose all information to the registars office for review

Question 9

Identify the impact of false statements, past conduct, and activities that contravene REBBA on a registrant’s initial or renewal application

Answer 9

The Registrar can refuse to approve an application for registration or renewal, or suspend or revoke a registration, under certain circumstances. An application will require specific information and disclosures to be made. An applicant who has past unprofessional conduct or criminal charges, or who incorrectly or incompletely answers any questions, could have an application for registration refused. In some instances, the Registrar may approve the registration or renewal of a registration by attaching conditions to which the applicant or registrant voluntarily agrees.

Question 10

Describe RECO’s disciplinary process when addressing complaints, including the actions the Registrar cantake

Answer 10

Not all inquiries or complaints result in action taken against a registrant. If the complaint is outside of RECO’s jurisdiction, or there is no evidence to support the complaint, no action is taken. If the complaint is supported by evidence, depending on the severity of the offence, there are various discipline paths and outcomes.
Every complaint received by RECO is unique and there are many potential outcomes including dispute resolutions, written warnings, fines, and/or prison terms for a conviction under the Act. Some infractions are honest mistakes. However, if the same infraction is made repeatedly, something more serious is happening. Hence, RECO can take a progressive discipline approach.

Question 11

List brokerage obligations during an inspection

Answer 11

RECO has the right to inspect brokerages as part of its mandate. These can be done to ensure compliance with the Act, confirm a registrant remains entitled to registration, or as a fact-finding exercise when investigating a complaint involving a registrant.
It is important for a salesperson to be aware of what these inspections entail so that they are equipped to deal with them, should they need to.

Question 12

Identify the potential consequences of a registrant not complying with the Code of Ethics

Answer 12

If RECO determines there could have been a breach of the Code, the matter may be referred to the Discipline Committee.
If found guilty, the committee can require the registrant to:
•Take educational courses
•Pay a fine
•Impose additional fixed costs
The maximum fine for an individual is $50,000 and for a brokerage, $100,000.
A registrant can appeal a Discipline Committee decision. The Appeals Committee can overturn, affirm, or modify the order of the Discipline Committee.
Understanding the severity and consequences of a breach can encourage a salesperson to always be conscious of upholding the Code in their day-to-day activities on the job.

Question 13

Describe the statutory requirement for a brokerage to maintain a trust account

Answer 13

“Every brokerage shall,
a)maintain in Ontario an account designated as a trust account, in,
I.a bank, or an authorized foreign bank, within the meaning of section 2 of the Bank Act(Canada),
II.a corporation registered under the Loan and Trust Corporations Act, or
III.a credit union within the meaning of the Credit Unions and Caisses Populaires Act, 1994;
b)deposit into the account all money that comes into the brokerage’s hands in trust for otherpersons in connection with the brokerage’s business;
c)at all times keep the money separate and apart from money belonging to the brokerage; and
d)disburse the money only in accordance with the terms of the trust.”
–Act, Subsec. 27(1)

Question 14

Identify the requirement regarding employment with a brokerage and the payment of commission

Answer 14

Salesperson must only be registered under 1 brokerage at a time, Commission must not be shared with an unregistered person.

Question 15

Identify the allowable methods of calculating commission under REBBA

Answer 15

Commission agreed amount or % of the sale or rental price or a combination of both.

Commission percentage can decrease as the sale price increases.

If no commission amt is agreed upon between a seller/buyer and a brokerage the prevailing rate in the community is used.

Prohibition - You can not charge over what the property sells for.

Question 16

List the required disclosures when a registrant directly or indirectly sells/buys an interest in real estate

Answer 16

Requires a salesperson to provide a notice to all other parties and recieve signed acknowledgements from those parties PRIOR to making an offer

Notice must include:
A statement that the individual is a salesperson, broker, or brokerage
•Full disclosure of all known facts that may affect the value of the property
•Details of any third-party negotiations for the subsequent sale of the property

Question 17

Identify the requirements of a registrant to not falsify information or furnish false information, or induce or counsel others to do so

Answer 17

• Including false information in a mortgage application, such as a different selling price
• Advising a buyer to provide false information on their mortgage application, such as their income
• Advising a seller to provide incorrect information about their property, such as the square footage of the home
• Advising a buyer to indicate to a lender that the property will be their primary residence when it will be aninvestment property as this would impact the mortgage approval
• Omitting facts on documentation that a lender requires when purchasing a property, such as failing to disclosea second mortgage

Question 18

Identify the Registrar’s options for recourse when a registrant makes false, misleading, or deceptive statements in advertising

Answer 18

Order to immediately stop
Order the registrant to retract the statement or publish a correction of equal prominence to the original advertising
Order the registrant to do both above
May also require pre-approval of a registrant’s advertising for up to one year.

Question 19

List the potential penalties when a registrant is convicted of offence(s) under the Act

Answer 19

Registration suspended or revoked, or may face charges under the Provincial Offences Act or other statutes

If convicted of an offence, individuals may be fined up to $50,000 and are subject to prison terms of up to two years. Corporations are subject to fines of up to $250,000. In addition, a court may order a convicted person to pay compensation or restitution to the affected parties.

Question 20

Identify how a registrant’s obligation to protect the best interests of a seller or buyer applies only in a client relationship

Answer 20

A client owns the utmost loyalty and respect

Question 21

Identify a registrant’s obligation to provide conscientious and competent service to both clients and customers

Answer 21

A registrant shall provide conscientious service to the registrant’s clients and customers and shall demonstrate reasonable knowledge, skill, judgement and competence in providing those services.”

Question 22

Distinguish between the salesperson’s obligations regarding material facts when representing a client or providing services to a customer

Answer 22

For customers, the obligation is limited to disclosing only those material facts that are known, or ought to be known, by the salesperson. Customers are required to make their own inquiries to determine if any material fact affects a property.

Question 23

List the obligations of a registrant when providing opinions or advice

Answer 23

“6(1) A registrant shall demonstrate reasonable knowledge, skill, judgement and competence in providing opinions, advice or information to any person in respect of a trade in real estate.”
–CODE, Subsec. 6(1)
6(2) Without limiting the generality of subsection (1) or section 5,
(a)a brokerage shall not provide an opinion or advice about the value of real estate to any person unless the opinion or advice is provided on behalf of the brokerage by a broker or salesperson who has education or experience related to the valuation of real estate; and
(b)a broker or salesperson shall not provide an opinion or advice about the value of real estateto any person unless the broker or salesperson has education or experience related to the valuation of real estate.”
–CODE, Subsec. 6(2)

Question 24

Identify when a registrant should advise a client or customer to obtain services from another person

Answer 24

a salesperson should advise a client or customer to obtain the services from others who are qualified when they are not capable of providing the service. Second, a salesperson should not discourage a client or customer from seeking such services.

Question 25

Demonstrate how to comply with these sections of the Code as part of everyday practice (Conscientious and competent service)

Answer 25

Stop and think - Whatever is you are doing on behalf of client or customer
Ask Broker of Record - Advice
Understand your advice will be relied upon.
Always do things the right way
Continue to learn and be aware of changes affecting the profession
Search for past discipline decisions on the RECO website