Practice Test 1 Flashcards
Which of the following indicator classifications will often change prior to large economic adjustments, which makes them useful in predicting future trends. (Select one)
Chronology Indicator
Coincident Indicator
Fraternal Indicator
Lagging Indicator
Lagging Indicator
This license holder meets the same education and experience as a broker, but their role, responsibilities, and limitations are that of an associate. (Select one)
The broker
Assessor
Associate Broker
Associate
Associate Broker
A brokerage is a legal entity with legal rights and responsibilities. The brokerage may operate as a sole proprietorship, a partnership, or a corporation.
True or False: While the broker is a legal entity, the broker is the one who is authorized by the Real Estate Council of Alberta (RECA)to trade in real estate. All associate brokers, and associates conduct business on behalf of the broker.
True
False
False
Joaquim has discovered the trust account for the brokerage is short by $1,800. A quick check of the ledger shows that a $200 disbursement was accidentally charged as a $2000 disbursement. He moves brokerage funds to cover the difference while the money is recovered.
True or False: Joaquim should immediately report the shortage to the Registrar.
True
False
False
As a real estate professional, you have responsibilities to your clients and to your brokerage and for complying with the legislation as determined by the government and RECA. While RECA’s role may appear to just be the governing body of the real estate council of Alberta, a key responsibility is primarily to protect consumers. Which actions does RECA take to protect the consumers in Alberta? (Select ALL that apply)
Addressing any complaints consumers may have about real estate licensees.
Establish the Prime Rate for lending.
Inspecting brokerages to ensure compliance with legislation and regulations.
Manage MLS® listings for Real estate professionals
Providing a list of top brokerages monthly at https://www.reca.ca
Responsible for services including registries, land titles, and the Alberta King’s Printer.
Set guidance on commission distributions among brokerages and their associates.
Addressing any complaints consumers may have about real estate licensees.
Inspecting brokerages to ensure compliance with legislation and regulations.
True or False: A Broker must have ownership interest in the brokerage for which they are responsible.
True
False
False
Which residential property type includes unique forms of ownership including timeshares and fractional ownership, and may have issues related to usage, private easements, and seasonal considerations? (Select one)
Condominium Sales
Mobile Home Sales
New Residential Sales
Residential Sales
Recreational Property Sales
Rural Residential Sales
Recreational Property Sales
Which of the following types of real estate includes real estate that has as its primary purpose farming? (Select one)
Commercial
Industrial
Residential
Rural
Special Use
Rural
How often does the real estate brokerage trust account need to be reconciled? (Select one)
Weekly
Monthly
Quarterly
Annually
Monthly
Priority is the order in which those who are registered on the title are paid. Which of the following registered interests takes priority over a primary mortgage? (Select ALL that apply)
A lien (encumbrance or financial claim) filed after the registration date of the mortgage
Condominium fees
Property taxes
Second mortgages
Unregistered mortgages
Property taxes
Second mortgages
A buyer comes into the brokerage and asks to see listings of homes in his price range. He is shocked to discover that in the last 6 months homes that used to be included are now above the price he is able to afford. Which of the following reasons may explain this? (Select ALL that apply)
Housing prices have increased.
Housing prices have decreased.
Supply of available homes has increased.
Supply of available homes has decreased.
Housing prices have increased.
Supply of available homes has decreased.
True or False: Real estate refers to the physical land and the structures that are attached to it.
True
False
True
Treaties between Indigenous peoples and the Canadian government resulted in designated reserves for First Nations people.
True or False: The Real Estate Council of Alberta regulates transactions on reserve lands, as governed by the Indian Act.
True
False
False
Certain actions can result in circumstances that make individuals ineligible to become or continue to be licensed. Other circumstances do not prevent professionals from renewing their license. From the following list, select the circumstances which make individuals ineligible to become or continue to be licensed. (Select ALL that apply)
Lifetime withdrawal.
Failure to recertify by the annual expiration date.
Licence suspended or revoked by Registrar.
Licence is “parked.”
Not a Canadian citizen.
Failing a Certified Criminal Record Check (CCRC)
Lifetime withdrawal.
Failure to recertify by the annual expiration date.
Licence suspended or revoked by Registrar.
Failing a Certified Criminal Record Check (CCRC)
True or False: You must first be hired by a brokerage to finalize the licensing process and complete the authorization.
True
False
True
Specialization allows property management brokerages to concentrate on managing a sector of properties needing their services. Which specialization includes mixed-use buildings, shopping centres, strip malls, gas stations, and repair shops? (Select one)
Agri-business property management
Commercial property management
Industrial property management
Residential property management
Retail property management
Commercial property management
True or False: Tax legislation (i.e., the Income Tax Act) has distinctions between an employee and an independent contractor.
True
False
True
There are two ways for real estate professionals to connect with a brokerage: as an employee or an independent contractor.
Which of the two methods is under the direction and control of the brokerage representing the employer in all business dealings? (Select one)
Employee
Independent Contractor
Both Employee and Independent Contractor
None of the above
Employee
True or False: Self-regulation in the industry enables the industry to hold its own disciplinary investigations and administer sanctions.
True
False
True
After which of the following process steps are you authorized to practice as a licensee? (Select one)
After you are hired with a brokerage.
After you begin the application process.
After you complete and return the application to the broker, and the broker accepts the application.
After the broker submits the application to RECA along with all licensing fees.
When RECA receives the application and the application has been accepted online.
When the registration to a brokerage is complete.
When the registration to a brokerage is complete.
True or False: The executor of an estate becomes the automatic property owner of the property to be disposed.
TRUE
FALSE
False
Evaluate each of the following fiduciary obligations, and determine if it applies to a Sole Agency relationship with a SELLER. (Select ALL that apply)
Confidentiality.
Full accounting.
Full disclosure.
Hold funds in a private account for the buyer.
Obedience to lawful instructions.
Reasonable care and skill.
Signatory authorization for all real estate related transactions
Undivided loyalty.
Confidentiality.
Full accounting.
Full disclosure.
Obedience to lawful instructions.
Reasonable care and skill.
Undivided loyalty.
Which of the following events would result in a breach of an agency relationship by the agent? (Select ALL that apply)
Failure to disclose a conflict of interest.
The agent fraudulently presents information making it look like the deal is a bargain.
The fees and commissions earned are not fully disclosed in the written service agreement.
The real estate professional requests general advice from the broker on how to legally proceed with a financial situation the client has found themselves in.
The real estate professional shares consented to private information to a lender about client in order to secure the best possible rates for the client.
The real estate professional shares the client’s property information with prospective buyers.
Favoring a customer over a client in a transaction
Failure to disclose a conflict of interest.
The agent fraudulently presents information making it look like the deal is a bargain.
The fees and commissions earned are not fully disclosed in the written service agreement.
Favoring a customer over a client in a transaction
There are multiple types of authority in representation relationships. In this type of authority, the person assigned to oversee the disposition of real estate on behalf of a person who is in bankruptcy is known as a: (Select one)
Assignee.
Assignor.
Dower.
Executor.
Power of Attorney.
Probate.
Trustee.
Trustee
A seller or buyer customer is an individual who has elected not to be represented by an agent in a transaction but instead represents themselves. If you represent the seller in an agency relationship, and the buyer is unrepresented (a customer), what should you discuss with the seller? (Select ALL that apply)
That you must act in the best interest of the customer.
That you must share all information given to you by the customer, with the seller, even if it is confidential (unless it were received while acting as the customer’s agent).
That you will not give the customer information or advice that is not in the seller’s best interests.
That you will use your judgement on the customer’s behalf and give them advice.
That you must share all information given to you by the customer, with the seller, even if it is confidential (unless it were received while acting as the customer’s agent).
That you will not give the customer information or advice that is not in the seller’s best interests.
The licensee is expected to have the professional skill and capacity to know and address certain issues in a transaction before they arise.
True or False: The licensee should NOT wait for clients to ask specific questions or request specific services if they already know what would be required to prevent harm to client interests.
TRUE
FALSE
True
In a transaction brokerage situation, which of the following services may NOT be provided by the licensee? (Select ALL that apply)
Acting as sole agent for both buyer and seller.
Acting as transaction facilitator.
Explaining to the parties what each part of a contract means.
Fiduciary responsibility to all parties
Full disclosure with both parties.
Providing advice about aspects of the property or transaction.
Fiduciary responsibility to all parties
Full disclosure with both parties.
Providing advice about aspects of the property or transaction.
Clients often don’t know what concerns they should have in the real estate process. This is why they seek advice and counsel from real estate professionals. Which of the following ways are used to uncover client concerns? (Select ALL that apply)
Give them a list of services offered.
Give your clients a chance to speak and encourage them to ask questions.
Interview potential clients to get a sense of what they’re looking for in an agent relationship and their personalities.
Provide to them the brokerage address and contact points.
Ask open ended questions and be an active listener.
ive your clients a chance to speak and encourage them to ask questions.
Interview potential clients to get a sense of what they’re looking for in an agent relationship and their personalities.
True or False: While you may suggest a non-resident client consult tax specialists for guidance, real estate associates are expected to be tax specialists for property transactions in which they are involved.
TRUE
FALSE
FALSE
A real estate licensee is required to have the professional skill and capacity to know and address certain issues in a transaction before they arise. This is considered a “standard of care.” Therefore, real estate professionals should not wait for clients to ask specific questions or request specific services if they already know what would be required to prevent harm to client interests.
The standard of care to which real estate professionals are held includes informing the client of what? (Select ALL that apply)
Things they do not know to ask about.
The possible consequences of their lawful instructions to you.
The potential results of any decisions made.
Any costs to the trade that they may not have anticipated.
Things they do not know to ask about.
The possible consequences of their lawful instructions to you.
The potential results of any decisions made.
Any costs to the trade that they may not have anticipated.
Jeffrey is looking into hiring a real estate professional to sell several of his properties. Jeffrey is a very private person, and really doesn’t like anyone learning about his personal information. He works very hard to keep his “digital footprint” at near zero. He understands he’ll have to provide some information to sell his properties, but wants to keep the distribution of his information to an absolute minimum, preferably, with just one person.
Which type of agency contract allows Jeffrey to have a single real estate professional act as his agent, with protections in place to prevent his personal information from being accessed by other agents at the brokerage? (Select one)
Common law agency relationship.
Customer relationship.
Designated agency relationship.
Designated customer relationship.
De facto agency relationship.
Designated agency relationship.
There are multiple types of authority in representation relationships. In this type of authority, a perfectly competent owner delegates signing authority with a notarized legal document to another person when they are unavailable, such as if they are travelling abroad and difficult to reach. (Select one)
Assignee.
Assignor.
Dower.
Executor.
Power of Attorney.
Probate.
Trustee.
Power of Attorney.
Carter has come to Balloon Real Estate Brokerage to find an agent to sell his home. He works with Pradeep as his real estate agent, and signs a written service agreement (WSA). Pradeep explains that the brokerage operates in a way that each associate has their own clientele within the brokerage, and that they do not share information about clients between agents. The WSA also clearly explains that Pradeep is the only associate at the brokerage who will be able to assist Carter on behalf of the brokerage. Three days later, Francine comes into the same brokerage to buy Carter’s home. She meets Pradeep at the door who invites her in. Francine mentions the home, and Pradeep tells Francine that he needs to introduce another associate to Francine, as Carter has requested that Pradeep not represent both the buyer and seller in the transaction. Francine meets with Alayah who happily takes her on as a buyer client.
In the above Scenario, what is the brokerage model, and in what capacity are the clients being represented? (Select one)
Designated Agency and Sole Agency.
Designated Agency and Transaction Brokerage.
Common Law Agency and Sole Agency.
Common Law Agency and Transaction Brokerage.
Implied Agency and Self-Representation.
Self-Representation and Sole Agency.
Designated Agency and Sole Agency.
Which conditions allow you to disclose confidential client information (including NDA related issues). (Select ALL that apply)
You have permission from your client.
The law requires disclosure.
When you are in an agency relationship and you determine it is in the client’s best interest, even though you don’t have direct permission from the client.
The real estate brokerage or associate is the agent of the seller or buyer (their client), and a customer has provided information to the agent. The real estate brokerage or associate must share all information given to them by the customer, even if it is confidential, unless it was received while they were acting as the customer’s agent.
You have permission from your client.
The law requires disclosure.
The real estate brokerage or associate is the agent of the seller or buyer (their client), and a customer has provided information to the agent. The real estate brokerage or associate must share all information given to them by the customer, even if it is confidential, unless it was received while they were acting as the customer’s agent.
RECA’s Customer Acknowledgement form describes the role of the real estate professional as (2.1.a), “we have no agency obligations to you, especially fiduciary ones. In a fiduciary relationship, you rely on someone to act in your best interests.”
True or False: “Have no agency obligation” means a real estate professional has no obligation to disclose information to a customer, including fees, commissions, and information that is not in the real estate professional’s client’s best interest.
TRUE
FALSE
TRUE
Historically, it was assumed that every associate in a brokerage had equal access to the same clients and client information and therefore, under common law, it was acknowledged that agency relationship was always between the consumer and the brokerage. Regardless of the type of real estate (residential, rural, commercial, or property management), practice and brokerage models have now evolved enabling individual agents to maintain client confidentiality.
In Alberta, real estate brokerages may operate as one of two different types of brokerages. What are they? (Select one)
Crown law, and designated agency brokerages.
Designated agency, and common law brokerages.
Designated agency, and sole agency brokerages.
Implied agency, and designated agency brokerages.
Implied agency, and transaction agency brokerages.
Sole agency, and common law agency brokerages.
Designated agency, and common law brokerages.
Identify all of the following that apply to designated agency relationships. (Select ALL that apply)
The client is a client of the brokerage but the brokerage designates a specific associate(s) to the specific transaction.
The real estate brokerage shares client information among associates.
The real estate brokerage puts barriers in place to isolate client information to only their own appointed associate (agent).
An individual real estate professional works exclusively as the client’s agent.
Clients are individuals that are being helped by an agent specifically named under a written service agreement with the brokerage.
Clients receive support for buying and selling real estate.
The client is a client of the brokerage but the brokerage designates a specific associate(s) to the specific transaction.
The real estate brokerage puts barriers in place to isolate client information to only their own appointed associate (agent).
An individual real estate professional works exclusively as the client’s agent.
Clients are individuals that are being helped by an agent specifically named under a written service agreement with the brokerage.
Clients receive support for buying and selling real estate.
Which of the following are included in the elements of responsibility for an Agency relationship? (Select ALL that apply)
Act as Executor.
Enter Probate.
Clients Best Interests.
Confidentiality.
Full Accounting.
Full Disclosure.
Obedience to lawful instructions.
Reasonable Care and Skill.
Signatory Authorization.
Undivided Loyalty.
Clients Best Interests.
Confidentiality.
Full Accounting.
Full Disclosure.
Obedience to lawful instructions.
Reasonable Care and Skill.
Undivided Loyalty.
True or False: You can build trust with your clients and customers by being consistent in your duty to follow rules and to set expectations about both your business practices and the types of services you are permitted to provide.
TRUE
FALSE
True
Anna is a real estate professional who is approached by a newlywed couple looking to get into their first home. Because the wife’s job is likely to move locations to another province in about a year, they only want to live there until that time, and then rent it out. What type of ownership option should they investigate?
Fee Simple
Leasehold
Life estate
Fee Simple
More properties are being fitted with security cameras and nanny cams, often directly accessible through the internet. While it is illegal for a third party to record a conversation secretly in Canada, the lines are blurred with what you can do in your own home and the intent of security device.
Client conversations that might reveal negotiation strategies, prices, or other transaction related details should be communicated outside of the home for optimal protection of the client’s best interest.
TRUE
FALSE
True
Real estate associates have a responsibility to keep client information protected. Which of the following are included in the individual real estate associate’s responsibilities? (Select ALL that apply)
Make a reasonable effort to ensure the information is accurate.
Notify the Privacy Commissioner of any incident involving loss, unauthorized access, or disclosure of personal information (breaches)where a reasonable person would consider there is a real risk of significant harm to an individual because of that breach.
Prepare and implement a compliance program consisting of appointing a compliance officer, maintaining current written compliance policies and procedures, training, and risk assessment.
Protect personal information by making sure they have reasonable security measures against risks.
Make a reasonable effort to ensure the information is accurate.
Notify the Privacy Commissioner of any incident involving loss, unauthorized access, or disclosure of personal information (breaches)where a reasonable person would consider there is a real risk of significant harm to an individual because of that breach.
Protect personal information by making sure they have reasonable security measures against risks.
If your organization is being investigated by Alberta’s Office of Information and Privacy Commissioner (OIPC), what actions can the OIPC take during the investigation? (Select ALL that apply)
Attempt to resolve complaints.
Give advance rulings regarding any matters that the Privacy Commissioner could investigate.
Investigate complaints, requiring documents to be produced within 10 days.
Issue monetary judgements.
Attempt to resolve complaints.
Give advance rulings regarding any matters that the Privacy Commissioner could investigate.
Investigate complaints, requiring documents to be produced within 10 days.
Issue monetary judgements.
Tyrone has taken on a client to sell a property in the city. The market is considered a “hot seller’s market,” with most properties listed going under contract within a week. Many of them receive offers within hours of posting, and often unconditional. The client seems prepared for this and provides pictures of the property to Tyrone to publish on MLS®, along with a great deal of information about the property, including dimensions and amenities. A quick search reveals to Tyrone that these are the same pictures and descriptions used just three years ago when the house was purchased by the client. Tyrone signs a listing contract with the client and begins to prepare the marketing.
As part of the due-diligence process, Tyrone visits the property to confirm the details. When he arrives, immediately he notices the property is severely under cared for, with peeling external paint, some broken windows that are taped with cardboard, a garage door that is apparently off the rails, and a yard and garden that has trash everywhere.
Tyrone could list the property under his brokerage’s existing (and compliant) template with the pictures and descriptions that do not reflect the current state. If he did, which of the following requirements/obligations would he be violating, with regard to the legislated obligations of standards of practice? (Select ALL that apply)
Be true and accurate.
Clearly display the full name of the brokerage.
Disclose key information, including sources of information.
Clearly display the name of the licensed associate.
Be true and accurate.
Disclose key information, including sources of information.
Which of the following criminal offenses is described as when someone receives something valuable (money or gifts) for doing, or not doing, something connected with the business or affairs of the principal without transparency to all parties? (Select one)
Criminal interest rate
De facto enterprise
Fraud
Secret commissions
Secret commissions
The Competition Act prohibits representations made to promote a product, service, or business interest that are false or misleading. Which of the following does this apply? (Select ALL that apply)
Marketing
Advertising
Social Media
Oral Claims
Marketing
Advertising
Social Media
Oral Claims
A potential client comes into the brokerage seeking a real estate agent to help them with a transaction. The client hands the receptionist a folder that contains the client’s basic information as well as copies of financial statements, a T-4 form, and several pay stubs. The client tells the receptionist that he’d like to schedule time with a real estate agent who can assist with his transaction. The receptionist informs him that all agents are out right now, but she can call him as soon as someone returns. The potential client agrees and leaves. He leaves the documentation in the folder with the receptionist.
The receptionist has no legal obligation under PIPA for the personal information, because the person who left it there did so of their own free will and they are NOT yet a client.
TRUE
FALSE
False
As a licensee, you see different phrases for “personal information” that sound as though they mean the same thing. The three most common phrases are personal information, privacy, and confidential information. Which of the three phrases is the right of an individual to choose what information they make available to others, including an organization or government agency (Select one)
Personal information
Privacy
Confidential information
Privacy
Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) differs from the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) in which of the following ways? (Select one)
PCMLTFA has an extensive website that provides numerous guidelines and notices for businesses that are mandated to use their system.
PCMLTFA is an independent agency, whereas FINTRAC is legislation.
PCMLTFA is legislation, whereas FINTRAC is an agency governed by the PCMLTFA.
There is no substantial difference, both are legislations that deal with money laundering.
PCMLTFA is legislation, whereas FINTRAC is an agency governed by the PCMLTFA.
Which of the PIPEDA’s Fair Information Principles indicates that a person has the right to know how the organization collects and protects their information, AND has the right to address any questions or concerns and understand the organization’s policies and procedures? (Select one)
Accountability
Accuracy
Consent
Challenging Compliance
Identifying Purposes
Individual Access
Limiting Collection
Limiting Use, Disclosure, Retention
Openness
Safegaurds
Accountability
When an organization no longer needs personal information for legal or business purposes, what should the organization do with the personal information?
Destroy or render the records as non-identifying.
Move the records to a permanent archive with secure access only.
Nothing. There is no requirement regarding personal information that no longer has a purpose.
Take the personal identification and make contact, to indefinitely require the data.
Destroy or render the records as non-identifying.
Which of the following situations are examples of anti-competitive conduct by real estate professionals? (Select ALL that apply)
Advising a landlord to reject a tenant on the basis of their business being a competitor to your own.
An agreement between the three largest firms in the city to show properties listed only by those of the largest firms.
Confirming with a client that another brokerage has listings they can be shown.
Suggesting to other brokerage associates that they avoid doing business with ABBA brokerage’s associates.
Two brokers, talking over lunch together, decide to set their brokerage’s commissions 1% lower than the other brokerages in town.
Advising a landlord to reject a tenant on the basis of their business being a competitor to your own.
An agreement between the three largest firms in the city to show properties listed only by those of the largest firms.
Suggesting to other brokerage associates that they avoid doing business with ABBA brokerage’s associates.
Two brokers, talking over lunch together, decide to set their brokerage’s commissions 1% lower than the other brokerages in town.
To avoid making false or misleading statements, a real estate professional should always verify that their claim is true and accurate.
TRUE
FALSE
True
To determine if the claim was false or misleading material, a court would consider whether an average consumer would likely be influenced into obtaining the product or service.
TRUE
FALSE
True
Consent is NOT required when contacting former clients with electronic marketing materials.
TRUE
FALSE
False
During a real estate transaction, the buying associate must fill out a Fintrac ID on both the buyer and seller. If the seller refuses, the transaction cannot proceed.
TRUE
FALSE
False
During a real estate transaction, the buying associate must fill out a Fintrac ID on both the buyer and seller. If the seller refuses, the transaction cannot proceed.
TRUE
FALSE
As a licensee, you see different phrases for “personal information” that sound as though they mean the same thing. The three most common phrases are personal information, privacy, and confidential information. Which of the three phrases is information about an identifiable individual? (Select one)
Personal information
Privacy
Confidential information
Personal information
Obtaining consent is key when processing someone’s personal information.
Consent is when a person provides information to you, even when they do not know how you will utilize the information.
TRUE
FALSE
True
Which of the PIPEDA’s Fair Information Principles is described as when a person gives permission to an organization to possess personal information? (Select one)
Accountability
Accuracy
Consent
Challenging Compliance
Identifying purposes
Individual Access
Limiting Collection
Limiting Use, Disclosure, Retention
Openness
Safeguards
Consent
