Practice Test 2 Flashcards
Which of the following is the required action by a brokerage if a trust fund is found to be either negative in balance or short funds
The brokerage must immediately use brokerage funds to cover the negative balance or shortage
True or False: If information changes have occurred, licensees are only obligated to report the changes to the Registrar at the annual re-licensing period.
False
True or False: A broker must have ownership interest in the brokerage for which they are responsible
False
True or False: A brokerage is allowed to deposit funds received on behalf of clients into any brokerage account, as long as the deposit happens within two days
False
After which of the following process steps are you authorized to practice as a licensee
When the registration to a brokerage is complete
True or False: A person may only hold a license in one of the following sectors: Real estate associate, mortgage associate, property manager
False
Which of the following items does RECA make available to the public
Annual reports
Audited financial statements
Current goals and objectives
Results and summaries of disciplinary hearings
Which type of real estate is used to earn income and includes real estate used for retail, office, industrial, investment, institutional purposes and residential real estate comprising of more than four residential premises
Commercial
Which residential property type that is used as a primary residence are called “acreages,” regardless of their actual size, and often include considerations of environmental issues, utility services, and the adequate supply of water
Rural residential sales
Which two components regulate real estate brokerages in Alberta?
The Real Estate Act (REA) & Real Estate Council of Alberta (RECA
True or False: If at any time there is a shortage of money in an account in which money is held in trust, the brokerage shall deposit the brokerage’s own money into the account as soon as the amount of the shortage is determined
True
True or False RECA automatically suspends a license during an investigation
False
Which of the following are within the scope of practice for professionals with a rural real estate license
Farmland
Land Leasing
Agri-business
Commercial Livestock operations
True or False: RECA may deny an authorization and issue an Administrative Penalty up to $25,000 for learners who are not industry professionals and who breach the Education Code of Conduct
True
Which actions does RECA take to protect the consumers in Alberta?
Addressing any complaints consumers may have about real estate licensees
Inspecting brokerages to ensure compliance with legislation and regulations
What are a broker’s responsibilities as they relate to supervising licensees?
Be available for consultation about transactions, clients, concerns about the dealings of others, etc.
Ensure the brokerage name is clearly indicated in trades and advertising
Ensures the licensees work is done properly.
Correctly checked
Reinforce the need for brokerage policies and procedures with which the licensees and employees are required to comply.
Correctly checked
Review all real estate agreements the licensees create on behalf of brokerage clients.
Which type of real estate required licensees to be knowledgeable about the capacity of a particular piece of land for carrying animal units without undue stress, as maximum long term production is government by stocking rates rates to ensure the land is not abused
Rural
True or False: Tax legislation has distinctions between an employee and an independent contractor
True
Which of the following license’s are government by RECA
Mortgage associate
Mortgage broker
Property Manager
Real estate associate
Real estate broker
Treaties between Indigenous peoples and the Canadian government resulted in designated reserved for First Nations people.
True or False: The Real Estate Council of Alberta regulates transactions on reserve lands, as government by the Indian Act.
False
Five management related responsibilities of a broker
Ensure all documents related to trades are maintained or made available for the purposes of a RECA review
Ensure all trust monies are properly maintained
Ensure proper management and control of documents or records related to licensing, registrations, and related regulatory requirements
Ensure brokerage name is clearly indicated
Provide licensees and personnel of the brokerage with written policies and procedures
True or False: Self-regulation in the industry enables the industry to hold its own disciplinary investigations and administer sanctions
True
Range of property types considered commercial real estate
Business brokerage
Integrated office space
Manufacturing
Office Space
Retail facilities
Warehousing
Yard storage
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.
False
Residential real estate professionals have many primary tasks. Often acting in multiple capacities for their clients. Review each of the following lists, and select the list that contains the most accurate accounting of the “Role of a Residential Licensee”.
Prospecting, Qualifying, Listing, Showing, Offer Preparation, Offer Negotiation, Follow-up.
Which rights are considered part of fee simple property rights?
To control
To dispose of
To enjoy
To exclude
To possess
A former director of professional standards at RECA, stated that Right-touch regulation”
Employing the minimum regulatory force necessary to achieve the desired outcome
Real estate education takes many forms. Pre-licensing education, ongoing education, and mandatory courses are just a few key learning points in the journey to obtain and maintain a real estate license. Which of the following are reasons why real estate education is required?
Pre-licensing education ensures licensees have sufficient knowledge to perform their duties with integrity.
Pre-licensing education ensures clients know you have the required knowledge to adequately support their needs.
Ongoing education enables professionals to become licensed in multiple industries.
Mandatory courses ensure everyone is brought up to a certain level of education on a specific topic by a certain date
Which of the following occurs when the demand for properties outweighs the availability of properties?
Market shortage
Which of the following accurately describes “Registered interests”
Interests that appear on the title
Gerald is reviewing a title of a property being listed for a client. He sees that there is a grant of interest in the land by the owner to his client for a period of time for consideration. He realizes his client does not have the rights to sell the property. What type of ownership is described with that type of interest?
Leasehold
True or False: If misrepresentation is fraudulent, the wronged party can sue for damages caused.
True
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?
Things they do not know to ask about.
Correctly checked
The possible consequences of their lawful instructions to you.
Correctly checked
The potential results of any decisions made.
Correctly checked
Any costs to the trade that they may not have anticipated.
True or False: If a licensee follows unlawful instructions given by a client, they are protected, under the law, from prosecution.
False
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
What are the elements of responsibility for an agency relationship
Clients best interests
Confidentiality
Full Accounting
Full Disclosure
Obedience to lawful instructions
Reasonable care and skill
Undivided loyalty
True or False: As a trained real estate professional, you know better than the client what is relevant to them, and the client’s best interests are best defined by you, the real estate professional.
False
If buyer gives you a lawful instruction which is against their best interest, what should you do?
Obey lawful instructions
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
True or False: Real estate professionals have a fiduciary obligation to customers.
False
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.
Executor
True or False: RECA has the authority to recommend the prosecution of licensees in the courts.
True
Audrey purchased her first home in a small newly built subdivision. She owns all the property and common law rights to it except mines and mineral rights. Which one of the following ownership type is Audrey?
Fee Simple
True or False: There are many different types of Power of Attorney, so if you encounter one and are unsure of its validity, you should always get a legal opinion.
True
True or False: The executor of an estate becomes the automatic property owner of the property to be disposed.
False
Review each of the following actions and select those that demonstrate poor ethics and professional conduct?
Failure to meet the minimum required standard of conduct as defined by RECA.
Misrepresentation of facts, whether unknowingly, or intentionally.
Observing all policies and procedures in place at your brokerage.
Operating in contravention of the Real Estate Act Rules in any respect.
Acting as a Facilitator in a Transaction Brokerage capacity at a Common Law Agency Brokerage.
Declining to take on a client, due to personality incompatibility.
Failure to meet the minimum required standard of conduct as defined by RECA.
Misrepresentation of facts, whether unknowingly, or intentionally.
Operating in contravention of the Real Estate Act Rules in any respect.
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:
Trustee
Under the Real Estate Act Rules, licensees are prohibited from certain actions. Often referred to as “restrictions,” these actions protect the licensee, the client, and the reputation of the industry. Carefully read each of the following statements and identify those which are prohibitions (aka restrictions) in the Rules?
Conduct that is reckless or intentionally misleading or deceitful (or is likely to be so).
Deny professional services to, or be a party to any plan or agreement to discriminate against, any client, customer or party to trade in real estate, deal in mortgages, property management service, or condominium management services, for reasons of race, creed, colour, gender, sexual orientation, family status, marital status, age, national origin, or physical disability.
Encouraging a client, customer or party who requests legal counsel or expert advice.
Engage in conduct that undermines public confidence in the industry.
Participation in lawful activities in connection with the provision of services or in any dealings.
Use of confidential information on behalf of the client, for the purpose for which it was obtained.
Conduct that is reckless or intentionally misleading or deceitful (or is likely to be so).
Deny professional services to, or be a party to any plan or agreement to discriminate against, any client, customer or party to trade in real estate, deal in mortgages, property management service, or condominium management services, for reasons of race, creed, colour, gender, sexual orientation, family status, marital status, age, national origin, or physical disability.
Engage in conduct that undermines public confidence in the industry.
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.
Floyd and Katherine are now empty nesters. They are looking to sell their large 5-bedroom home on a cul-de-sac and find a medium-sized property that has a primary bedroom in the basement. While they are looking for a smaller property, they aren’t necessarily looking for a cheaper one. They want all the modern amenities and upgrades available in higher end properties.
From the following list below, match the above description with the type of client. (Select one)
First-time buyer/seller.
Move-up buyer/seller.
Move-down buyer/seller.
Investment buyer/seller.
Elderly property owner.
Move-down buyer/seller.
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 or False
True
The Real Estate Act and RECA address fraud committed by real estate professionals with a disciplinary process that addresses their professional liability.
Even though fraud is a criminal offense, if RECA has punished a licensee, the courts will not pursue criminal charges.
True or False
False
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
Which of the following are potential consequences of failing to securely store personal information? (Select ALL that apply)
Endangering the person’s safety (for example, the individual is purchasing a house to flee an abusive partner).
Identity theft.
Loss of business opportunities.
The client could be subjected to fines up to $100,000 for violations of PIPA.
Endangering the person’s safety (for example, the individual is purchasing a house to flee an abusive partner).
Identity theft.
Loss of business opportunities.
PIPA applies to personal information collected, used, or disclosed for all of the following except one. Which of the following is NOT an exclusion to PIPA legislation? (Select one)
Archival purposes where the individual has been dead for at least 20 years.
Archival purposes where the record has existed for at least 100 years.
Artistic or literary purposes.
Campaigning purposes (public office, mayor, councilor, school trustee, etc.).
Information collected for the purpose of a real estate transaction.
Journalistic purposes.
Notes created by or for judges and similar people.
Personal or domestic purposes of the individual.
Purpose of producing court documents.
Records created by or for MLAs or other elected members of public bodies.
Information collected for the purpose of a real estate transaction.
Which of the PIPEDA’s Fair Information Principles states that an organization must have policies and practices regarding how it manages personal information? (Select one)
Accountability
Accuracy
Consent
Challenging Compliance
Identifying purposes
Individual Access
Limiting Collection
Limiting Use, Disclosure, Retention
Openness
Safeguards
Identifying purposes
Alberta has enacted the Personal Information Protection Act (PIPA). Which of the following statements is TRUE? (Select ALL that apply)
PIPA applies to private sector organizations or corporations which were incorporated in Alberta.
PIPA aims to protect personally identifying information.
PIPA prohibits interest rates at an annual interest rate that exceeds 60% on the credit advanced.
A real estate professional is responsible for receiving consent before using a client’s personal information.
PIPA applies to private sector organizations or corporations which were incorporated in Alberta.
PIPA aims to protect personally identifying information.
A real estate professional is responsible for receiving consent before using a client’s personal information.
Theodora is working as an associate at ABBA Brokerage. She has been tasked by the broker to go through and alphabetize all the prior clients in a category of clients that is listed “Consent only for transaction”. She notices that each of the clients has a signature page that authorizes the brokerage to ONLY use the client’s information for the purposes of the transaction.
Theodora has a great idea that she could call each of the clients (some of whom haven’t worked with the brokerage in several years), and ask for referrals. She approaches her broker to ask permission.
The broker tells her, “No, the clients have not authorized that. Under PIPEDA’s Fair Information Principles we cannot contact them for referrals.”
Theodora asks which part of PIPEDA restricts the contact. The broker should inform Theodora the appropriate principle. Which principal prevents Theodora from using the customer contact information for referrals? (Select one)
Accountability
Challenging Compliance
Identifying purposes
Individual Access
Limiting Collection
Limiting Use, Disclosure, Retention
Limiting Use, Disclosure, Retention
Which type of Consent under PIPA is described when individuals provide their personal information to an organization for a particular purpose without actually giving their consent? (Select one)
Explicit
Deemed
Determined
Executor
Informed
Deemed
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