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Fundamentals of Real Estate > Unit 2: Real Estate Act > Flashcards

Unit 2: Real Estate Act Flashcards

1
Q

The Real Estate Act provides regulation for which 3 professionals?

A

1) Commercial and Residential Real Estate
2) Property Management
3) Mortgage Brokerage

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2
Q

Legislation includes which 4 components?

A

1) The Act
2) The Rules
3) The Regulations
4) The Bylaws

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3
Q

Who is responsible for the Act?

A

Minister of Service Alberta

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4
Q

Who establishes and amends the Rules?

A

The Council

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5
Q

The Regulations are amendments / interpretations from the Act and are made by…

A

the Minister or the Lieutenant Governor in Council

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6
Q

The Bylaws are guidelines adopted by who?

A

The Board (related to governance and admin functions)

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7
Q

Real Estate Council of Alberta (RECA) is run by a board composed of:

A
  • 3 public members chosen by the minister and 4 professionals chosen from each industry council
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8
Q

Who is in charge of the Real Estate Assurance Fund?

A

RECA allocates funds to consumers on case by case basis

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9
Q

Alberta Real Estate Foundation provides..

A

Education to professionals, the public and supports research / reform

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10
Q

The Rules set requirements regarding…

A
  • Licensing
  • Standards of Practice
  • Record-keeping / reporting
  • REIX mandate
  • Fee schedules
  • Administrative penalties
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11
Q

The Regulations are divided into 2 types:

A

1) Ministerial Regulations (policies for Foundation and Fund, Council structure, etc.)
2) Exemption Regulations: Grants exemptions to certain individuals

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12
Q

Bylaws pertain to RECA’s conduct and operation and include:

A
  • Board appointment, remuneration, and duties
  • Board / Council training, performance evals, proceedings
  • Admin including Registrar duties
  • Penalties, hearings and appeals
  • Real Estate Assurance Fund
  • Licensing Service and Fees
  • Schedules
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13
Q

What are the 4 Industry Councils?

A

1) Residential Real Estate
2) Commercial Real Estate / Commercial Property Manager
3) Residential Property Manager (including condos)
4) Mortgage Broker

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14
Q

Industry Councils are composed of…

A
  • 2 members of the public (chosen by Minister) and 3 licensees from that particular sector (elected)
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15
Q

The Office of the Registrar is responsible for…

A

RECA’s regulatory functions (e.g. licensing, trusts, practice reviews, etc.)

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16
Q

What are the 4 classes of licences in Alberta?

A

1) Brokerage
2) Broker
3) Associate Broker
4) Associate

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17
Q

To become a Real Estate Broker you must…

A
  • Complete education in all specialty areas, complete the Real Estate Brokers Program, and have at least 2 years experience as an associate (within the past 5 years)
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18
Q

How many brokers can one brokerage employ?

A

Only one, anyone else with that brokerage that holds the same qualifications would be an associate broker

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19
Q

Who can be exempted from RECA Licensing?

A
  • Custodian, liquidator, trustee, or anyone else acting according to court order
  • Estate administrator, executor or trustee (for will, marriage settlements, deed of trust)
  • Banks, treasuries, credit union, loan corps, trust corps or insurance companies
  • Someone who owns at least 25% of the property they are trading
  • Condo corporation
  • Mineral right only transactions
  • Member of Law Society of AB
  • Licensee of Land Agents Act
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20
Q

Licence + Registration Certificate =

A

Authorization

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21
Q

If someone’s license has been cancelled under the Act, how long must they wait to reapply for a new license?

A

36 months

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22
Q

REAP stands for…

A

Real Estate Associates Program

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23
Q

How long does a person have to complete their REAP?

A

1 year from date of enrollment in Fundamentals class

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24
Q

What do the following status indicators mean for authorization to trade? Green - Grey - Black - No results

A

Green = authorized to trade
Grey = not authorized to trade (transferring)
Black = not authorized to trade (suspension or cancellation)
No Results = not authorized (not licensed yet)

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25
Q

Which date is license renewal each year?

A

Sept 30th

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26
Q

If under 1 year of absence from being licensed..

A

the licensee can register with a brokerage and complete a licensing online application

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27
Q

If absent between 1 year and 3 years…

A

the licensee needs to complete an application for registration, submit a criminal record check, and complete all annual courses required for renewals

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28
Q

If absent over 36 months…

A

Application must complete all training and requirements that a first-time applicant would complete

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29
Q

Who has the power to suspend or cancel a license?

A

Executive Director

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30
Q

Reasons for license suspension / cancellation include:

A
  • Failure to comply with terms, conditions or restrictions
  • Failure to comply with an order of hearing / appeal panels or court
  • Failure to pay outstanding moneys
  • Swears false affidavit
  • Gives false / misleading info
  • Fails to comply with request for info / submit records
  • Does not complete required renewal courses
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31
Q

Reasons to suspend or cancel a Brokerage license:

A
  • Fails to keep or make available records
  • Fails to keep trust fund balanced
  • Denies access to auditors or investigators
  • Qualifications don’t apply anymore
  • Exercises little to no authority
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32
Q

What is the timeline for an appeal request?

A

Within 30 days of receipt of notice

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33
Q

What circumstances would lead a licensee to reach out to the Executive Director?

A
  • Changes to personal / contact info
  • Fines, sanctions, discipline in other professions
  • Bankruptcy, insolvency, or receivership
  • Criminal convictions
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34
Q

Conduct deserving of sanction includes:

A
  • breaches to the Real Estate Act
  • conduct falling below industry standard
  • personal conduct that looks badly on the industry
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35
Q

Responsibility of ‘Act Honestly’ is to…

A

speak up and disclose info

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36
Q

Responsibility of ‘Provide Competent Service’ is to…

A

have knowledge, skills and abilities to perform necessary services

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37
Q

Responsibility of ‘Duty of Compensation’ is to…

A

Collect and disperse compensation money related to trade or potential trades

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38
Q

Responsibility to ‘Fulfill Fiduciary Obligations to Clients’ is to…

A

create trust and confidence through being loyal, avoiding / disclosing conflicts of interest, disclosing relevant info, keeping confidentiality, refraining from making secret profits

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39
Q

Responsibility to ‘Disclose Conflict of Interest’ including where…

A

-they are part of the transaction personally
- they have 20% or more ownership or their spouse does
- they represent multiple clients in transaction
- they could use confidential info to their advantage
- they receive compensation from multiple sources without client knowledge

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40
Q

Responsibility to ‘Cooperate with RECA’ is to…

A

comply with the Act, Rules, Regulations and Bylaws. To provide any info required during audits, etc.

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41
Q

Responsibility to ‘Refuse Service to unlawful clients’ means…

A

Walking away from clients that try to hide material latent defects.

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42
Q

What is a material latent defect?

A

Any defect that causes the property to be dangerous (or potentially so), unfit for habitation, unfit for intended purpose. These could be defects that require great cost to fix, notice of government or local authority, lack of property building or other permits.

43
Q

What is the penalty for a breach of the Education Code of Conduct for Learners?

A

Denial of license and admin penalty up to $25,000

44
Q

What are the 2 types of misrepresentation?

A

Reckless and Intentional

45
Q

Reckless misrepresentation is..

A

false or misleading statement made by someone with no intent to harm but didn’t take reasonable steps to verify info

46
Q

Intentional misrepresentation is…

A

false or misleading statement made by someone that knew it was not truthful

47
Q

What are the 5 key qualities all licensees must have?

A

1) Respect for the Rule of Law
2) Honesty
3) Governability
4) Have commendable individual history
5) Financial responsibility

48
Q

What is a Written Service Agreement?

A

A contract that outlines roles and responsibilities of parties in a transaction as well as establishing expectations (and remuneration) between client and industry professional

49
Q

PIPA stands for:

A

Personal Information Protection Act of Alberta

50
Q

PIPEDA stands for:

A

Personal Information Protection and Electronic Documents Act of Canada

51
Q

PIPEDA is the privacy legislation for…

A

Canada - federal legislation

52
Q

_________ is provincial privacy legislation that applies to brokerages carrying out business exclusively in Alberta.

A

PIPA

53
Q

For any referral, the licensee must disclose…

A

the name and contact info has been sent, and if they are entitled to any benefit as a result of the referral.

54
Q

When providing referrals the licensee should -

A
  • Provide of at least 3 whom they know or have dealt with
  • Disclose any relationships
  • Have the client reach out independently
  • Document referral discussions
  • Make sure they have proper certifications
55
Q

Unauthorized Real Estate Assistants must…

A
  • Identify themselves as unauthorized to the public
  • Have written consent from Broker to be hired
  • Have an agreement that details job
  • Provide job description to brokerage
56
Q

Unauthorized assistants may do the following:

A
  • Answer / forward calls
  • Submit listings / changes to listing services / databases
  • Follow up on loans (after contract finalized)
  • Put together docs for closing, or incoming/outgoing tenants
  • Create copies of keys as requested
  • Write ads for approval and place approved ads
  • Record and deposit trust money, deposits and advances
  • Type forms for approval
  • Calculate commission cheques to be paid
  • Place signs on properties
  • Prepare promo materials for approval, hand out with no discussions
  • Act as courier for docs and key pick up
  • Schedule appointments for professionals
  • Retrieve info from the board
  • Set up listing files (take photos, make fact sheets for approvals, deliver them)
  • Open listings or units for appraisers, inspectors, etc. (with consent of owners)
  • Install lockboxes
  • Have business cards (stating unauthorized)
  • Assist with inspections / measurements if accompanied by real estate pro
  • Unsolicited contact to solicit interest in brokerage
  • Accept payment of rent / security deposits once agreement signed
  • Perform bookkeeping
  • Find leads
57
Q

Can unauthorized assistants place telephone calls on late rent payments?

A

No

58
Q

Can unauthorized assistants have the keycode to a key box?

A

No

59
Q

When a Broker delegates responsibilities, the rules include:

A
  • writing clear delegation of responsibilities
  • agreement and understanding of those responsibilities by the broker and delegate
  • the delegation info must be shared with employees and associates
  • the delegate must be qualified to carry out those duties
  • the broker must continue to monitor and ensure proper supervision is maintained
60
Q

Can an associate accept a referral fee directly?

A

No, all referral payments or commissions must go to the Brokerage for dispersal.

61
Q

Can an associate offer an incentive or inducement?

A

No, all incentives and inducements must be offered by the brokerage.

62
Q

Anything that is advertised, communicated or offered by a brokerage to the public for the purpose of attracting business, refers to what?

A

An incentive

63
Q

Can individual associates decide whether or not to offer an incentive?

A

No, if a brokerage offers incentives to clients, all associates must comply

64
Q

The brokerage must have a detailed marketing plan to communicate this with their clients - is this an incentive or inducement?

A

Incentive

65
Q

Anything that is offered or provided by a brokerage to someone who is, or could be, party to a real estate or mortgage transaction with the intent of assisting or persuading them to enter into the transaction, refers to what?

A

An inducement

66
Q

The key difference between incentives and inducements relates to the ____________?

A

timing of when they are offered

67
Q

For an inducement to be lawful, the following must occur:

A
  • Inducement is offered in writing and signed by the agent and client
  • It clearly describes what’s being offered
  • The agent must have explicit authority from brokerage to offer it
  • The brokerage takes full responsibility for fulfillment or issues
68
Q

Requirements of a ‘Guaranteed Sale’ include:

A
  • purchase contract with price, date of possession and terms
  • Brokerage to place 5% into separate trust account (to be released on completion)
  • No commission can be charged
69
Q

Real Estate Transaction paperwork to be given to all parties include:

A
  • Listing contract (or agreement to lease), including any addendums or amendments
  • Purchase contracts (or offer to lease) including the acceptance of the offer and schedules
  • Notice removing all conditions
  • Agency acknowledgement with written consent
70
Q

Personal trades in real estate refers to…

A

an agent buying, selling, leasing, or renting property for personal or commercial purposes on their own behalf. This includes beneficial interest like that through immediate family members.

71
Q

Business interests in personal trades refer to…

A

any kind of monetary interest the agent has in the property. (if corporation, must have 50% ownership)

72
Q

Family interest in personal trade refers to…

A

the agents immediate family member such as spouse, parents, children, siblings or any of those of your spouse.

73
Q

Personal associations in personal trade refer to…

A

any business associates / affiliations or memberships in organizations such as foundations and non-profits.

74
Q

Must dos for personal trades include:

A
  • be transparent about their license and the brokerage they work for
  • properly disclose their interest to the other party before starting a trade
  • comply with brokerage policies related to personal trades
75
Q

Trading in real estate with a party with their own representation professional from another brokerage - which level of disclosure is this?

A

Disclosure Level 1

76
Q

Trading in real estate with a party that has no representation - which level of disclosure is this?

A

Disclosure Level 2

77
Q

Trading in real estate with a party represented by the same brokerage - which level of disclosure is this?

A

Disclosure Level 3

78
Q

For Disclosure Level 2, what addition info needs to be shared in writing?

A
  • Direct or indirect interest in the transaction
  • Details of any negotiations for further trade of the property
  • Info known to the agent that could materially affect the value of the property
79
Q

In Common Law agency …

A

any relationship with a client of that brokerage is shared with all agents (aka attributed knowledge)

80
Q

In Designated Agency …

A

the relationships are between client and the designated agent. The knowledge does not extend to other agents under that brokerage.

81
Q

If an agent / their spouse is buying or selling their own real estate and a claim arises, will it be covered by REIX?

A

No

82
Q

Requirements for Brokerage Trust Accounts include:

A
  • The broker is responsible for signatory authority, receipts and disbursements
  • Written receipts must be given when cash is received
  • Cheques used to disburse funds from the trust must be numbered and labelled ‘Trust Account’
  • Cheques (including void ones) are tracked in the record
  • Any payments (including cheque or transfer) can only be done if sufficient money exists in the trust account
  • Records of interest earned
  • Year-end report provided to RECA
83
Q

What are the 2 exceptions of when commission payments are not deposited into a trust account?

A

1) When the commission is not being shared with another brokerage
2) When commission is transferred to that brokerage from another brokerage for their share

84
Q

Order of payment out of trust account:

A

1) Cooperating brokerage paid
2) Holding brokerage transfers to general account

85
Q

The Real Estate Assurance Fund covers consumers who suffer a loss as a result of…

A

an industry professional committing fraud, breach of trust, or failure to disburse money from trust account.

86
Q

Are emails related to specific trades required to be maintained in the trade file?

A

Yes

87
Q

Brokerage records include all records created and received while conducting trades in real estate, such as…

A

faxes, emails, website data, social media communications, text messages, and e-documents

88
Q

Which 3 programs is the Professional Standards department responsible for?

A

1) Trust Assurance & Practice Review
2) Professional Conduct Review
3) Professional Conduct Proceedings

89
Q

Does the professional conduct review program look into unauthorized activity (e.g. individuals trading in real estate without authorization)?

A

Yes

90
Q

Practice Review is…

A

an independent review of accounting and brokerage records including transaction files, policies and procedures, oversight systems, and activities.

91
Q

4 Main objectives of Practice Reviews:

A

1) Serve brokerage leadership
2) Comply with the Act / Rules
3) Safeguard the licensing system
4) Reduce Assurance Fund claims

92
Q

Practice Reviews aim target which two groups?

A
  • Brokerages deemed to be high risk
  • Brokerages that are new / haven’t been reviewed for a while
93
Q

According to the Rules, how long must brokerage records be retained for?

A

A minimum of 3 years

94
Q

After a Practice Review, 4 steps are taken:

A

1) Verbal review of results
2) Recommendations / strategies for improvement
3) Written summary of the results
4) Ongoing support

95
Q

What is RECA’s ‘right touch’ approach to compliance and enforcement?

A

It means their approach is consistent, proportionate, effective, transparent, and timely

96
Q

3 main objectives of RECAs procedures:

A
  • gather relevant info for informed decisions
  • treat all parties fairly and impartially
  • gather info efficiently
97
Q

Conduct deserving of sanction refers to…

A

conduct that is not in compliance of standard of practice

98
Q

What are the 5 potential outcomes of a Conduct Review?

A

1) Dismiss the complaint (not discipline)
2) Issue an Advisory Note (not discipline)
3) Issue a Letter of Reprimand
4) Issue an Administrative Penalty
5) Refer it to a Hearing Panel

99
Q

More serious disciplinary outcomes include:

A

-Temporary license suspension
- Lifetime withdrawal from the profession

100
Q

What is a Consent Agreement?

A
  • a statement of agreed facts, admission by the agent of conduct deserving of sanction, and sanction / costs recommendation for the Hearing Panel’s consideration
101
Q

A Hearing Panel is composed of:

A

at least 3 individuals, 1 of whom is a Council member. (the others are public or industry professionals)

102
Q

Hearing Panels may sanction a fine up to $__________ for each finding

A

$5,000

103
Q

All Letters of Reprimand, Administrative Penalties, Hearing Panel / Appeal Panel / Court decisions are posted ______________.

A

On RECAs website and emailed via Case Summaries semi-monthly

Fundamentals of Real Estate (19 decks)

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