Assignment 3 Flashcards
Question 2
When asked for an opinion, which of the following actions would NOT be likely to relieve a licensee of liability for negligent
misrepresentation?
- When asked for an opinion, a licensee refuses to give advice or an opinion on the subject matter.
- When asked for an opinion, a licensee gives an opinion that they believe is correct in order to encourage a rapid sale.
- When asked for an opinion, a licensee gives an opinion with a clear qualification that they accept no responsibility for the accuracy or reliability of the opinion.
- When asked for an opinion, a licensee directs the person asking for an opinion to someone who is a subject matter
expert.
Correct Answer: 2
Option (2) is correct because a licensee giving an opinion, without clearly qualifying that they accept no responsibility for the
accuracy or reliability of the advice, could be liable for negligent misrepresentation if the opinion if incorrect.
Option (1) is incorrect
because refusing to give an opinion would result in no opinion or advice given, which means the licensee could not have made
any negligent misrepresentations.
Option (3) is incorrect because a licensee giving advice or an opinion with a clear qualification that they accept no responsibility for the accuracy or reliability of the information could relieve the licensee of liability for negligent
misrepresentation.
Option (4) is incorrect because a licensee directing a person to an expert would not constitute negligent misrepresentation, as no representation was made by the licensee.
Question 3
Sandra attended an open house held by Adele, the listing representative, at a lovely Tudor Style home. Sandra loved the house, but the price was at the very limit of her budget, so she wanted to be certain there would be no major repairs necessary to the house. She explained her concerns to Adele who immediately said, “Don’t worry, this house is as solid as the rock of Gibraltar, it is in A-1 mechanical shape!” Six months after Sandra bought the house, the foundation on one side collapsed involving $15,000 worth of repairs to make the house habitable. Which of the following statements is/are TRUE?
A. Adele cannot be liable to Sandra because Adele was the agent of the vendor and not the agent of the purchaser.
B. Adele’s comments to Sandra involved opinions and not statements of fact and therefore no liability for negligent
misrepresentation can be imposed on Adele.
C. On the basis of the facts in this problem, Adele may very likely be liable to Sandra for negligent misrepresentation.
D. If Adele had told Sandra that she should not rely on Adele’s opinion because Adele did not have knowledge of the condition of the house, then Sandra could not hold Adele liable for negligent misrepresentation.
- A, B, and D only
- C and D only
- C only
- B and D only
Correct Answer: 2
Adele can be liable in tort to the purchaser because she has a duty not to misrepresent the condition of the house or property.
This duty exists in tort law and as well as under the Real Estate Rules. Both Adele and the vendor may be liable to the purchaser:
the vendor is vicariously liable for any wrongful actions of the agent, and the agent is personally liable for their own wrongdoings.
If Adele’s comments may be regarded as “expert”, she is liable to the purchaser for inaccurate statements of opinion as well as of fact, unless she qualifies her statement with a disclaimer as in Option (D).
Question 4
Which of the following statements regarding fiduciary duties is TRUE?
- The overarching duty for any fiduciary is the duty to obey their clients’ instructions, which involves following and obeying all instructions from their client, regardless of what they ask.
- The law created fiduciary duties to ensure that principals do not abuse their position of power in relation to their agents.
- When a principal alleges that an agent has breached their fiduciary duties, the law requires the agent to provide
evidence to support the fact that they have properly fulfilled their fiduciary duties. - Should a licensee face an allegation that they have breached their fiduciary duties, claiming that their actions are in line with industry practices will always result in a successful defence.
Correct Answer: 3
Option (3) is correct because fiduciary duties are unique, in that when a principal alleges that an agent has breached their fiduciary duties, rather than requiring the principal prove this allegation, the law instead requires the agent to provide evidence to
support the fact that they properly discharged or fulfilled their fiduciary duties.
Option (1) is incorrect because the overarching
fiduciary duty is the duty of loyalty; additionally, an agent does not need to obey all of their principal’s instructions, only their lawful
instructions.
Option (2) is incorrect because the law created fiduciary duties to ensure that agents do not abuse their position in
relation to their principals (not the other way around).
Option (4) is incorrect because compliance with industry standards is not a valid excuse for failing to carry out one’s fiduciary duties
Question 8
Which of the following scenarios would require a licensee to identity a person under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act?
A. A licensee receives funds from an unidentified person who is represented by another licensee.
B. A licensee receives four separate $5,000 payments (of cash) within 12 hours from a single unidentified person.
C. A licensee is representing an unidentified person when a purchase of real estate occurs.
D. A licensee receives funds from an unidentified person in the form of a bank draft.
- B and D only
- C and D only
- B, C, and D only
- All of the above
Correct Answer: 3
Option (3) is correct because the licensees in scenarios B, C, and D are all required to identify someone. As part of a licensee’s Know Your Client obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, there are four main triggers that require a licensee to identity a party in a real estate transaction.
A licensee must identify their client if they receive funds from a person in any form. For that reason, the licensees in scenarios B and D must identify a person.
Scenario B also falls within the large cash transaction trigger for identifying a person.
Additionally, licensees must identify their client when a purchase
and sale of real estate occurs, meaning that the licensee in scenario C must identify a person.
Scenario A does not require a
licensee to identity the unidentified party because each licensee needs only to identify their own client.
Question 9
Indicate which of the following disciplinary actions might occur when a real estate licensee has breached a provision of the Real
Estate Services Act, the Regulations, the Home Buyer Rescission Period Regulation, or Rules, or has breached the Code of
Ethics and Standards of Business Practice.
A. The licensee may be required to pay the costs of any hearing of the real estate board.
B. Their licence may be cancelled by the British Columbia Financial Services Authority.
C. The real estate board of which the licensee is a member may expel the licensee from the board.
D. The real estate board of which the licensee is a member may suspend his or her licence.
- All of the above
- A, B, and C only
- B and D only
- C and D only
Correct Answer: 2
Option (2) is correct because a licensee may be disciplined by having their licence suspended or cancelled by the British Columbia Financial Services Authority; the real estate boards do not have this power, but may impose a range of other penalties, including expelling the licensee from the board and requiring the licensee to pay the costs of any hearing.
Question 10
Which of the following is TRUE with respect to money laundering through real estate transactions?
- The only way to launder money is through buying physical property with physical cash.
- Real estate is highly attractive for money launderers because real estate is a fairly stable asset.
- The use of a corporate entity guarantees that money laundering is not happening, as beneficial ownership is publicly
recorded at the Land Title Act registry. - Money laundering is best dealt with by banks and other financial institutions.
Correct Answer: 2
Option (2) is correct because one of the many reasons which real estate is attractive for money launderers is that real estate is a
fairly secure and stable asset that cannot be stolen and is less susceptible to dramatic decreases in value in the long term.
Option (1) is incorrect because most money laundering is done through electronic means, not through physical cash.
Option (3) is incorrect because the use of a corporate entity is commonly used to launder money, as these entities mask the beneficial ownership of property. While the Land Ownership Transparency Act has been enacted to help fight the hidden ownership of land in B.C., this does not mean that money launderers have automatically stopped using corporate entities in their money-laundering schemes. Further, beneficial ownership is recorded in the Land Owner Transparency Registry, which is different than the Land
Title Act registry.
Option (4) is incorrect because licensees often have useful insight into money laundering, given their role as
“boots on the ground”.v
Question 14
Which of the following statements regarding a licensee’s reporting obligations under the Proceeds of Crime (Money Laundering)
and Terrorist Financing Act is TRUE?
- If a licensee receives over $5,000 or more in cash in a single transaction, or multiple payments of cash that add up to $5,000 or more in a 24-hour period, the licensee must file a Large Cash Transaction Report within 15 days of the
transaction. - A Terrorist Property Report must be filed within one year of a transaction where a licensee believes that property under their control is owned by a terrorist group.
- Even if the monetary amount is small, licensees have an obligation to fill out Suspicious Transaction Reports as soon
as practically possible when they determine that there are reasonable grounds to suspect that a transaction is related to money laundering. - A hunch that money laundering is occurring, on its own, meets the threshold of “reasonable grounds to suspect” which is required to file a suspicious transaction report.
Correct Answer: 3
Option (3) is correct because there is no monetary threshold for reporting on a suspicious transaction, and licensees have an obligation to fill out a Suspicious Transaction Report as soon as practicable when they determine that there are reasonable
grounds to suspect that a transaction or attempted transaction is related to the commission or attempted commission of a money laundering or terrorist financing offence.
Option (1) is incorrect because the threshold amount of money is $10,000, not $5,000.
Option (2) is incorrect because a Terrorist Property Report must be filed without delay by a licensee when the licensee knows or
has reason to believe that property in their possession or under their control is either owned or controlled by a terrorist group.
Option (4) is incorrect because “reasonable grounds to suspect” is a step above a simple suspicion or hunch. A simple suspicion
or hunch, by itself, is not enough to amount to “reasonable grounds to suspect”.
