Chapters 2, 9 & 11

Question 1

What is the purpose of the Real Estate Services Act (RESA)?

Answer 1

To protect the public

Question 2

What are the two pieces of legislation authorized by RESA?

Answer 2

• Real Estate Services Regulation
• Real Estate Services Rules (BCFSA)

Question 3

What are the three main types of real estate services defined by RESA?

Answer 3

• Rental Property Management
• Strata Management Services
• Trading Services

Question 4

What are some of the roles of the BC Financial Services Authority (BCFSA)?

Answer 4

To regulate real estate professionals:
- Administer rules & regulations
- Ensure compliance of the act
- Issue & renew licenses
- Hold hearings to investigate
- Ensure licensees have education & knowledge

Question 5

Who is the chief executive officer of the BCFSA?

Answer 5

The Superintendent of Real Estate.
- All licensing applications must be made to the superintendent

Question 6

What does the Real Estate Foundation do?

Answer 6

• Non-profit corporation managed by 5 members
• Undertakes real estate education and research
• Receives interest from brokerages’ trust accounts

LAW REFORM

Question 7

What is the purpose of the Real Estate Errors and Omissions Corp (E&O)?

Answer 7

To protect licensees from financial loss due to errors
- Fees are collected by the RE council
- 7 directors (4 appointed by council, 3 appointed by BCREA)

Question 8

What are the criteria for a representative providing trading services?

Answer 8

• 19 years of age
• Consent to a criminal record check
• Good reputation
• Meet educational and experience requirements

Question 9

What is the maximum compensation paid out by the Real Estate Compensation Fund Corp?

Answer 9

$100,000.

Question 10

What activities are permitted for unlicensed assistants?

Answer 10

• Unlocking a property for viewing
• Office filing and bookkeeping
• Witnessing signatures

Question 11

What is a trust account in real estate?

Answer 11

An account held by brokerages as a stakeholder, for transaction funds.

Question 12

What are the available sanctions for licensees under RESA?

Answer 12

• Reprimand
• Suspend or cancel license
• Impose restrictions
• Enroll in courses

Question 13

What does the Real Estate Development Marketing Act (REDMA) require from developers?

Answer 13

• Obtain necessary approvals
• Title assurance and utilities
• Disclosure statements

Question 14

What is a ‘material change’ in the context of real estate development?

Answer 14

Any change that may affect the value, price, or use of a unit or development.

Question 15

What does Development Property include?

Answer 15

• 5 or more subdivision lots in a subdivision, unless each lot is 64.7 ha or more
• 5 or more bare land strata lots in a bare land strata plan
• 5 or more strata lots in a stratified building
• 5 or more time share interests in a time share plan
• 5 or more leasehold units in a residential leasehold complex
• 2 or more cooperative interests in a cooperative association
• 2 or more shared interests in land in the same parcel of land

Development Property refers to various types of land ownership and management situations that involve multiple lots or interests.

Question 16

List the exemptions for developers marketing to sell in a single transaction.

Answer 16

• Developer who markets to sell in a single transaction
• Units zoned and used for industrial or commercial purposes
• Leases of 3 years or less
• Sales or leases subject to Securities Act requirements
• Certain subdivision lots within municipalities

These exemptions allow developers to operate without certain restrictions under specific conditions.

Question 17

True or False: A developer is required to provide a disclosure statement to purchasers.

Answer 17

True

If a developer fails to provide a disclosure statement, it can result in legal consequences for the developer.

Question 18

What is the role of ethics in professional conduct?

Answer 18

Ethics recognizes that it is possible to do wrong without breaking any civil or criminal law.

Question 19

What is part of the BCFSA’s role?

Answer 19

Addressing licensee misconduct to uphold and protect the public.

Question 20

What constitutes professional misconduct?

Answer 20

Focused on competency in practice and technical breaches of legislation.

Question 21

What is conduct unbecoming a licensee?

Answer 21

Conduct outside the core business that undermines public confidence

Question 22

What is a licensee’s highest duty?

Answer 22

To protect the General Public.

Question 23

What should a licensee do if a seller insists on not disclosing a material defect?

Answer 23

Withdraw from representing the seller.

Question 24

What are common law contractual duties of a licensee?

Answer 24

Fulfill all obligations within contracts with clients.

Question 25

What are tort law duties?

Answer 25

Avoid the commission of torts against clients and act with reasonable care and skill. eg: don't be negligent

Question 26

What are agency and fiduciary duties?

Answer 26

Duty of trust & loyalty

Question 27

What is the Headline Test?

Answer 27

A test to evaluate how a decision would appear as a headline.

Question 28

What is the duty to report misconduct?

Answer 28

Licensees must report any misconduct they observe, regardless of whether the licensee is part of their brokerage.

Question 29

What is the Code of Ethics' golden rule?

Answer 29

Do unto others as you would have them do unto you.

Question 30

What are the penalties for misconduct?

Answer 30

Reprimand, suspension, fines, expulsion, and education courses.

Question 31

What is the safest practice for disclosures?

Answer 31

Ensure that disclosures are in writing.

Question 32

How long does a licensee's duty of confidentiality last?

Answer 32

It lasts indefinitely.

Question 33

What must a licensee do if they discover the misconduct of a colleague at their brokerage?

Answer 33

They must report it to their managing broker.

Question 34

What should a licensee do if they discover misconduct of a licensee at a different brokerage?

Answer 34

They have no explicit duty to report but should talk to their managing broker.

Question 35

Is it true that the only code of ethics for real estate licensees are the duties contained in the Rules made under the Real Estate Services Act?

Answer 35

False. Professional real estate associations often have their own codes of ethics.

Question 36

What must a licensee do when a conflict of interest arises?

Answer 36

They must promptly and fully disclose the conflict to their client.

Question 37

Should licensees answer all of their client’s questions even if they doubt their expertise?

Answer 37

False. Licensees should refer a client to a competent professional if they have doubts.

Question 38

From what two key sources are duties to clients derived?

Answer 38

Common law and legislation.

Question 39

What is a licensee’s failure to meet their obligations as a trusted professional seen as?

Answer 39

A breach of professional ethics.

Question 40

If a client does not understand a disclosure, what should the licensee do?

Answer 40

Have a further conversation with the client to ensure they understand.

Question 41

What does Section 59 of the Law and Equity Act state about contracts dealing with land?

Answer 41

Contracts dealing with Real Estate must be in writing to be enforceable.

Question 42

What are listing contracts?

Answer 42

Contracts between a vendor and a real estate brokerage that should obtain a title search and verify information.

Question 43

What is the risk of loss in a Contract of Purchase and Sale at common law?

Answer 43

The risk of loss or damage of the state of the title passes to the buyer at the time the contract is signed.

Question 44

What are the technical requirements for a Contract of Purchase and Sale?

Answer 44

1. Names and occupations of the parties. 2. Description of the property being sold. 3. Description of the price and related financing. 4. Protection of personal information. 5. Terms and conditions, warranties.

Question 45

What is a condition precedent?

Answer 45

A subject clause in an agreement that depends on a contingent event that is not certain to occur.

Question 46

What is the goal of successful negotiations?

Answer 46

To achieve an optimal outcome for both parties with minimal wasted resources and preservation of the relationship.

Question 47

What is the difference between conditions and warranties in a contract?

Answer 47

Conditions are fundamental terms allowing termination and/or damages, while warranties are minor items allowing for damages but not termination.

Question 48

What is the deposit requirement for a binding contract?

Answer 48

A binding contract can be created without a deposit, but typically a deposit of 5-10% is standard.

Question 49

What is the Doctrine of Merger?

Answer 49

It limits the remedies available to the parties after completion of a contract.

Question 50

What is a Builders’ Lien?

Answer 50

A claim registered against the title to land by a contractor for work done or materials supplied. A claimant has 45 days to file a lien.

Question 51

What is the purpose of the Competition Act?

Answer 51

To hold business actors accountable for misleading or anti-competitive pricing.

Question 52

What are the obligations of real estate licensees under PCMLTFA?

Answer 52

1. Client identification process. 2. Receipt of funds record. 3. Large cash transaction record. 4. Suspicious transaction report.

Question 53

What are the penalties for failing to comply with PCMLTFA obligations?

Answer 53

Criminal charges, penalties of up to 5 years imprisonment, fines of up to $2 million, or both.

Question 54

CREA (BCREA)

Answer 54

- Voluntary - 11 boards - Each board manages MLS - Enforces Code of Ethics

Question 55

When may a licensee appeal to the Financial Services Tribunal

Answer 55

Within 30 days of BCFSA's decision.