Introduction to Real Estate Flashcards
(111 cards)
1
Q
What is Real Estate?
A
-Real estate refers to the physical land and the structures that are attached to it
-The land includes the waters and minerals below and most of the airspace above the surface
-The structures include buildings and other improvements
2
Q
What is a fixture?
A
-If an item cannot be removed from the property without causing damage to the property, it is considered a fixture and part of the real estate
-This includes any buildings, as well as fences, wells, and other site improvements
3
Q
What is a chattel
A
-Items not securely affixed to the land or buildings such as furnishings and appliances, are not considered part of the real estate
-referred to as personal property
4
Q
What is Real Property?
A
-Real property consists of both physical objects (real estate) and common law rights
-Real property can be classified according to its use as residential, commercial, agricultural, industrial, or special purpose
5
Q
What are the Real Property bundle of rights?
A
- the right to possess
- the right to control
- the right to enjoy
- the right to exclude
- the right to dispose of
6
Q
What is Fee Simple?
A
-In Canada, the majority of land is Crown land. This means that it is owned by the federal or provincial government. The Crown controls these public lands
- After the rights of the Crown, people or corporations can have an ownership interest in the land
7
Q
Types of ownership?
A
- sole owner
- joint tenancy
- tenancy in common
8
Q
What is a sole owner?
A
-The sole owner of a property can be either a person or a registered company
-if the sole owner is married, the spouse has rights to the property. Spousal rights are referred to as “Dower rights”
9
Q
What is Joint Tenancy?
A
-Ownership with two or more owners who own the entire property jointly. If one owner dies, then the property remains the possession of the surviving joint tenant
-An example would be a married couple buying a property together.
10
Q
What is Tenancy in Common?
A
-Where two or more owners own proportional shares of the property making up the whole
-Therefore if one owner dies, then their share in the land goes to their estate, not to the other co-owners
-The share of ownership may not be equal for all owners.
11
Q
What is a Life Estate?
A
-When the ownership of real property exists only for the duration of the life of a person and will then revert to another person, it is termed a life estate
-An example would be if you wanted to provide a home to someone upon your death, and then upon their death it reverted to an heir you had designated
-While they could sell the property, this would mean that, upon their death, the purchaser would be forced to leave the property
12
Q
Whats a leasehold?
A
-Leaseholders and renters have the right to inhabit land or buildings
-The owner (the landlord or lessor) grants a person (the tenant or lessee) the right to use and possess the property
-Their tenancy is usually for a specified period of time, in return for rent or some other consideration
13
Q
Types of Tenancy?
A
- Tenancy for years
- Periodic tenancy
- Tenancy at will
14
Q
What is Tenancy for years?
A
A leasehold estate for a specific period of time.
15
Q
What is periodic Tenancy?
A
-A leasehold estate for an indefinite period.
-The tenancy is conditional upon the receipt of rent or other considerations at fixed intervals.
-An example would be a month-to-month lease.
16
Q
What is Tenancy at will?
A
-A leasehold estate that permits either the lessor or lessee to terminate the tenancy without cause and without notice.
-It is generally used as a short-term solution for the occupation of commercial premises. Once payment of rent is made, it reverts to periodic.
17
Q
whats a title?
A
documents that show legal ownership to a property or asset
18
Q
what is interest in land?
A
a right of ownership in land or in an encumbrance against it, such as a mortgage
19
Q
what is an encumbrance?
A
a claim against the property, such as an outstanding mortgage or an easement.
20
Q
what are three encumbrances?
A
- easement
- encroachment
- restrictive covenants
21
Q
what is an easement?
A
-An easement gives a person or company other than the property owner the right to access a portion of the land
-Easements stay on the title regardless of a change in ownership.
22
Q
what is an encroachment?
A
-situation wherein an item on a property encroaches or is built on or over an adjoining property
-The encroachment may have been unintentional. If a homeowner builds a fence that does not stay within their property lines, they have made an unintentional encroachment.
-an encroachment agreement between the property owners (which could include a municipality) can be registered.
23
Q
what is restrictive covenants?
A
restrictions on an architectural component or limits the use of a property.
24
Q
what is a lien?
A
when a party has a financial interest in a property outside of a contractual agreement as security or payment for a debt that person owes
25
what is builders lien?
They are used in cases where a builder has a claim for unpaid services or materials against the property owner
26
what is caveats?
-A caveat may exist if a notice or warning has been given that someone is declaring they have an interest in the property
-It is only a notice, and does not indicate whether or not the claim is valid
-When a caveat is registered on title, the owner(s) of the property are notified by the Lands Title Office
27
what is priority in terms of mortgage?
-the order in which the lenders who are registered on the title are paid
-When considering priority, the registration date on title will generally be the main consideration. However, it is not always the sole factor
28
what takes priority over mortgage?
1. property tax
2. condominium fees
29
characteristics of real estate?
1. land is immobile: Real estate is fixed in location
2. land is indestructible: Land cannot be destroyed or worn out. Its appearance may change, but it continues to exist.
3. land is unique: Every piece of land is different because of its location and geography.
30
what is a real estate associate or licensee?
-The real estate associate or real estate licensee can help people to buy, sell, or lease property and can hold a license in some or all of the following areas:
1. Residential,
2. Commercial,
3. Rural,
4. Property management.
-a person who meets the qualifications of a real estate associate
-is licensed in Alberta
-is employed by or associated with a licensed real estate brokerage
31
what is a real estate broker?
-The real estate broker holds the qualifications of a real estate broker defined by law
-includes additional education over the real estate associate
-licensed as a real estate broker
-registered, employed by or associated with, and approved to operate a real estate brokerage.
32
what is a real estate agent?
-The real estate agent is a licensee who is authorized to act for or represent another person.
-The person(s) they have been authorized to act for or represent is their client.
-In a client relationship, the licensee must represent the client’s best interests at all times and assist them with the transaction.
-They work as an agent of that client.
33
whats a realtor?
are licensed real estate associates or brokers who are members of the Canadian Real Estate Association (CREA).
34
what is a real estate professional?
-The term real estate professional refers to any person who is authorized in the various classes of licenses in real estate.
-The real estate professional possesses the required education, knowledge, and experience of current practices for their respective class of licence in order to provide competent services to members of the public.
35
what is scarcity?
Scarcity is the concept that resources are limited.
36
microeconomics?
-examines the behaviour of an individual market such as the local real estate market
-Microeconomics deals with economics at the smallest individual level.
-This includes the decisions made by individuals, households and firms, and the factors that affect those decisions.
-The field of microeconomics is concerned with reasons consumers make certain decisions
37
macroeconomics?
-macroeconomics looks at the entire (national or global) real estate market and then seeks to analyze and explain its impact.
- big-picture version of economics.
-It focuses on total output of goods and services produced in a given period of time.
-This includes economy-wide phenomena such as inflation and unemployment.
38
Economists categorize resources under one of four factors of production:
1. land: includes everything from agricultural land to commercial real estate. It also includes the minerals and resources available from a particular piece of land.
2. labour: refers to the effort expended by an individual to produce a product or service and then get it into the marketplace.
3. capital: Capital in economics refers to man-made resources like machinery, tools, and equipment used in the production of goods and services. It can be fixed (long-lasting, like machinery) or working (short-term, like raw materials).
4. Entrepreneurship: the activities of individuals who are able to organize and combine the factors of land, labour, and capital. Entrepreneurs are the innovators who bring about new or modified goods and services.
39
market economy?
determined by the supply and demand of goods and services. Individuals and businesses own the resources and are free to exchange and contract with each other without government authority.
-A market economy would be associated with a capitalistic society where prices occur naturally based on supply and demand.
40
command economy?
A centralized government owns most, if not all, businesses in a command economy and thereby directs all the factors of production. The government controls all of the supply and sets all of the demand.
-A command economy would be associated with a socialist society where prices must be set by government officials.
41
mixed economy?
protect private property and allow a level of economic freedom in the use of capital, but also allow for governments to interfere in economic activities in order to achieve social aims or to protect its citizens.
-maintain private ownership and control of most of the means of production, but often under government regulation.
-canada is a mixed economy
42
the law of supply
The law of supply is that the higher a good or service can be sold for, the more will be produced. If the price goes down, the producer may choose to move on to another product that is more profitable.
43
the law of demand
-The law of demand states that the higher the price of a product, the less of it people would be prepared to buy.
-If the price moves so high that people begin to buy an alternative product, then the demand for the product decreases even further.
-However, if the price of the product goes down, then more people would be prepared to purchase the goods or service.
44
Equilibrium
That is the point where the forces of supply and demand are relatively equal and where the market is performing most efficiently.
45
market surplus
-If the supply exceeds the demand at the current price, a market surplus occurs.
-When surplus occurs, then the seller or producer will begin to reduce prices in order to move more of their goods or services.
-As the price decreases, there will be a decrease in the quantity supplied and an increase in the quantity demanded. In this way, equilibrium will once again be achieved.
46
market shortage
-Demand increases if the current price is lower than the equilibrium price.
-There are three main causes of shortage:
1. increase in demand
2. decrease in supply
3. government intervention.
-When demand increase occurs, then the seller will begin to raise their prices.
-As the price rises, equilibrium will once again be achieved.
47
Market elasticity
refers to the market's ability to react to the demand shift with effective supply levels.
48
economic indicators
1. leading indicators: attempt to show where the economy is going
2. lagging indicators: based on historical performance and look at changes that have already occurred as a result of an economic trend or pattern
3. coincident indicators: are macroeconomics measures that are as reflective as possible of economic performance at the time period they cover.
49
business indicator supply
-Gross domestic product,
-Gross national product,
-Manufacturing sector,
-Inventories,
-Utilization rates.
50
GDP
tracks the health of a country’s economy and represents the value of all goods and services produced over a specific period of time.
51
GNP
the total value of all finished goods and services produced by a country’s citizens in a given financial year, regardless of their location.
52
Consumer indicators demand
-Retail sales
-Consumer confidence
-Consumer price index
-Consumer disposable income/debt
53
consumer confidence
-How consumers feel about the overall state of the economy and/or their own personal financial situation will determine their amount of optimism about the future.
-When they are confident and optimistic, they are much more likely to make large purchases.
-When confidence is low, then consumers may be more wary about spending money and be more interested in savings, which would see a contraction of the economy.
54
consumer price index- inflation deflation
-It is the most widely used indicator of price changes in Canada.
-It is obtained by evaluating the cost of a fixed basket of commodities purchased by Canadian consumers as of a point in time.
-The CPI is used as a measure of consumer price inflation or deflation.
-Large increases in CPI over a short period of time would denote periods of inflation.
-Large decreases in CPI over the same time period would generally suggest a period of deflation.
55
inflation
-CPI signals a period of inflation when there is an increase in the cost of living.
-A high rate of inflation may decrease consumer purchasing power.
-Inflation can also affect other factors, such as job growth, and can lead to decreases in the employment rate and GDP.
56
deflation
-Deflation is a condition in which the cost of living decreases.
-This may signal that the economy is not performing well.
-When consumers cut back on spending, this forces retailers to lower prices to meet a lower demand.
57
consumer disposable income/debt
-Disposable income is net income
-it is the amount of income left over after taxes.
58
building permits
-written documents
-usually issued by the municipal government granting permission for the construction of a new property
-They also can be issued for alteration, demolition, or renovation of an existing property.
59
housing starts
-CMHC defines a housing start as “the beginning of construction work on the building where the dwelling will be located”
-housing starts look at supply, new and existing home sales look at demand.
60
low interest rates
-A lower interest rate results in more people being able to borrow money to make large purchases such as real estate.
61
high interest rates
-An increase in interest rates will have a reverse effect of low interest rates
-It may also affect the real estate market since businesses will have to pay more for capital.
62
mortgage rates
-The volume of mortgage loans can be impacted by interest rates and consumer confidence.
-Higher interest rates can result in higher qualification requirements, and therefore fewer eligible consumers.
-Low consumer confidence also results in fewer people looking for mortgages.
63
four phases of business cycle
-expansion
-peak
-contration
-trough
64
phase 1 of business cycle: expansion
-Expansion is generally considered to be the most desirable or healthy phase.
-This period is characterized by steady growth, low unemployment, and positive consumer confidence, which then translates into an increasing demand for goods and services.
65
phase 2 of business cycle: peak
-The point at which the level of activity and the cost of goods and services are high, the peak, is the turning point.
-There is no way to go any higher; inflation may have accelerated, and issues around price versus value now signify a contraction is forthcoming.
66
phase 3 of business cycle: contraction
-A contraction spans the length of time from the peak to the trough
- Economic activity is now on its way down
-It can mean increased unemployment and GDP activity showing slower growth as a result of decreased business activity.
Recession – During the contraction phase, when the GDP has declined over two or more consecutive quarters, the economy would be considered to be in recession. A recession is a normal part of the business cycle.
Depression – An extreme fall in economic activity that lasts for years, rather than just several quarters, signifies a depression.
67
phase 4 of business cycle: trough
-The trough is the low point that occurs when the contraction phase has found its lowest level and begins to move back into a new phase of expansion.
68
four phases of the real estate cycle
-expansion
-peak
-contration
-trough
69
phase 1 of the real estate cycle: expansion
-A period of expansion is characterized by an increased demand for real estate in excess of the supply.
-This is met with an increase in construction, increased land costs, and increased rents.
-During this expansion phase, a hyper supply may develop either from too much added inventory or a sudden decrease in the economy.
70
phase 2 of the real estate cycle: peak
-The real estate cycle peaks when property prices and rents reach their all-time high.
-Close to the peak there is a danger that a prolonged acceleration in prices and demand might continue and a real estate bubble may form.
71
phase 3 of the real estate cycle: contraction
-The real estate market begins to slow and prices begin to level or fall.
-Typically demand and rents will also begin to decline.
Recession – sees supply exceeding demand by a wide margin and real estate suffers from high vacancy rates and slowing sales numbers.
72
phase 4 of the real estate cycle: trough
-The trough is the lowest point before moving to a new period of expansion.
-A real estate investor’s ability to correctly recognize the low points will allow them to take advantage of low prices
-During this period, real estate may be in a below-value market position as the recovery phase begins and moves back into expansion.
73
housing bubble
-occurs when the price of housing rises at a rapid pace.
-This pace is driven by an increase in demand with limited supply, and is spurred on by emotional buying.
-Excessive buyer confidence convinces purchasers that they will be able to sell at a higher price in the future.
-prices will likely fall soon
74
four components of real estate
-the act
-the bylaws
-the rules
-the regulations
75
the act
a statute enacted by the provincial legislature. It can only be edited or changed by the legislative process.
76
the bylaws
are administrative guidelines that specify how RECA conducts and operates its business. The bylaws can be amended by RECA’s Board of Directors.
77
the rules
are standards of practice for industry licensees. They can be amended by the relevant industry council.
78
the regulations
-are amendments to or interpretations of sections of the Act and are part of the law.
-These can be amended on recommendation of the Service Alberta Minister through an Order in Cabinet, which is a vote of the provincial cabinet ministers.
79
self regulations
-In Alberta real estate, self-regulation includes being responsible for consumer protection.
80
RECA protects the public interest by:
-Licensing practitioners,
-Setting standards of competency,
-Determining certain minimum levels of conduct, and
-Providing a mechanism to discipline members who fail to meet those standards.
81
The Real Estate Professional’s Role in Self-Regulation
-Understanding the need for a set of rules and standards.
-Adhering to those rules and standards of practice.
-Taking actions based on what is in the public interest.
-Recognizing the boundary of one’s expertise.
-Avoiding conflicts, admitting and rectifying issues using good communication skills.
-Being honest and respectful in all real estate endeavours.
82
RECA is the independent governing authority that sets, regulates, and enforces standards for Alberta’s:
-Residential real estate,
-Commercial real estate,
-Rural real estate,
-Property management,
-Condominium management, and
-Mortgage brokerage professionals.
83
reca structure
-board of directors
-executive directors
-registrar
-industry councils
-licensing services
84
board of directors
(a) to set the strategic direction and ensure the effective operation of the Council;
(b) to protect against, investigate, detect and suppress fraud as it relates to the business of licensees and to protect consumers;
(c) to provide, or support the provision of, services and other things that facilitate the business of licensees, as provided for in the regulations;
(d) to administer this Act as provided in this Act, the regulations, the bylaws and the rules.
-The board of directors is composed of three members from the public (not licensees) who are appointed by the Minister, and four industry members, one from each of the four industry councils.
-They serve a three-year term
85
executive directors
-The RECA board of directors appoints an executive director.
-The executive director serves as the chief administrative officer of RECA.
-They are responsible for daily operational management, including managing staff, helping to implement the organization’s values and mission, and providing direction on annual strategic goals, objectives, and priorities.
-The executive director cannot be a licensee.
86
registrar
-The RECA board of directors appoints a registrar, who reports to the executive director.
-They are responsible for regulatory functions including licensing, discipline, trust assurance, and practice reviews.
-A licensee is not eligible, and the person must not be the same person appointed as the executive director
87
industry councils
Four industry councils create and administer rules and licensing requirements for their industries:
-The Residential Real Estate Broker Industry Council,
-The Mortgage Broker Industry Council,
-the Residential Property Manager Industry Council, and
-The Commercial Real Estate Broker and Commercial Property Manager Industry Council.
-Each industry council is composed of two members from the public who are appointed by the Minister and are not licensees, and three industry members who are elected by licensees of that industry.
-They serve a three-year term.
(1)(a) to set and enforce standards of conduct for licensees and the business of licensees in order to protect consumers and promote the integrity of the industry, and
(b) to administer this Act as provided in this Act, the regulations, the bylaws and the rules.
(2) Each Industry Council may establish rules setting out the conditions for a person to become and remain a licensee of the industry to which the Industry Council relates, including minimum standards for conduct and education requirements.
88
hearing panel
-Hearing panels are public.
-A hearing panel consists of at least three members, including at least one licensee and at least one member of the public.
-If the panel finds the conduct of the licensee “deserving of sanction,” there are a number of available penalties.
1. Possible penalties include:
2. A letter of reprimand.
3. Fines of up to $25,000.
4. Suspension or cancellation of the licensee’s licence.
5. Conditions on the licensee’s licence.
6. The requirement for payment of the investigation or hearing costs.
89
suspension of licence
*When a licensee fails to file or submit required records or fails to make records available for RECA review.
*When a brokerage fails to fund a trust shortage.
*When access is denied to a RECA auditor or investigator, or they are otherwise prevented from carrying out duties.
*When a licensee provides false or misleading information in a licence application.
*When a licensee fails to provide subsequent information under Rules S.21 and S.40 (see changes to licensee's information) regarding a bankruptcy, discipline, criminal offence, etc., or when the information is provided and the registrar concludes it would be in the public interest to suspend or cancel.
*When a licensee fails to comply with a term, condition, or restriction attached to their license
*When a licensee fails to pay a required fee, penalty, fine, etc., or fails to comply with an order of a hearing or appeal panel or court of law.
*When a licensee does not comply with a request for information made by the registrar or the relevant Industry Council.
*When a licensee fails to maintain the appropriate insurance coverage as required.
*When the licensee breaches the Education Code of Conduct for Learners.
90
When a consumer is represented by an individual holding a licence, the following provisions of the REA apply to the licensee and work toward the public interest:
-Knowledge and Education—Alberta licensees must complete pre-licensing education.
-Assurance Fund—This fund protects the financial position of consumers who have been the victim of a fraud or breach of trust committed against them by a licensee.
-Complaints and Discipline—Licensees are held to a standard of practice. If a consumer complains about an unlicensed person, RECA can only investigate whether or not the person conducted an activity that requires a licence. These investigations do not account for how badly the activity was performed or how greatly the consumer was disadvantaged.
-Insurance Indemnity Plan—Licensees are required to participate in such a plan, while unlicensed persons are not.
91
penalties for unlicensed
liable for administrative penalties issued by the registrar, or a fine of up to $25,000 issued by a court.
92
(REA) delegates responsibility to the Real Estate Council of Alberta (RECA) to issue licences in four areas:
-Real estate brokerage,
-Property management,
-Mortgage brokerage, and
-Condominium management.
93
mortgage brokers
they can then provide services including:
*Soliciting a person to borrow or lend money secured by a mortgage.
*Negotiating a mortgage transaction.
*Collecting mortgage payments.
*Administering mortgages.
*Buying, selling, or exchanging mortgages, or offering to do so.
94
Condominium Management
The following licenses are available:
*Condominium manager broker,
*Condominium manager associate broker, and
*Condominium manager associate.
-Because condominium management is a separate activity and industry from property management, a condominium management brokerage licence is required.
-Individuals wanting to practice both condominium management and property management must do so under separate brokerages.
95
license renewal
september 30th each year
96
steps of transfer of license
1. The licensee provides their myRECA username to the new broker.
2. The new broker will verify that the current broker has been advised of the intent to transfer.
3. The new broker completes the transfer application.
4. The licensee completes their portion of the application.
5. The new broker accepts the application.
6. The transfer fee is paid.
7. The transfer is complete.
8. The associate should check their licence status to ensure the transfer went through properly.
97
All licensees must notify the registrar if:
*Has a name change.
*Is disciplined by any real estate board, professional or regulatory body, etc.
*Has a judgement in relation to providing goods or services to the public.
*Has a business interest that has a judgement rendered against it.
*Is subject to bankruptcy proceedings or has a business under bankruptcy proceedings.
*Has had proceedings pursuant to the Criminal Code commenced or has been convicted of an offence (other than minor traffic offences).
98
residential property management
The general types of residential property that may require a property manager include:
1. Residential income-producing properties.
-Duplexes
-fourplexes
-townhouses
-low-rise and high-rise apartments.
2. Special residential projects.
-Senior retirement homes
-public housing
-mobile home parks.
3. Condominiums.
4. Cooperatives.
99
commercial property management
1. Office buildings.
Low-rise and high-rise office buildings, mixed-use buildings, office parks.
2. retail stores.
Shopping centres, strip malls.
3. Service operations.
Gas stations, auto repair, electrical and supplier shops.
100
industrial property management
Industrial property management skills are focused on the facility and the business or businesses using the facilities.
-Warehouses,
-Custom-built manufacturing facilities,
-Special use industrial parks, and
-Industrial parks.
101
three classes of individual real estate license that can be registered to the brokerage:
1. The Broker:
-There is one broker registered to the brokerage.
-They are responsible for the brokerage’s compliance with the Real Estate Act (REA) and other legislation that governs privacy, competition, and fair housing.
2. Associate Brokers:
-Several associate brokers can be registered to each brokerage.
-An associate broker has met the same education and experience requirements as the broker, but their role, responsibilities, and limitations are that of an associate.
3. Associates:
-The brokerage can have any number of associates registered to it.
-An associate has earned at least the initial license to trade in real estate.
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brokerage requirement
-A brokerage must have a broker
-registered business office
-trust account.
103
becoming a broker
At least two years of industry experience in the previous five years.
*All four practice courses (Residential, Commercial, Rural, and Property Management) so they are familiar with all aspects of trading in real estate.
*Broker pre-licensing education, which focuses on the regulatory responsibility of brokers.
After meeting these requirements, they can obtain a broker’s licence by either opening their own brokerage or replacing the broker at a current brokerage. Until they have done so, they have an associate broker licence.
104
A registered business office needs to meet several requirements:
*Brokerage business is conducted at an office location.
*The broker has access to, and control over, the premises.
*The office is where the required records are made available in the event of a RECA review.
*The office's address is the address of service for all associates registered with the brokerage.
*The broker manages the registered business office and any additional offices unless this responsibility is delegated to an authorized delegate.
105
the trust account
-A brokerage must have a trust account for the deposit of funds received on behalf of its clients
-One of the main responsibilities of the brokerage and its broker is to properly maintain the brokerage trust account
1. Terms of trust must be established prior to receiving money
2. Keep records, deposit funds within three banking days (unless agreed otherwise), keep monies separate, disburse funds properly
3. Allow inspection by RECA's executive director
4. Properly maintain electronic banking transactions
5. Do not make any unauthorized payments from the trust account
6. Prepare monthly reconciliation
7. Prevent negative trust balance; if this occurs, immediately fund the shortage
8. If undetermined shortage occurs, or if brokerage cannot fund a trust shortage, report to the registrar
9. Report annually to RECA on operation of trust accounts
10. The brokerage policy manual should detail how its associates and other employees handle trust monies.
106
brokerage responsibilities
1. A brokerage must establish adequate policies and procedures for the maintenance and protection of personal and confidential information, and ensure industry members registered with the brokerage and staff know and adhere to the procedures
2. The brokerage must clearly indicate the name of the brokerage in all transactions, including advertisements
3. the brokerage must not:
-Allow a person registered to another brokerage to conduct transactions on its behalf.
-Employ a person to conduct transactions who is not licensed.
-Employ a person who does not meet the legislative requirements or who has not paid a fee, levy, etc., as required by RECA.
4. A brokerage may not pay a commission or remuneration, except to:
-A broker, associate broker, or associate employed by the brokerage or to not more than one corporation of which that broker, associate broker or associate, owns not less than fifty percent of the shares.1
-Another licensed brokerage (who will, in turn, pay the associates registered to it).
-A qualified auctioneer, when involved in a real estate transaction as an auctioneer.
5. A brokerage may pay a commission or referral fee to an unlicensed person, but may not pay a commission when it has knowledge that the person to be paid is required to be licensed and is not
6. The real estate brokerage is required to keep copies of all records pertaining to real estate trades in Alberta for a period of three years
The following records must be maintained for every trade, whether or not the sale was completed.
-Service agreements,
-Purchase contracts,
-Real estate management agreements,
-Leases, and All records, accounts, and supporting documentation.
107
The documents that should be in the brokerage file include:
*Brokerage, purchase, or lease contracts,
*Amendments,
*Showing logs,
*Contact phone numbers,
*Advertisements,
*Notes of telephone conversations,
*Correspondence,
*Photographs,
*Square footage calculations, and
*Comparative market analyses.
These records must be kept for trades and potential trades. This means a file must also be maintained for purchase contracts that were unsuccessful, seller brokerage agreements for properties that did not sell, and buyer brokerage agreements that didn't result in a purchase.
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broker responsibilities
*Ensure proper management and control of documents or records related to licensing, registrations, and related regulatory requirements.
*Ensure all documents related to trades are maintained or made available for the purposes of a RECA review.
*Ensure the brokerage name is clearly indicated.
*Ensure all trust monies are properly maintained.
*Provide licensees and personnel of the brokerage with written policies and procedures.
*Provide licensees with brokerage policies and procedures for their personal trades.
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licensee responsibilities to the brokerage
(a) act honestly;
(b) provide competent service;
(c) disclose to clients, at the earliest practical opportunity, how they will be paid for their services;
(d) fulfill fiduciary obligations to clients;
(e) ensure their role is clearly understood by their clients;
(f) disclose to clients, at the earliest practical opportunity, any conflict of interest they have in the course of dealings with a client;
(g) practice in strict accordance with the Act, Regulations, Rules, Bylaws and any other laws that govern trading in real estate, mortgage transactions or appraisals in Alberta;
(h) cooperate fully with, and provide any information to a representative of Council carrying out their duties; and
(i) comply with an order issued pursuant to the Act by the Council or the executive director, a hearing panel, appeal panel or court; and any terms, conditions or restrictions of licensing; and
(j) refuse to provide further services to or on behalf of a client who instructs withholding of a required disclosure.
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the real estate assurance fund
-Also known as the Consumer Protection Fund, this fund(opens in a new tab) compensates consumers who suffer a financial loss as a result of fraud, or losses related to breach of trust or failure to disburse trust monies in accordance with the Real Estate Act.
-Consumers who wish to make an application to the fund can do so for up to one year from the date the loss was deemed to occur. There are some eligibility limitations; however, those are related more to organizations and institutions.
-There is a maximum amount of $35,000 per application.
-The fund applies to both the real estate profession and mortgage brokers. It is funded entirely by real estate professionals. RECA is responsible for administration of the fund. This is part of the industry’s commitment to consumer protection.
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REIX
-provides errors and omissions insurance for the industry. It functions as a not-for-profit organization and uses premiums from licensees to pay the costs of defending claims.
-REIX is a mandatory program that operates and protects licensees in both Alberta and Saskatchewan.
-REIX does not accept claims directly from members of the public. It is up to the licensee to report claims, or potential claims, to REIX.
