Practice Test 2 Flashcards
1
Q
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
A
The brokerage must immediately use brokerage funds to cover the negative balance or shortage
2
Q
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.
A
False
3
Q
True or False: A broker must have ownership interest in the brokerage for which they are responsible
A
False
4
Q
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
A
False
5
Q
After which of the following process steps are you authorized to practice as a licensee
A
When the registration to a brokerage is complete
6
Q
True or False: A person may only hold a license in one of the following sectors: Real estate associate, mortgage associate, property manager
A
False
7
Q
Which of the following items does RECA make available to the public
A
Annual reports
Audited financial statements
Current goals and objectives
Results and summaries of disciplinary hearings
8
Q
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
A
Commercial
9
Q
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
A
Rural residential sales
10
Q
Which two components regulate real estate brokerages in Alberta?
A
The Real Estate Act (REA) & Real Estate Council of Alberta (RECA
11
Q
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
A
True
12
Q
True or False RECA automatically suspends a license during an investigation
A
False
13
Q
Which of the following are within the scope of practice for professionals with a rural real estate license
A
Farmland
Land Leasing
Agri-business
Commercial Livestock operations
14
Q
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
A
True
15
Q
Which actions does RECA take to protect the consumers in Alberta?
A
Addressing any complaints consumers may have about real estate licensees
Inspecting brokerages to ensure compliance with legislation and regulations
16
Q
What are a broker’s responsibilities as they relate to supervising licensees?
A
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.
17
Q
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
A
Rural
18
Q
True or False: Tax legislation has distinctions between an employee and an independent contractor
A
True
19
Q
Which of the following license’s are government by RECA
A
Mortgage associate
Mortgage broker
Property Manager
Real estate associate
Real estate broker
20
Q
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.
A
False
21
Q
Five management related responsibilities of a broker
A
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
22
Q
True or False: Self-regulation in the industry enables the industry to hold its own disciplinary investigations and administer sanctions
A
True
23
Q
Range of property types considered commercial real estate
A
Business brokerage
Integrated office space
Manufacturing
Office Space
Retail facilities
Warehousing
Yard storage
24
Q
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.
A
False
25
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.
26
Which rights are considered part of fee simple property rights?
To control
To dispose of
To enjoy
To exclude
To possess
27
A former director of professional standards at RECA, stated that Right-touch regulation"
Employing the minimum regulatory force necessary to achieve the desired outcome
28
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
29
Which of the following occurs when the demand for properties outweighs the availability of properties?
Market shortage
30
Which of the following accurately describes "Registered interests"
Interests that appear on the title
31
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
32
True or False: If misrepresentation is fraudulent, the wronged party can sue for damages caused.
True
33
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.
34
True or False: If a licensee follows unlawful instructions given by a client, they are protected, under the law, from prosecution.
False
35
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
36
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
37
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
38
If buyer gives you a lawful instruction which is against their best interest, what should you do?
Obey lawful instructions
39
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
40
True or False: Real estate professionals have a fiduciary obligation to customers.
False
41
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
42
True or False: RECA has the authority to recommend the prosecution of licensees in the courts.
True
43
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
44
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
45
True or False: The executor of an estate becomes the automatic property owner of the property to be disposed.
False
46
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.
47
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
48
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.
49
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.
50
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.
51
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
52
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
53
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
54
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.
55
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.
56
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
57
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.
58
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
59
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
60
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
61
Which of the following describes the purpose of the Environmental Protection and Enhancement Act? (Select one)
Enable the smaller government systems to create their own bylaws and grant approvals.
Grant ownership of mines and minerals associated with real property.
The legal framework upon which rights are granted by application to individuals or companies interested in harvesting the land’s mineral rich resources.
Support, protect, enhance, and ensure the sustainable use of our environment.
Support, protect, enhance, and ensure the sustainable use of our environment.
62
Which of the PIPEDA’s Fair Information Principles is described as when a person gives permission to an organization to possess personal information? (Select one)
Accountability
Accuracy
Consent
Challenging Compliance
Identifying purposes
Individual Access
Limiting Collection
Limiting Use, Disclosure, Retention
Openness
Safeguards
Consent
63
Which type of Consent under PIPA is described when the individual states outright (verbally, written, or electronically) that an organization may process their personal information? (Select one)
Explicit
Deemed
Determined
Executor
Informed
Explicit
64
When engaging in telemarketing, all of the following, except one, are required to be identified. Which of the items is NOT a requirement of the Competition Act to be identified during telemarketing? (Select one)
Any terms and conditions that are applicable.
The company.
The nature of the business or product being promoted.
The physical location of the telemarketer making the call.
The price of the service or product.
The purpose of the call.
Themselves.
The physical location of the telemarketer making the call.
65
Alberta has enacted the Personal Information Protection Act (PIPA). PIPA applies to private sector organizations or corporations which were incorporated in Alberta.
PIPA does NOT apply to health service organizations or public (government) bodies.
TRUE
True
66
Sellers sign the Exclusive Seller Representation Agreement when listing a property. By signing this document, they are stating that the property’s buildings or improvements meet certain requirements. What are the consequences of improvements to the property being done without the proper permits? (Select ALL that apply)
Banks might NOT finance a property without permits.
Insurance companies will NOT insure unpermitted development.
Missing permits are considered a material latent defect.
Missing permits are considered a patent defect.
Banks might NOT finance a property without permits.
Insurance companies will NOT insure unpermitted development.
Missing permits are considered a material latent defect.
67
Regarding the primary differences between permitted land uses and discretionary land uses, review each item below, and select the one TRUE statement. (Select one)
Permitted land use and discretionary use are the same things (what the property owner is allowed to do with the land).
Permitted land use are defined lists of uses that are allowed on the land with no further approvals required other than the necessary building permits, whereas discretionary uses are approved on a case-by-case basis by the Development Authority.
Permitted land use are defined lists of uses that are allowed on the land with no further approvals required (including any building permits), whereas discretionary uses are approved on a case-by-case basis by the Development Authority.
Permitted land use are defined lists of individuals who are authorized to build and construct properties within a municipality, whereas discretionary uses are construction companies that require advanced approval through the municipality’s Development Authority.
Permitted land use are defined lists of uses that are allowed on the land with no further approvals required other than the necessary building permits, whereas discretionary uses are approved on a case-by-case basis by the Development Authority.
68
What is a primary impact of land use classification? (Select one)
Enables utility easements and public rights-of-way.
Ensures the highest amount of taxes are collected from each landowner.
Is the primary driver of interest rates in the lending market.
Land cannot be used in any way the property owner decides, it must conform to the municipalities land use policies.
Land cannot be used in any way the property owner decides, it must conform to the municipalities land use policies.
69
The Alberta Building code specifies requirements for houses with secondary suites.
True or False: The code requires secondary suites to have independent heating and ventilation for the primary suite and the secondary suite.
True
70
Which of the following is described as “the smallest level of government in the Canadian political system, serving local populations.” (Select one)
Dormer.
Municipality.
Oriented Strand Board (OSB).
Township.
Settlement.
Municipality
71
When considering “green real estate,” a likely association is with energy-efficient components. Green properties also include the materials used in the construction. What properties of bamboo makes it a popular “green” material? (Select ALL that apply)
High strength to weight ratio, making it a great option for flooring and cabinetry.
Is commonly recycled into plastic bags.
The leaves are consumed by Pandas, which are very popular at zoos.
The plant is not killed during harvest and has a high self-regeneration rate (making it a renewable resource).
High strength to weight ratio, making it a great option for flooring and cabinetry.
The plant is not killed during harvest and has a high self-regeneration rate (making it a renewable resource).
72
Illegal Cannabis grow-operations, or "illegal grow-ops", create an indoor nursery for illegally cultivating cannabis. This is not the same as a resident owning and cultivating four or less cannabis plants, which is legal in Canada. To establish an illegal grow-op, a building's systems may have been altered, compromising the integrity of the building and creating safety, health, and fire hazards.
Which of the following are signs or characteristics that a property may have been used as a grow-op? (Select ALL that apply)
Condensation on the inside of windows.
Equipment either discarded or hauled away, including fertilizers, containers, pots, wiring, PVC pipe, C02 tanks, and fuel tanks.
Hardwood flooring.
Odour similar to rotten cabbage or skunk.
Primary bedroom on the main floor.
Roof free from snow, when surrounding properties are still snow covered.
Unusual electrical hookups.
Windows covered with black plastic, foil, or dark, heavy curtains.
Windows with vertical blinds.
Condensation on the inside of windows.
Equipment either discarded or hauled away, including fertilizers, containers, pots, wiring, PVC pipe, C02 tanks, and fuel tanks.
Odour similar to rotten cabbage or skunk.
Roof free from snow, when surrounding properties are still snow covered.
Unusual electrical hookups.
Windows covered with black plastic, foil, or dark, heavy curtains.
73
Veronica’s brokerage is located in a city that borders both a mountain range and a river plain. She is likely to represent buyers who will purchase properties in a variety of locales and land conditions. From the following list. Select the FIVE most likely environmental conditions or contexts in which Veronica would be most likely to ensure her buyer has a property inspection as part of the condition of the offer to purchase. (Select FOUR)
Agricultural land primarily used for growing hay.
Properties located on or near a fault line.
Properties located on sloping ground in heavy precipitation environments.
Properties located within flood zones.
Property with no buildings or attachments.
Vacant land adjacent to municipal buildings.
Wind hazards are likely for the area.
Properties located on or near a fault line.
Properties located on sloping ground in heavy precipitation environments.
Properties located within flood zones.
Wind hazards are likely for the area.
74
True or False: Maintaining situational awareness increases the likelihood of recognizing when the situation becomes unsafe.
True
75
Which of the following tools will help you to remain safe as a real estate agent? (Select ALL that apply)
Installing cybersecurity software on electronic devices.
Posting listings on MLS® that utilize 360-degree views.
The “Find My Friends” app freely available on mobile phones.
The safety app for AREA members through Kinetic Global.
Taking safety training courses.
Using a film camera instead of a digital camera.
Installing cybersecurity software on electronic devices.
The “Find My Friends” app freely available on mobile phones.
The safety app for AREA members through Kinetic Global.
Taking safety training courses.
76
In Alberta, there is legislation that encompasses hazards which can be physical, emotional, or mental. These are generally termed occupational health and safety.
True or False: Your brokerage should provide you with information on the OHS guidelines in Alberta and how they are implemented on the job.
True
77
Which of the following brokerage processes support communication, efficiency, and quality assurance? (Select ALL that apply)
Brokerage Policies and Procedures provided to all new hires.
Communication tools such as Workplace or Slack to make it easier to connect with others in your office.
Open-Door-Policy with the broker.
Optimistic Mindset requirements.
Self-reflection tools to determine your grit.
Brokerage Policies and Procedures provided to all new hires.
Communication tools such as Workplace or Slack to make it easier to connect with others in your office.
78
True or False: A trusted group of advisors you can call on for advice, mentorship, or coaching may include colleagues, friends and family.
TRUE
FALSE
True
79
RECA’s Good Character Policy references five key areas: Respect for the Rule of Law, Honesty, Governability, Financial Responsibility, Professionalism.
Which area is failed by a professional who intentionally withholds disclosures? (Select one)
Respect for the Rule of Law
Honesty
Governability
Financial Responsibility
Honesty
80
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 discovered.
TRUE
FALSE
True
81
The following is a list of common types of insurance that are important for real estate licensees. Which of these insurance options are available to help cover business-related risks? (Select ALL that apply)
Commercial Auto Insurance.
Commercial Property Insurance or Occupiers Liability Insurance.
Commission Protection Insurance.
Cyber Liability Insurance.
General Liability Insurance or Commercial General Liability Insurance.
Homeowners insurance.
Life insurance.
checked
Personal property insurance.
Professional Liability (Errors & Omissions) Insurance.
Commercial Auto Insurance.
Commercial Property Insurance or Occupiers Liability Insurance.
Commission Protection Insurance.
Cyber Liability Insurance.
General Liability Insurance or Commercial General Liability Insurance.
Professional Liability (Errors & Omissions) Insurance.
82
Some conflicts of interest can be avoided, such as when a buyer asks you to represent them in a deal in which your spouse is the property owner. You can inform them and decline to represent them. Which of the following are circumstances that give rise to unavoidable conflicts of interest? (Select ALL that apply)
You, a licensee, want to buy a property to flip for a profit. This results in a potentially higher level of market knowledge between buyer and seller. The seller asks you what the property is worth without realizing you are potentially interested in the property.
You are a licensee for a seller. A new client comes into the brokerage and asks you to represent them as a buyer. You sign an agency agreement with them. The buyer client notices your seller client’s property and asks you to make an offer.
There is only one real estate brokerage in the area. There is no other opportunity for clients to find a real estate associate to represent them for buying and selling in the area.
You represent a buyer interested in purchasing his childhood home. The home is across the province, but still within Alberta.
You are a licensee for a seller. A new client comes into the brokerage and asks you to represent them as a buyer. You sign an agency agreement with them. The buyer client notices your seller client’s property and asks you to make an offer.
There is only one real estate brokerage in the area. There is no other opportunity for clients to find a real estate associate to represent them for buying and selling in the area.
83
While insurance coverage helps manage the risk of damages, a brokerage may also reduce risk by creating policies and procedures. How do brokerage policies and procedures serve to manage risk? (Select ALL that apply)
Anticipation of situations allows brokerages to put in policies and procedures to prevent the situations from occurring.
Policies and procedures cover all the situations where things can go wrong.
Policies and procedures around communication help keep the broker involved in critical decisions that can mitigate risk.
The trust fund provided by the brokerage spreads the cost of damages and failed contracts across the agents
Anticipation of situations allows brokerages to put in policies and procedures to prevent the situations from occurring.
Policies and procedures around communication help keep the broker involved in critical decisions that can mitigate risk.
84
Practice reviews allow the registrar to ensure that brokerages are running their businesses properly. According to RECA’s website, the four main objectives of a practice review are which of the following?
To develop content for brokerages to use in marketing and advertising.
To penalize poor performing agents to protect consumers.
To provide service to licensees.
To promote compliance with the REA and the Rules.
To reduce the number of claims against the Assurance Fund.
To safeguard the integrity of the licensing system.
To provide service to licensees.
To promote compliance with the REA and the Rules.
To reduce the number of claims against the Assurance Fund.
To safeguard the integrity of the licensing system.
85
True or False: Any situation involving exposure to danger is considered “risk.”
True.
False.
True
86
Which key term in the Real Estate Act describes the group that creates and administers rules and licensing requirements, for residential real estate, commercial real estate brokers and property managers, residential property managers, or mortgage brokers? (Select one)
Bylaws.
Council.
Industry Council.
Real Estate.
Rules.
Industry Council.
87
The Real Estate Insurance Exchange has periodical reviews and establishes the insurance premium due dates. Who reviews and establishes the premiums, and when are they due for Alberta subscribers? (Select one)
The REA advisory board reviews; Due annually on October 1.
The REIX advisory board reviews; Due annually on April 1.
The REA advisory board reviews; Due bi-annually on April 1 and October 1.
The REIX advisory board reviews; Due annually on October 1.
The REIX advisory board reviews; Due annually on October 1.
88
During an investigation, or after a hearing has determined conduct deserving of a sanction, which of the following powers does the Registrar have, with regard to licenses? (Select ALL that apply)
Power to invoke licenses.
Power to designate a licensee as inepta stultus.
Power to place conditions on licenses.
Power to place restrictions on licenses.
Power to provoke licensees.
Power to place conditions on licenses.
Power to place restrictions on licenses.
89
Following the report of the investigation, if the conduct has been determined to be sufficient for sanction, a disciplinary proceeding can take place. Which of the following disciplinary proceedings may take place if there is enough evidence that the licensee’s conduct deserves sanction? (Select ALL that apply)
A notice of decision is sent to the licensee (and the complainant if there is one).
Registrar imposes an “administrative penalty” the amounts of which are set out in the bylaws.
Registrar sends the findings to an appeals court and the licensee may be compelled to respond to the allegations.
Registrar sends the findings to the Minister of Service Alberta, who determines either to suspend or revoke the license of the licensee.
The Licensee receives a letter, reprimanding the behavior.
A notice of decision is sent to the licensee (and the complainant if there is one).
Registrar imposes an “administrative penalty” the amounts of which are set out in the bylaws.
The Licensee receives a letter, reprimanding the behavior.
90
Some groups trade in real estate but are not governed by the Real Estate Act (REA). The people who are exempted are regulated in different industries or by different legislation, and it would not be reasonable to expect them to get a license to do their duty. Which of the following exemptions appear in the Real Estate Act (REA)?
(Select ALL that apply)
A banking institution that trades in real estate owned or administered by it.
A person who trades only in mineral rights, rather than surface rights.
A person representing rural property owners seeking buyers.
A person who has a 25% or more interest (ownership) in the real estate and sells it.
A practicing Alberta lawyer.
An agent at a brokerage authorized by the owner of a specific property to broker the transaction on the owner’s behalf.
People who are ordered to deal with real estate by a court, are appointed under legislation, are assigned or appointed to take care of a dead person’s property or are responsible for taking care of property for someone else’s benefit as a trustee.
A banking institution that trades in real estate owned or administered by it.
A person who trades only in mineral rights, rather than surface rights.
A person who has a 25% or more interest (ownership) in the real estate and sells it.
A practicing Alberta lawyer.
People who are ordered to deal with real estate by a court, are appointed under legislation, are assigned or appointed to take care of a dead person’s property or are responsible for taking care of property for someone else’s benefit as a trustee.
91
In 1980, Alberta enacted a new Real Estate Act. The history of the act includes several changes. Which of the following is accurate (Select one)
1984 and 1987 had amendments to the Real Estate Act, and 1995 represented a large change and upgrade in legislation concerning licensees.
Buying and selling mobile homes was covered in the original 1980 act.
The Real Estate Assurance Fund was NOT created until 1995, but collection of funds into a central repository was allowed following the 1982 amendment.
There were no amendments, only a major rewrite in 1995 that allowed for self-governance.
1984 and 1987 had amendments to the Real Estate Act, and 1995 represented a large change and upgrade in legislation concerning licensees.
92
True or False: Once the appeals hearing panel decides, a licensee may appeal the decision through the Court of King’s Bench.
True.
False.
True
93
Which of the following are consequences associated with a licensee entering into a conflict of interest with a client’s consent?
It increases the possibility of civil liability.
It may NOT be possible to adequately represent the client.
It may NOT be possible to put the client’s interest first.
Conflicts of interest may expose the client to undue risk.
It increases the possibility of civil liability.
It may NOT be possible to adequately represent the client.
It may NOT be possible to put the client’s interest first.
Conflicts of interest may expose the client to undue risk.
94
Kendall and Corwin are associates at Skeevy Brokerage. Recently, they were both representing a buyer and seller in the same real estate transaction, and they failed to disclose this information to their clients. It was discovered by the clients at the closing when they reviewed the documentation. The clients both shared similar experiences where the prices and contract items negotiated seemed to primarily favor the agents and their convenience. A formal complaint was filed with RECA, and both clients filed a civil claim against the licensees through the Courts.
This is an example of a case regarding tort law, where the licensee had a duty to care to a client, failed to come up to the standard of care, and harmed someone in the process. Which of the following is the most common remedy from the courts for this type of case? (Select one)
Compensation – An order to pay a certain amount of money in compensation for the damages the plaintiff suffered.
Contractual remedies – an order to pay the deposit to either the buyer or seller, as appropriate.
Criminal remedies – and order to serve jail time.
Punitive remedies – and order to suspend or revoke the agent’s licenses.
Compensation – An order to pay a certain amount of money in compensation for the damages the plaintiff suffered.
95
Which of the following parts of the process required to create an amendment to the Real Estate Act is incorrectly described? (Select one)
A first draft of the amendment is prepared.
The bill is introduced in the Legislature (First Reading).
The Members of the Legislative Assembly (MLAs) debate the contents of the draft.
The Committee of the Whole discuss specific clauses and possible amendments.
If the bill passes the final vote, the legislature sends it to the Minister for Service Alberta for Royal Assent.
The amendment becomes in force once it receives Royal Assent.
If the bill passes the final vote, the legislature sends it to the Minister for Service Alberta for Royal Assent.
96
A real or apparent incompatibility between a licensee’s interests and the interests of the client or potential client
Which of the following is described above? (Select one)
Agency Interest.
Agency Conflict.
Conflict of Agency.
Conflict of Interest.
Designated Agency.
Designated Conflict.
Conflict of Interest.
97
From the following list, which are the advantages provided by having a professional group of peers govern the same body of professionals? (Select ALL that apply)
A professional’s peers also have insight into whether a negative outcome in a transaction is beyond the control of the professional, or due to their negligence.
Conversations of both problems and advances are easier with someone of the same professional background.
Members prefer all other members be just like themselves in nationality, race, creed, religion, gender, and other preference.
Members of these groups want to be judged, at least in part, by other people who understand the pressures and difficulties of that profession.
A professional’s peers also have insight into whether a negative outcome in a transaction is beyond the control of the professional, or due to their negligence.
Conversations of both problems and advances are easier with someone of the same professional background.
Members of these groups want to be judged, at least in part, by other people who understand the pressures and difficulties of that profession.
98
A client suggests to a licensed agent that they have a concern that the agent might not be representing their best interests. The cause is a result of the agent noting to the client that the other agent in the deal went to the same high school at the time the agent did, and that they have repeatedly worked with the other agent in other transactions.
Which of the following best describes both the situation and action that should be taken? (Select the BEST answer)
There is absolutely no real or perceived conflict of interest. This is an example of a silly client.
This is an example of perceived conflict of interest. If the client perceives it, it is best handled as though it is a conflict of interest. Contact the broker for a discussion.
This is an example of perceived conflict of interest. The client is obviously wrong, no action is required.
This is an example of real conflict of interest. The client must be informed and must sign a disclosure form to proceed with the transaction.
This is an example of a real conflict of interest. The client agent relationship should be immediately terminated.
This is an example of perceived conflict of interest. If the client perceives it, it is best handled as though it is a conflict of interest. Contact the broker for a discussion.
99
Not only do licensees have the responsibility of behaving properly themselves, but they are also responsible for supporting the proper function of their profession. Under the Real Estate Act Rules, certain behaviors (unethical, unsafe, illegal, incompetent) should be reported. From the following list, select to whom and what order the actions should be reported? (Select one)
Law enforcement (when appropriate), the person being complained against, then RECA.
RECA first, then the broker, then law enforcement (when appropriate).
The broker first, then RECA or law enforcement (when appropriate).
The broker only. The broker reports anything further to RECA and/or other authorities.
To the person being complained against first, then RECA, then the broker, then law enforcement (when appropriate).
The broker first, then RECA or law enforcement (when appropriate).
100
Under which circumstances can the registrar freeze a licensee’s assets? (Select ALL that apply)
If it looks as though the licensee might move assets around and hide them (including shifting money between accounts or account holders) to prevent an injured party from getting anything back.
There are connected criminal proceedings, or civil proceedings for non-compliance with the Real Estate Act, which are based in the business of a licensee.
When the registrar has appointed someone to investigate a brokerage and instructed a brokerage staff member to produce documents related to the investigation.
Where the amount in the licensee’s trust account is less than what the registrar thinks the licensee might owe.
If it looks as though the licensee might move assets around and hide them (including shifting money between accounts or account holders) to prevent an injured party from getting anything back.
There are connected criminal proceedings, or civil proceedings for non-compliance with the Real Estate Act, which are based in the business of a licensee.
Where the amount in the licensee’s trust account is less than what the registrar thinks the licensee might owe.
101
True or False: If a licensee follows the advice of RECA, and documents their efforts to limit liability, this prevents the client from holding the licensee liable for a recommendation, if things go wrong.
TRUE
FALSE
FALSE
102
True or False: When listing a rural property, if a Real Property Report is required by the buyer, it can be replaced with the real estate professional’s best judgement of what the property includes, how the property is described, and measurements.
TRUE
FALSE
False
103
For the following specific situations, documents or information, which could require a Commercial Real Estate license. (Select ALL that apply)
A buyer interested in a home in an established 55+ community.
A mobile home placed on leased land.
A tenant’s agreement for a residential home.
A tenant’s agreement for a strip mall.
A warehouse used to store inventory for a manufacturing facility.
An office building.
Recreational property sales.
The environmental consideration for acreages.
A tenant’s agreement for a strip mall.
A warehouse used to store inventory for a manufacturing facility.
An office building.
104
The Real Estate Act requires anyone trading in real estate as a real estate broker, dealing as a mortgage broker, acting as a property manager, or acting as a real estate appraiser to have the authorization to carry out these activities. In each industry sector, the preliminary factors in determining whether a person's activities require a license are which of the following? (Select ALL that apply)
Whether the person is being compensated for undertaking these activities or providing these services.
Whether the person is performing a real estate, mortgage, property management, or appraisal activity or service for someone else.
Whether the person is trading in real estate as the buyer or seller.
Whether the person works for a brokerage, regardless of whether or not they trade in real estate.
Whether the person is being compensated for undertaking these activities or providing these services.
Correctly checked
Whether the person is performing a real estate, mortgage, property management, or appraisal activity or service for someone else.
105
Home inspectors in Alberta must have a license. To have a license, a home inspector must have all of the following except one. Select the item which is NOT required. (Select one)
Be employed by a home inspection business.
Have a degree, diploma, or certificate in home inspection from an approved school, and pass a test inspection by a CMI from the International Associate of Certified Home Inspectors Alberta, or a RHI from the Canadian Association of Home & Property Inspectors.
Have a license from an approved regulator body.
Hold an approved home inspection designation from an approved industry association (APHIS and InterNACHI are two examples).
Validate the Home Inspector license through the Canada Mortgage and Housing Corporation (CMHC).
Validate the Home Inspector license through the Canada Mortgage and Housing Corporation (CMHC).
106
Some self-managed corporations are ignorant or willfully blind to the CPA and Regulations. They do not maintain a reserve fund, prepare a yearly budget, or hold annual general meetings. In these situations, buyers and sellers are forced to make decisions with incomplete information.
The consequence of being a seller in this situation is that they are often forced to take values below market value to compensate for the risk.
True or False
True
107
A condominium corporation may give one month’s notice to a renter to vacate for which of the following? (Select ALL that apply)
Damage the property of the corporation.
Practice religious observance in their unit.
Contravene the bylaws.
Intimidate other residents.
Leave the lights on while absent from the premises
Damage the property of the corporation.
Contravene the bylaws.
Intimidate other residents.
108
Generally, condominiums are less expensive than other ownership models. Regardless of whether they are commercial or residential, condominiums make the cost of owning a property attainable for more people. The vast majority of condominium transactions involve resale units which have been previously purchased and owned as condominium units.
If you hold a residential real estate license, you can represent a client in the purchase or sale of a residential condominium unit.
TRUE
FALSE
True
109
Condominiums may include commercial outlets, such as a strip mall
True
110
How does a board of directors cover the cost of certain repairs or costly expenses when the condominium corporation’s assets are not adequate to cover the expenses? (Select one)
A special levy (special assessment) is charged to all units.
Special land units retained by the corporation are immediately sold to fund the shortage.
The condominium corporation is dissolved in bankruptcy, and the courts determine the sale of assets.
The condominium corporation is considered “in arrears” and each unit must participate in a fundraiser.
A special levy (special assessment) is charged to all units.
111
Mortgages products are available for a variety of purposes. From the list below, select one item that is NOT a valid type of mortgage product. (Select one)
Acreage lending mortgage.
Build/Completion mortgage.
Construction draw mortgage.
Cashback mortgage.
Crashcart mortgage.
Home Equity Line of Credit.
New-to-Canada mortgage.
Refinance mortgage.
Residential mortgage.
Reverse mortgage.
Crashcart mortgage.
112
Which of the following justifies a brokerage's need to collect seller/landlord and buyer/tenant information during a transaction? (Select one)
Collecting the data prevents the need for client confidentiality.
It is a requirement of the Canada Mortgage and Housing Corporation (CMHC) to establish identities of all parties in a lease/tenant scenario.
It minimizes the possibility of mortgage fraud.
Minister of Service Alberta requires the information for brokerage licensing.
It minimizes the possibility of mortgage fraud.
113
Which of the following mortgage types provides the borrower with access to capital without making standard principal and interest payments? (Select one)
Acreage lending mortgage.
Construction draw mortgage.
Cashback mortgage.
Home Equity Line of Credit.
Residential mortgage.
Reverse Mortgage.
Reverse Mortgage.
114
In a mortgage who is typically referred to as “the buyer” or individual who is obtaining the loan? (Select one)
Mortgagee.
Mortgagor.
Primary title holder.
Writ of Guarantor.
Mortgagor.
115
Which of the following are ways real estate professionals can minimize or suppress mortgage fraud? (Select ALL that apply)
Always ask your client where the referral came from and how they obtained your information.
Avoid meeting clients face to face.
Discourage the seller or investor from having you see or inspect the property.
Encourage consumers to hire a professional to facilitate their purchase.
If a property that is being listed and sold is occupied by a tenant, the real estate professional must collect information from all parties.
Leave signature lines or other important areas on a loan application blank.
Order, review, and verify all land title documents and mortgage statements to confirm ownership before listing or buying properties.
Read, study, and be aware of all mortgage fraud types and transactions.
Tune into Fraud Awareness Month with RECA and other provincial and national governing or licensing bodies.
Verify all documents and fact check your clients’ information.
Always ask your client where the referral came from and how they obtained your information.
Encourage consumers to hire a professional to facilitate their purchase.
If a property that is being listed and sold is occupied by a tenant, the real estate professional must collect information from all parties.
Order, review, and verify all land title documents and mortgage statements to confirm ownership before listing or buying properties.
Read, study, and be aware of all mortgage fraud types and transactions.
Tune into Fraud Awareness Month with RECA and other provincial and national governing or licensing bodies.
Verify all documents and fact check your clients’ information.
116
True or False: A down payment can be gifted from an immediate family member.
TRUE
FALSE
True
117
When assisting clients in finding properties that fit their budgets, desired property features are classified into which categories? (Select one)
Needs and passions.
Needs, requirements, and musts.
Needs, wants, and nice-to-haves.
Musts, requirements, and necessities.
Needs, wants, and nice-to-haves.
118
Real estate professionals, especially mortgage brokers and mortgage agents, need to be aware of applicable provincial and federal legislation and how this impacts the consumer, the lender, their brokerage, and mortgage documents. Which of the following developments in legislation have affected mortgage financing in Canada? (Select ALL that apply)
Interest Act.
Law of Property Act.
National Housing Act (NHA).
Office of the Superintendent of Financial Institutions (OFSI)
Interest Act.
Law of Property Act.
National Housing Act (NHA).
119
Some mortgages do not qualify for mortgage insurance. These mortgages require the lender to take on additional risk and are called uninsurable mortgages. Which of the following are characteristics of an uninsurable mortgage? (Select ALL that apply)
A mortgage that is considered to be lent as an auxiliary product.
A mortgage with a 30-year amortization.
A mortgage with a minimum down payment of 20%.
An investment property.
Any mortgage loan on a purchase over one million dollars.
The lowest interest rates of all mortgage products.
A mortgage with a 30-year amortization.
An investment property.
Any mortgage loan on a purchase over one million dollars.
120
What is the difference between a high-ratio mortgage and a conventional mortgage? (Select one)
The conventional mortgage is insured, but high-ratio is not.
The high-ratio mortgage has a 20% down-payment or more; the conventional mortgage has 20% or less (5% to 19.99%).
The high-ratio mortgage has a less than 20% down-payment (5% to 19.99%); the conventional mortgage has 20% or more.
The high-ratio mortgage has significantly lower interest rates, due to high income to loan ratio.
The high-ratio mortgage is insured, but conventional mortgage is not.
The high-ratio mortgage has a less than 20% down-payment (5% to 19.99%); the conventional mortgage has 20% or more.
121
Riley has a client listing on MLS® that is generating a lot of calls about the property. One of the callers asks Riley if he would be willing to represent him as the buyer for the property, and suggests that by doing so, Riley should be extra grateful for the additional commission. Riley appreciates the idea of making more money, but also understands that he needs to talk with the seller client before he can proceed with a transaction. Which of the following would reduce the professional risk to Riley in this situation? (Select ALL that apply)
Riley could suggest the buyer work out a deal with him “under the table” to secure the information the buyer wants.
Riley could suggest another agent from the brokerage to the buyer to avoid any conflict of interest with his current client.
Riley must allow the seller to determine if Riley representing both parties in the deal is acceptable.
Riley should inform the buyer that if he represents both parties in the deal, he cannot offer any details about the seller or offer advice or counsel as a regular agent could, due to the need to remain impartial.
Riley should suggest to the seller that this type of deal will result in a higher sales price for the seller.
Riley could suggest another agent from the brokerage to the buyer to avoid any conflict of interest with his current client.
Riley must allow the seller to determine if Riley representing both parties in the deal is acceptable.
Riley should inform the buyer that if he represents both parties in the deal, he cannot offer any details about the seller or offer advice or counsel as a regular agent could, due to the need to remain impartial.
122
In a mortgage, who is the person who is providing funds for the purchase of a loan or mortgage security on a real estate transaction? (Select one)
Mortgagee.
Mortgagor.
Primary title holder.
Writ of Guarantor.
Mortgagee
123
Who does mortgage default insurance protect? (Select one)
The buyer.
The mortgage broker.
The mortgage lender.
The seller.
The mortgage lender.
124
How can you determine that your client is buying the home that is described and that the seller is, in fact, the seller?
Ask to see a utility bill for the property, and validate the seller is listed as the payee.
Check the phone and address listings for the seller, and make sure the seller’s name matches the address listing.
Investigate the property’s title, and validate the seller’s name on valid ID matches the title holder.
Validate the seller lives at the property being sold.
Investigate the property’s title, and validate the seller’s name on valid ID matches the title holder.
125
When writing an offer for a client who is securing a mortgage, which of the following are considered due diligence on the part of the real estate agent representing the buyer? (Select ALL that apply)
Consult the mortgage professional to determine the number of business days required for conditions to be met.
Ensure that the property appraisal is scheduled to enable the mortgage lender to approve financing.
Fully sign the offer to purchase prior to having a condition of finance date on the offer.
Writing the offer as conditional to the buyer securing financing
Consult the mortgage professional to determine the number of business days required for conditions to be met.
Ensure that the property appraisal is scheduled to enable the mortgage lender to approve financing.
Writing the offer as conditional to the buyer securing financing
126
The principle of Surplus Productivity states that after all costs are satisfied in a venture, the net income flows to the land and establishes the value of that land.
True or False: This principle has a limited effect on residential property.
TRUE
FALSE
TRUE
127
Which of the following is a federal act that imposes requirements on how interest is described and calculated in loan and mortgage documents? (Select one)
The Interest Act.
Service Alberta.
The Law of Property Act.
The National Housing Act.
The Interest Act.
128
Mortgage fraud can have drastic effects on the country’s real estate market. Which of the following are the impacts of mortgage fraud on society? (Select ALL that apply)
It can make it more challenging for everyday citizens to attain a mortgage and purchase a property.
It creates unnecessary supply and inventory issues.
It prevents government intervention on mortgage and housing regulations.
There is a financial loss component to banks, professionals, and everyday people.
It can make it more challenging for everyday citizens to attain a mortgage and purchase a property.
It creates unnecessary supply and inventory issues.
There is a financial loss component to banks, professionals, and everyday people.
129
Which of the following activities are considered to be “dealing in mortgages” and require a mortgage brokering license? (Select ALL that apply)
Assisting a client in choosing which mortgage product and lender is best for them.
Collecting client information on behalf of a mortgage lender to secure financing.
Contacting a mortgage lender to get a rate sheet.
Contacting mortgage lenders to secure financing on behalf of a client.
Referring a client to a mortgage broker.
Assisting a client in choosing which mortgage product and lender is best for them.
Collecting client information on behalf of a mortgage lender to secure financing.
Contacting mortgage lenders to secure financing on behalf of a client.
130
The financing condition in a real estate purchase contract ensures the mortgage money will be paid to the buyer on or before the time and date listed on the conditional offer. (Select one)
TRUE
FALSE
False
131
Which method of control allows each proposed development to be considered according to its own merits? (Select one)
Development control.
Permitting.
Principal Title.
Regulatory commission.
Zoning control.
Development control.
132
Occasionally during contract negotiations, differences and disputes arise that put both the contract and the client at risk. What steps can be taken to advise clients and help prevent disputes and differences from resulting in legal action? (Select ALL that apply)
Encourage the client to have the contract reviewed by a lawyer prior to signing.
Include additional clauses written into the contract terms which allow for a specific set of dispute resolution processes to be employed if the parties to the contract have a disagreement pertaining to specific terms, obligations, or entitlements.
Keep the contract time short to prevent disputes from arising.
Use vague and unspecific language in the contract, to give maximum flexibility in meeting requirements.
Encourage the client to have the contract reviewed by a lawyer prior to signing.
Include additional clauses written into the contract terms which allow for a specific set of dispute resolution processes to be employed if the parties to the contract have a disagreement pertaining to specific terms, obligations, or entitlements
133
Where are the terms of trust negotiated and codified by the buyer/tenant, seller/landlord, and the trustee? (Select one)
In a separate “trust contract” provided by Service Alberta.
In a separate “trust contract” provided by the Real Estate Council of Alberta (RECA).
In the brokerages written service agreement (WSA) with the seller.
In the brokerage’s written service agreement (WSA) with the buyer.
In the real estate contract signed by the parties.
In the real estate contract signed by the parties.
134
Which of the following are TRUE statements regarding funds held in trust? (Select ALL that apply)
May NOT be used by the brokerage for other than the client’s intended purpose.
Must be allocated to the real estate agent for payment of commissions.
Must be in a separate account designated as a trust account by the brokerage.
Must be reported on daily, to the client, with the account number, and the current balance.
May NOT be used by the brokerage for other than the client’s intended purpose.
Must be in a separate account designated as a trust account by the brokerage.
135
Land use zoning classifications outline what type of construction is permitted on the property.
True or False: If R-1 is classified as a residential single-detached dwelling zone, and a person wishes to build within the R-1 district, the municipality may still refuse them permission if all other conditions of the application are met.
TRUE
FALSE
False
136
The broker’s role in handling the deposit is that of a trustee, and, as a trustee, they must abide by the terms of trust, and in accordance with the Trustees Act. Which of the following are part of the terms of trust? (Select ALL that apply)
As a trustee, the broker does not act on behalf of, or in favour of either party.
The broker’s duty is to receive and disburse funds in strict adherence to the terms of trust, which for real estate contracts is outlined and agreed to by the parties in the contract itself.
The brokerage holding the trust monies must deposit the money within three business days of receipt of the deposit.
The brokerage is entitled to a 1/3 proceed of the trust.
The brokerage may utilize the trust monies in possession for operation of the brokerage as long as the funds are disbursed according to the terms of the trust.
As a trustee, the broker does not act on behalf of, or in favour of either party.
The broker’s duty is to receive and disburse funds in strict adherence to the terms of trust, which for real estate contracts is outlined and agreed to by the parties in the contract itself.
The brokerage holding the trust monies must deposit the money within three business days of receipt of the deposit.
137
n some real estate transactions, a corporation may be selling a property. In such cases it is required by the real estate professional to obtain proof that the individual signing on behalf of the corporation has the express legal right to bind the corporation for the purchase or sale of real property. Which of the following are methods to validate the individual’s authority? (Select ALL that apply)
A review of the corporate bylaws.
A signed affidavit by the person signing that they are authorized.
A signed resolution of the board of directors.
A third-party vouching for the individual.
A website provided by the person signing, that they are a member of the board of directors of the company.
Checking the corporate registry to see if the individual signing is perhaps the sole owner of the corporation
A review of the corporate bylaws.
A signed resolution of the board of directors.
Checking the corporate registry to see if the individual signing is perhaps the sole owner of the corporation
138
True or False: The Statute of Frauds is a common law statute requiring that real estate contracts be in writing and be signed by all parties who will be bound by that contract.
TRUE
FALSE
True
139
Which of the following are benefits of having a written service agreement? (Select ALL that apply)
Creates a binding agreement between the client and agent for the duration of the agreement.
Creates a fiduciary responsibility of the real estate profession to the client.
Enables the real estate professional to claim a minimum of 5% commission on any transaction the client enters.
Enables the real estate professional to claim commissions on all brokerage products the client engages (real estate, mortgage, condominium, property management, etc.).
Requires the real estate professional to represent the client’s best interests at all times.
Creates a binding agreement between the client and agent for the duration of the agreement.
Creates a fiduciary responsibility of the real estate profession to the client.
Requires the real estate professional to represent the client’s best interests at all times.
140
Documentation best practices include documenting questions that clients ask, as well as the response provided. In such situations, which of the following is the best practice? (Select one)
Document the question and response in your own notes only.
Document the question and response in your own notes, and include it in the trade record file.
Document the question and response in your own notes, send a copy to the client, and include it in the trade record file.
None of the above.
Document the question and response in your own notes, send a copy to the client, and include it in the trade record file.
141
Which of the following additional documents indicates that the signer understands that the real estate professional does not owe them any agency obligations, including fiduciary duties and awareness that the real estate professional will not provide any services that require discretion, judgement, or the provision of confidential information? (Select one)
Alberta Real Estate Association (AREA)’s standard purchase contract.
Customer Acknowledgement form.
Sale of Buyer’s Property Schedule.
Seller Customer Acknowledgement and Fee Agreement.
Tenancy Schedule.
Addendum.
Customer Acknowledgement form.
142
Written communication, documentation, and record-keeping are fundamental to the work of a real estate professional. In situations where an important file note is being made, a best practice is to send a brief written correspondence to the client outlining the issue or discussion and any advice given. In which situation does this apply? (Select one)
Actions.
Advice.
Conversations.
Individual practice.
All of the above.
All of the above.
143
In cases where you would like to buy a property that is being listed by another real estate professional in your common law brokerage, the brokerage must immediately disclose certain items. From the list below, select the one item that is NOT required to be disclosed. (Select one)
Any of the seller’s confidential information that you may already know.
Current value of your portfolio.
That the seller has opportunity to seek independent legal advice.
The conflict of interest.
Who will be representing you in the transaction.
Your name and your relationship with the brokerage.
Current value of your portfolio.
144
True or False: A known material latent defect is one that must be disclosed by the seller.
TRUE
FALSE
TRUE
145
True or False: Real estate professionals have an obligation to ensure final signed copies of all agreements are provided to all parties to a transaction in a timely manner.
TRUE
FALSE
True
146
True or False: Consent is a legal term meaning the party freely agrees.
TRUE
FALSE
True
147
True or False: If a client wishes to view a property not as a buyer, but for some other reason, the real estate professional is NOT required to disclose the reason for the visit, only that the visit is occurring.
TRUE
FALSE
False
148
With regard to a service contract between a client and a real estate professional, who is the service contract between? (Select one)
The brokerage of the real estate professional and the client.
The brokerage of the real estate professional and the real estate professional.
The client and the Real Estate Association of Alberta (RECA).
The real estate professional and the client.
The brokerage of the real estate professional and the client.
149
Which of the following are common types of dispute resolution contract clauses? (Select ALL that apply)
Arbitration.
Foundational.
Mediation.
Arbitration.
Mediation.
150
True or False: Maintaining good notes and documenting any instances of unusual behaviour are critical should an issue of capacity arise.
TRUE
FALSE
True
