RECA RESIDENTIAL EXAM UNIT 1 -9 1000+ Q&A EXPERT VERIFIED WITH DETAILED ANSWERS 2023/2024 GUARANTEED PASS 3 fundamental principles of fiduciary duty. AKA the 3 principles that give rise to fiduciary duties in a representation relationship: Trust and Confidence, Best Interests, Loyalty 8 General Obligations of REPs Exercise Care and Skill, Act Honestly, Negotia te Favourable terms, Maintain Confidentiality, Disclose Information, Act in Person, Obey Lawful Instructions, Perform Mandate 6 Points of Fiduciary Duties Provide Utmost Loyalty, Not make secret profits, Handle Confident Information Properly, To Account, A void conflicts of interest, Disclose conflicts of interest. "To Account" meaning Real estate professionals must account for all money and/or property belonging to the client. This duty compels a real estate professional to safeguard all money, documents, p roperty, and information entrusted to them that relate to the client's transaction. "arm's length transaction" meaning In real estate, an arm's length transaction is when the buyer and seller each act in their own self -
interest to try to get the best deal they can. 4 common examples of deals that are not arm's length transactions Sales between friends or family members Sales between an employer and his or her employees Sales between a parent company and one of its subsidiaries Sales between a trust and its beneficiaries 2 options if REP cannot provide competent service to a client Be Supervised, Refer To determine if a REP has met the standard of care in a given situation, an objective review of all facts is performed. 3 measures to determine if that has bee n met. Professional Standards, Professional Norms and Practices, Expert Testimony "Expert Testimony" Meaning Other real estate professionals, or experts, may provide information as to the expectations of a reasonable and prudent real estate professional an d how they would have conducted themselves in similar circumstances. 9 points in "Meeting the Standard of Care" 1. Know the Type of Consumer Relationship 2. Act consistent with the relationship chosen 3. Know the Brokerage Service 4. Know the brokerage Pol icies and procedures 5. Be Aware of Market and Practical Issues 6. Make Reasonable Efforts to Confirm information 7. Exercise Due care when preparing documents 8. Seek Advice when appropriate 9. Be a Lifelong learner When is written disclosure needed? When ever a REP receives or is about to receive confidential information; including the consumer's real estate needs, motivation, or financial ability. 4 things that must be included in written disclosure 1. Whether the REP has entered into a representation rel ationship with another party to the real estate transaction 2. The service the REP will provide the consumer 3. Any conflicts of interest that may exist between the consumer and the REP 4. Any additional facts or information that may influence the consumer 's decision to proceed with the real estate relationship. Which guide must REPs practicing residential real estate must REPs provide to consumers for relationship disclosures (the guide includes all information REPs must include in written disclosures unde r the Rules) RECA's Consumer Relationship Guide For needed when non -representation relationship is selected by consumer (then becoming a customer) Customer acknowledgement form Form needed when representation relationship is chosen by consumer (then becoming a client) Written Service Agreement Does RECA's consumer relationships guide, customer Acknowledgement forms and written service agreements contain mandatory content? Can it be changed? Yes. Although these documents may be changed at the request of a consumer or tailored to the needs of a brokerage (eg. logo added, broker information added), content, meaning and intent must not be altered. Representation relationships are NOT established by the following 4 actions 1. REP conveying documents or providing general information to consumers 2. REP using certain terms to refer to consumers (eg client customer) 3. Consumers using certain terms to refer to REP (eg. Real estate agent, l ease agent, buyers agent) 4.Consumers paying remuneration (ie commission, fees) to the REP's brokerage 5Ds of Role Clarity and Consistency (5 words) 1. Discuss 2. Determine 3. Document 4. Disclose 5. Do Longer explanations of the 5Ds of Role Clarity and Co nsistency (sentences) 1. Discuss the Real estate relationship 2. Determine your representative capacity 3. Document your representative capacity in writing 4. Disclose your representative capacity (ie. seller's agent, buyer's agent, landlord's agent, or te nant's agent) 5. Do actions with your representative capacity consistent with your established relationship 6 Benefits of Role Clarity and Consistency 1. Meets Regulatory Requirements 2. Enhances professionalism 3. Prevents Unintended relationships 4. Clarifies responsibilities to consumers 5. Clarifies services to consumers 6. Reduces disputes True or False - Making referrals is a fiduciary duty that RE Ps owe to clients False True or False - the standard of care for a REP in a particular set of circumstances is determined subjectively False "subjectively" meaning In a way that is based on personal feelings, tastes, or opinions. "Objectively" meaning in a way that is not influenced by personal feelings or opinions. Defined in the Rules, what does confidential information include (3 things in specific) Any information concerning the client including the client's financial or personal situation, the client's real estate, and transactions involving the client. What does commercial activity refer to? Any transaction, act, or conduct involving the exchange of goods and/or services. Is Buying/selling/leasing considered commercial activity? Yes, the purchase, sale , or leasing of real estate is considered a commercial activity In Alberta the protection of individuals' personal information during real estate transactions is regulated by which privacy legislation (x2) PIPEDA (The Personal Information Protection and Electronic Document Act) and PIPA (The Personal Information Protection Act) Is PIPEDA a provincial or a Federal legislation? Federal Does PIPEDA legislation apply to Alberta? Yes and No, since Alberta has PIP A (which is substantially similar to PIPEDA so accepted), it does not all to all organizations involved in commercial activities. Which 2 areas does PIPEDA legislation continue to apply to in Alberta (and provinces that have set up legislation like PIPA) PIPEDA continues to apply to 1. Federally regulated businesses (such as banks, airlines, and telecommunication companies. 2. Organizations conducting business (involving person information) that crosses provincial or national borders 10 Privacy Principles i n Practice 1. Accountability 2. Identifying Purposes 3. Consent 4. Limiting Collection 5. Limiting Use, Disclosure, and Retention 6. Accuracy 7. Safeguards 8. Openness 9. Individual Access 10. Challenging Compliance 3 types of consent (recognized by Privac y legislation) Express, implied or opt -out Can Real estate assistants hired by the brokerage do activities involving the public? Yes (but not tasks that would require being authorized to trade in real estate, mainly to help with administrative functions or general office duties supporting the day -to-day activities. In some instances, involve the public If a REP hires an assistant (first must have broker's consent) can the tasks involve the public? No, they cannot involve the public. Otherwise they need to b e employed by the brokerage 3 Things that need to be implemented if using a virtual assistant in order to protect client information 1. Confirm the virtual assistant privacy policies and procedures are comparable to that of the brokerage 2. Notify clients whose personal information is being collected or transferred when notification was not included in the real estate relationship form. Notification should be in writing and documents for brokerage record keeping. 3. Advise clients whose personal information is collected or transferred, how the real estate brokerage's privacy policies and procedures may be obtained in writing. Also let the client know who can answer questions about the collection, use, and disclosure of their personal information when handled by the virtual assistant.
interest to try to get the best deal they can. 4 common examples of deals that are not arm's length transactions Sales between friends or family members Sales between an employer and his or her employees Sales between a parent company and one of its subsidiaries Sales between a trust and its beneficiaries 2 options if REP cannot provide competent service to a client Be Supervised, Refer To determine if a REP has met the standard of care in a given situation, an objective review of all facts is performed. 3 measures to determine if that has bee n met. Professional Standards, Professional Norms and Practices, Expert Testimony "Expert Testimony" Meaning Other real estate professionals, or experts, may provide information as to the expectations of a reasonable and prudent real estate professional an d how they would have conducted themselves in similar circumstances. 9 points in "Meeting the Standard of Care" 1. Know the Type of Consumer Relationship 2. Act consistent with the relationship chosen 3. Know the Brokerage Service 4. Know the brokerage Pol icies and procedures 5. Be Aware of Market and Practical Issues 6. Make Reasonable Efforts to Confirm information 7. Exercise Due care when preparing documents 8. Seek Advice when appropriate 9. Be a Lifelong learner When is written disclosure needed? When ever a REP receives or is about to receive confidential information; including the consumer's real estate needs, motivation, or financial ability. 4 things that must be included in written disclosure 1. Whether the REP has entered into a representation rel ationship with another party to the real estate transaction 2. The service the REP will provide the consumer 3. Any conflicts of interest that may exist between the consumer and the REP 4. Any additional facts or information that may influence the consumer 's decision to proceed with the real estate relationship. Which guide must REPs practicing residential real estate must REPs provide to consumers for relationship disclosures (the guide includes all information REPs must include in written disclosures unde r the Rules) RECA's Consumer Relationship Guide For needed when non -representation relationship is selected by consumer (then becoming a customer) Customer acknowledgement form Form needed when representation relationship is chosen by consumer (then becoming a client) Written Service Agreement Does RECA's consumer relationships guide, customer Acknowledgement forms and written service agreements contain mandatory content? Can it be changed? Yes. Although these documents may be changed at the request of a consumer or tailored to the needs of a brokerage (eg. logo added, broker information added), content, meaning and intent must not be altered. Representation relationships are NOT established by the following 4 actions 1. REP conveying documents or providing general information to consumers 2. REP using certain terms to refer to consumers (eg client customer) 3. Consumers using certain terms to refer to REP (eg. Real estate agent, l ease agent, buyers agent) 4.Consumers paying remuneration (ie commission, fees) to the REP's brokerage 5Ds of Role Clarity and Consistency (5 words) 1. Discuss 2. Determine 3. Document 4. Disclose 5. Do Longer explanations of the 5Ds of Role Clarity and Co nsistency (sentences) 1. Discuss the Real estate relationship 2. Determine your representative capacity 3. Document your representative capacity in writing 4. Disclose your representative capacity (ie. seller's agent, buyer's agent, landlord's agent, or te nant's agent) 5. Do actions with your representative capacity consistent with your established relationship 6 Benefits of Role Clarity and Consistency 1. Meets Regulatory Requirements 2. Enhances professionalism 3. Prevents Unintended relationships 4. Clarifies responsibilities to consumers 5. Clarifies services to consumers 6. Reduces disputes True or False - Making referrals is a fiduciary duty that RE Ps owe to clients False True or False - the standard of care for a REP in a particular set of circumstances is determined subjectively False "subjectively" meaning In a way that is based on personal feelings, tastes, or opinions. "Objectively" meaning in a way that is not influenced by personal feelings or opinions. Defined in the Rules, what does confidential information include (3 things in specific) Any information concerning the client including the client's financial or personal situation, the client's real estate, and transactions involving the client. What does commercial activity refer to? Any transaction, act, or conduct involving the exchange of goods and/or services. Is Buying/selling/leasing considered commercial activity? Yes, the purchase, sale , or leasing of real estate is considered a commercial activity In Alberta the protection of individuals' personal information during real estate transactions is regulated by which privacy legislation (x2) PIPEDA (The Personal Information Protection and Electronic Document Act) and PIPA (The Personal Information Protection Act) Is PIPEDA a provincial or a Federal legislation? Federal Does PIPEDA legislation apply to Alberta? Yes and No, since Alberta has PIP A (which is substantially similar to PIPEDA so accepted), it does not all to all organizations involved in commercial activities. Which 2 areas does PIPEDA legislation continue to apply to in Alberta (and provinces that have set up legislation like PIPA) PIPEDA continues to apply to 1. Federally regulated businesses (such as banks, airlines, and telecommunication companies. 2. Organizations conducting business (involving person information) that crosses provincial or national borders 10 Privacy Principles i n Practice 1. Accountability 2. Identifying Purposes 3. Consent 4. Limiting Collection 5. Limiting Use, Disclosure, and Retention 6. Accuracy 7. Safeguards 8. Openness 9. Individual Access 10. Challenging Compliance 3 types of consent (recognized by Privac y legislation) Express, implied or opt -out Can Real estate assistants hired by the brokerage do activities involving the public? Yes (but not tasks that would require being authorized to trade in real estate, mainly to help with administrative functions or general office duties supporting the day -to-day activities. In some instances, involve the public If a REP hires an assistant (first must have broker's consent) can the tasks involve the public? No, they cannot involve the public. Otherwise they need to b e employed by the brokerage 3 Things that need to be implemented if using a virtual assistant in order to protect client information 1. Confirm the virtual assistant privacy policies and procedures are comparable to that of the brokerage 2. Notify clients whose personal information is being collected or transferred when notification was not included in the real estate relationship form. Notification should be in writing and documents for brokerage record keeping. 3. Advise clients whose personal information is collected or transferred, how the real estate brokerage's privacy policies and procedures may be obtained in writing. Also let the client know who can answer questions about the collection, use, and disclosure of their personal information when handled by the virtual assistant.
