RECA RESIDENTIAL EXAM UNIT 1-9 1000+ Q&A
EXPERT VERIFIED WITH DETAILED ANSWERS
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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, Negotiate 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, Avoid 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, property, 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 selfinterest 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 been 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 and how they would have conducted themselves
in similar circumstances.
9 points in “Meeting the Standard of Care”
- Know the Type of Consumer Relationship 2. Act consistent with the relationship chosen 3.
Know the Brokerage Service 4. Know the brokerage Policies 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?
Whenever 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 - Whether the REP has entered into a representation relationship 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 under 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 - 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, lease agent, buyers agent) 4.Consumers paying remuneration (ie
commission, fees) to the REP’s brokerage
5Ds of Role Clarity and Consistency (5 words)
- Discuss 2. Determine 3. Document 4. Disclose 5. Do
Longer explanations of the 5Ds of Role Clarity and Consistency (sentences) - 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 tenant’s agent) 5. Do actions with your representative capacity
consistent with your established relationship
6 Benefits of Role Clarity and Consistency - 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 REPs 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 PIPA (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 in Practice
- 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 Privacy 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 be employed by the brokerage
3 Things that need to be implemented if using a virtual assistant in order to protect client
information - 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.