Real Estate Act Rules & Code of Conduct for Condominium Managers
What is the Real Estate Act (REA)?
The Real Estate Act establishes the legal framework that governs real estate professionals in Alberta, including condominium managers.
Under the REA Rules, condominium managers must:
Act honestly and with integrity when managing condominium affairs.
Avoid fraud, misrepresentation, and conflicts of interest.
Comply with all applicable legislation, bylaws, and condominium governance documents.
Key Ethical Responsibilities Under the REA
Duty to Act in Good Faith: Managers must act in the best interests of their clients (the condominium corporation).
Avoiding Misrepresentation: They must not make false, misleading, or deceptive statements.
Protecting Confidential Information: They must not disclose sensitive corporate or owner information without proper authorization.
Providing Competent Service: They must have the necessary knowledge and skills to manage the condominium corporation effectively.
Example: A condominium manager must not falsely state that a contractor is licensed if they are not, as this would constitute misrepresentation.
Legislative Reference: The Real Estate Act Rules require that all licensees “act honestly, competently, and in good faith” in all dealings related to condominium management.
Disclosure Requirements – Managing Conflicts of Interest
A condominium manager must disclose any situation where their personal interests could affect their professional judgment.
When Must a Manager Disclose a Conflict of Interest?
If they have a direct or indirect financial interest in a company hired to provide services to the condominium corporation.
If they receive compensation, gifts, or incentives from third-party vendors.
If they are related to or have a business relationship with a service provider.
Example: A condominium manager owns shares in a roofing company and recommends that company to the board. Failure to disclose this financial interest would violate REA disclosure rules.
How Should a Manager Disclose a Conflict?
Disclose the conflict in writing to the condominium board.
Obtain board approval before proceeding with any transactions.
Document all disclosures and retain them for future reference.
Example: A manager receives a referral fee from an insurance broker. They must inform the board in writing before finalizing the insurance contract.
Legislative Reference: The Real Estate Act Rules require licensees to disclose “all conflicts of interest, in writing, before acting on a matter.”
Trust Account Management and Financial Responsibilities
Handling Trust Accounts
All condominium funds held by the manager must be kept in a trust account.
Trust accounts must be separate from the manager’s personal or brokerage accounts.
The manager must provide accurate accounting records and reports to the board.
Example: A condominium manager collects owner contributions for a special assessment. These funds must be deposited in the corporation’s trust account and not used for any other purpose.
Prohibited Financial Practices
Commingling of funds: Personal funds must never be mixed with condominium trust accounts.
Unauthorized withdrawals: A manager cannot remove funds without board approval.
Failure to maintain records: Proper documentation of financial transactions is required.
Example: A manager borrows money from the condominium’s trust account to cover personal expenses. This is a serious breach of REA rules.
Legislative Reference: The Real Estate Act Rules state that all licensees who hold trust funds “must keep proper financial records and operate in compliance with generally accepted accounting principles.”
Compliance Check
Scenario:
A condominium manager recommends a contractor for a maintenance project without disclosing that they have a financial interest in the company.
Your Task:
Determine if this action complies with the REA.
Explain the legal consequences for failing to disclose the financial interest.
Suggest the correct course of action the manager should take.
Correct Answer:
The manager violated the REA disclosure requirements by not informing the board about their financial interest.
This could result in RECA disciplinary action, fines, or license suspension.
The correct action would have been to disclose the financial interest in writing and obtain board approval before recommending the contractor.
