Risks Licensees Face in Alberta
The Real Estate Act Rules outlines several specific duties of licensees.
WHAT YOU'LL LEARN
Identify Risks Licensees Face
Compare and Assess Risks
Evaluate a Hypothetical Situation
Risks Licensees Face
Key Licensee Duties
The Real Estate Act Rules outlines several specific duties of licensees, including obligations to:
Conduct themselves with integrity and professionalism.
Provide competent service to clients.
Ensure all information provided to clients is accurate and truthful.
Act in the best interest of the client while adhering to applicable laws and regulations.
Common Risks for Licensees
Inadequate Record Keeping: Failing to maintain accurate and complete records, such as meeting minutes or financial transactions, could lead to legal or financial disputes.
Inadequate Disclosures: Not providing clients with material facts regarding a property’s condition or potential risks may violate the REA Rules.
Miscommunication: Providing unclear or misleading information to the condominium board, owners, or tenants.
Activity
Using the REA Rules, identify three risks that a condominium manager could face when managing financial records for a condominium board.
Compare and Assess Risks
Brokerage Policies and Risk Management
The Real Estate Act Rules emphasizes the importance of brokerages implementing effective policies and procedures to address potential risks. These policies include guidelines for record keeping, disclosure requirements, and communication standards.
Risks to Analyze:
Improper Record Keeping:
Example: Failure to document an agreement with a contractor for building repairs.
Implications: Leads to disputes or financial liability if the agreement is not fulfilled.
Inadequate Disclosures:
Example: Failing to disclose a building defect during the approval process for a renovation.
Implications: Breach of licensee obligations resulting in legal and financial repercussions.
Non-Compliance with Brokerage Policies:
Example: A licensee bypasses the brokerage’s complaint-handling procedure.
Implications: Damages client trust and increases the risk of disciplinary action.
Analysis: Comparing Risks
Improper Record Keeping: Higher risk of financial disputes and loss of trust.
Inadequate Disclosures: Direct violation of the REA Rules with significant legal implications.
Non-Compliance with Policies: Reflects poorly on the brokerage and may result in license suspension.
Activity:
Compare the risks of improper record keeping versus inadequate disclosures. Which poses a greater legal liability, and why?
Evaluate a Hypothetical Situation
Licensee Responsibility
A licensee is personally responsible for complying with the Act, regulations, and rules. A failure to follow risk management protocols can result in disciplinary actions, including suspension, fines, or license cancellation.
Scenario:
A licensee fails to disclose material information about a property (e.g., water damage from a past flood) while preparing documents for the condominium board. The failure comes to light when an owner discovers the issue during renovations.
Evaluation Criteria:
Did the Licensee Meet Disclosure Obligations?
Licensees are required to provide accurate and truthful information to clients. Failure to disclose the water damage constitutes a breach of this duty.
Impact on the Condominium Board:
Financial consequences for the board if they are required to address the defect.
Loss of trust among unit owners, creating reputational damage.
Legal Implications for the Licensee:
Disciplinary action under the Real Estate Act Rules for failing to follow disclosure and risk management protocols.
Activity:
Critique the licensee’s actions in this scenario. Provide recommendations on how the issue could have been prevented using the Real Estate Act Rules guidelines.
