Post-Registration Course 1 - Compliance

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Post-Registration Real Estate as an Investment Strategy: Commercial Properties – Fundamentals Course

December 1, 2023

New Legislative Changes Introduced Starting December 1, 2023, the Ontario Government has enacted new and amended regulations to support and strengthen consumer protection and professionalism in the real estate sector. The reform in legislation has some critical outcomes concerning RECO’s regulatory powers, consumer protection, and rules for registered real estate brokerages, brokers, and salespersons. This document is to familiarize you with the latest changes in the legislation, effective December 1st, 2023. The current exam for this course is still based on existing eLearning content, and you will be notified in advance before these changes are implemented in the eLearning and exams. We ask learners to please consider these legislative changes during this course. The changes impacting Post-Registration Real Estate as an Investment Strategy: Commercial Properties – Fundamentals Course are as follows:

1. REBBA Changed to TRESA The legislation that governs real estate brokerages, brokers, and salespersons in Ontario, i.e., The Real Estate and Business Brokers Act, 2002 (REBBA), has been renamed Trust in Real Estate Services Act, 2002 (TRESA). 2. The Terms “Customer” and “Customer Service Agreement” Eliminated The definition of “customer” references to agreements for services with customers, and all other provisions related to “customer” and “customer agreements” are removed from the legislation. Customer relationships and customer agreements are not permitted under TRESA. There is no equivalent to a customer or a customer agreement under TRESA. With respect to a trade in real estate, a person is either: • A client of a brokerage or • A self-represented party. For most consumers, the distinction between a client and a customer was difficult to understand. Both clients and customers signed a written agreement, believing that the registrant would help them get the best terms and guide them through the real estate process. When the consumer signed the customer service agreement, it is unlikely that they understood they would be an unrepresented party and that the registrant would not be required to serve their best interests.

Post-Registration Real Estate as an Investment Strategy: Commercial Properties – Fundamentals Course

The elimination of the customer service agreement clarifies that a consumer will either be a client or a “self-represented party.” “Self-represented party” is not a new term for “customer.” Real estate agents are prohibited from providing services, opinions, or advice to a selfrepresented party in respect of a trade. 3. Services, Representation, Best Interests Are for Clients Only Significant changes have been made to the content to ensure clarity regarding the limited assistance permitted for self-represented parties (referred to as “customers” in the storyboards) and that services, representation and best interests are strictly for clients only. A salesperson can now only assist a self-represented party if they represent a client in the same transaction; otherwise, they will not interact with them. The content has also been updated to introduce the term “engagement options,” which refers to the type of relationship or interaction from which a seller or buyer can select. The two engagement options are as a client under a representation agreement or as a self-represented party. 4. Changes to the Code of Ethics Sections of the Code of Ethics have changed as per advancements in consumer protection. The updated Code retains ethical requirements and speaks to broad principles. Of particular note, the new Code of Ethics regulation introduces provisions related to conflicts of interest, confidentiality, and obstructing or attempting to obstruct the administration of the legislation. Technical and procedural requirements have been moved to General Regulation or Other Regulation. It is also important to note that specific wording throughout the legislation has been updated along with a large number of the section numbers. 5. Requirement to Provide and Disclose Contents of RECO Information Guide As per TRESA 2002, new content has been added to introduce the RECO Information Gude. Salespersons must provide and explain this Guide at the first substantial meeting with a potential seller or buyer before providing any services or assistance. RECO is working on a process to facilitate the electronic delivery of the RECO Information Guide for obtaining a consumer's acknowledgement of having received the Guide and having the contents explained to them. This change impacts OREA Form 810, Working with a REALTOR®, which will include a confirmation of receipt of the RECO Information Guide and confirmation of receipt of the RECO Information and Disclosure to Self-Represented Party form if the Seller or Buyer has chosen to be a self-represented party.

Post-Registration Real Estate as an Investment Strategy: Commercial Properties – Fundamentals Course

6. Requirement to Provide the RECO Information and Disclosure to SelfRepresented Party Form Before Assisting a Self-Represented Party As per TRESA 2002, new content has been added to introduce the RECO Information and Disclosure to Self-Represented Party form before assisting a self-represented party. The purpose of the Information and Disclosure to Self-represented Party form is to ensure that a person who decides to proceed as a self-represented party and might receive assistance understands the risks of receiving assistance from an agent who is protecting and promoting the best interests of the party on the other side of the transaction, the limited nature of the assistance they might receive, and that they should seek independent professional advice before proceeding.

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We request learners to consider all of these critical legislative updates when studying the content.

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Module 1: Reviewing REBBA and Other Legislation in Practice Disclaimer: This is a reference document which contains pages from the Accessible eLearning module. You should complete the eLearning module to proceed to the next step. Please note that the accessible module on the LMS only contains the interactive pages and you need to go through the content of this document thoroughly to attempt the interactive activities in the module. Please use Adobe Acrobat Reader (Recommended version 9 or above) to navigate through this PDF. Real Estate Salesperson Program © 2021 Real Estate Council of Ontario. All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or in any means – by electronic, mechanical, photocopying, recording or otherwise without prior written permission, except for the personal use of the Real Estate Salesperson Program learner.

© 2021 Real Estate Council of Ontario

Module 1: Reviewing REBBA and Other Legislation in Practice In Pre-Registration, you learned about legislative and regulatory requirements of all three levels of government – municipal, provincial, and federal – in relation to real estate trading activities. You also learned about key sections of REBBA that are critical for day-to-day trading practices, including Code of Ethics requirements. This module provides an opportunity to demonstrate your knowledge of these requirements and determine the key aspects of the relationship between you and your brokerage. To check your understanding of this module, you must complete all the activities in the online module. While navigating through the online module, click the Legislation button to view laws and regulations related to this module. The contents of the thumbnails Accessible PDF.

and References from the module are added to support your learning throughout this

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Menu: Reviewing REBBA and Other Legislation in Practice

Number of Lessons

Lesson Number

8 Lessons

Lesson Name

Lesson 1

Review Regulatory Requirements: Federal and Municipal

Lesson 2

Review Regulatory Requirements: Provincial

Lesson 3

REBBA Review: Duties and Obligations

Lesson 4

REBBA Review: Service Agreements

Lesson 5

REBBA Review: Disclosures

Lesson 6

REBBA Review: Due Diligence, Misrepresentation, and Consequences

Lesson 7

Summary Practice Activities Module Summary

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Lesson 1 | Page 1 of 26

Lesson 1: Review Regulatory Requirements: Federal and Municipal

This lesson reviews significant federal and municipal legislation and provides an opportunity to demonstrate your knowledge of application in your day-to-day work.

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Lesson 1 | Page 2 of 26

This lesson reviews your familiarity with both federal and municipal legislation. Understanding the core principles behind these rules and regulations allows you to integrate them into your trading activities. This lesson will highlight federal and municipal legislation, and how they impact you on a daily basis. Along with this legislation, you should also be aware of the different tiers of municipal and regional government and their involvement in the dividing and developing of land. Upon completion of this lesson, you will be able to: • Demonstrate knowledge of federal legislation applicable to the day-to-day work of a salesperson • Demonstrate knowledge of municipal government requirement applicable to the day-to-day work of a salesperson Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 1 | Page 3 of 26

You will now review the importance of understanding and adhering to the legislation that protects consumers’ privacy and personal information.

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Lesson 1 | Page 4 of 26

Review Personal Information Protection and Electronic Documents Act (PIPEDA) PIPEDA sets out requirements on how you collect and use consumer information. To review, its core principles include: 1. Accountability: You are responsible for the protection of personal information that is in your control. You should also know who the compliance officer is for your brokerage. 2. Identifying purposes: You are required to identify and document your purposes for collecting personal information and limit use to that which is necessary for the purpose identified. 3. Consent: You are required to make all reasonable efforts to ensure consumers understand how personal information will be used and disclosed by the brokerage, and obtain consent for those identified purposes. © 2021 Real Estate Council of Ontario

4. Limiting collection: You are required to limit your collection of information from sellers and buyers to only the amount and type needed for the purposes identified to them. 5. Limiting use, disclosure, and retention: You are required to use or disclose personal information only for the reason it was collected, unless the consumer consents, or required by law. You must destroy any personal information no longer needed for its identified purposes or legal requirements. 6. Accuracy: You are required to make reasonable efforts to protect the integrity of the personal information by ensuring that it is relevant and as accurate and complete as possible. This will help to minimize the possibility that inappropriate or inaccurate information may be used to make a decision about the consumer. 7. Safeguards: You must exercise due diligence to ensure personal information, which is considered confidential, is not stolen, lost, accessed, copied, used, or modified without permission. 8. Openness: You must be familiar with your brokerage’s policies and practices relating to the management of personal information and make this information readily available to consumers. 9. Individual access: You are required, upon request, to inform a consumer of the existence, use, and disclosure of their personal information and give the individual access to that information. The consumer is able to challenge the accuracy and completeness of the information and have it amended as appropriate. If the information is in the possession of the brokerage, you are required to tell the consumer who may contact the brokerage office to gain access to that information. 10. Challenging compliance: You must be aware that a consumer has the right to address a challenge concerning compliance with these principles to the designated accountable person (compliance officer) at the brokerage office. If the consumer is dissatisfied with the internal complaint resolution of the brokerage, they will be advised of the avenues available to direct their complaint, including the office of the Privacy Commissioner of Canada.

© 2021 Real Estate Council of Ontario

Lesson 1 | Page 5 of 26

Consequences of Not Adhering to PIPEDA Failing to comply with PIPEDA could have serious consequences. You can be subject to an investigation by the Office of the Privacy Commissioner of Canada, who has broad powers to investigate and audit a salesperson’s or a brokerage’s privacy practices. The Privacy Commissioner may publish the results of its audit, which could damage your or the brokerage’s reputation. Certain violations of PIPEDA are also criminal offences. For example: • When an individual has requested access to their personal information held by a registrant and the registrant fails to retain the requested information for as long as necessary to allow the individual to exhaust his or her recourse • When a registrant contravenes the "whistleblower" provisions (for example, by terminating an employee within the member’s organization who reports a contravention of PIPEDA) • When a registrant obstructs the investigation of a complaint or the conduct of an audit under PIPEDA

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• When a registrant fails to notify the Privacy Commissioner or affected individuals when there is a privacy breach that creates a real risk of significant harm to an individual For these reasons it is important to take PIPEDA, and privacy legislation, in general, seriously.

© 2021 Real Estate Council of Ontario

Lesson 1 | Page 6 of 26

PIPEDA: Questions and Answers The core principles that make up PIPEDA govern a range of daily activities in your work, from gaining consent to addressing privacy breaches. The specifics of PIPEDA can be best addressed in a detailed question and answer format. The following six sections contain information on common questions and answers about PIPEDA.

How should you and the brokerage obtain consent? The most reliable way to obtain consent is expressly, in writing. The consent form must be signed by the individual whose personal information is to be collected, disclosed, or used. If an individual ever falsely denies having granted consent, their signed consent form can be provided to the Privacy Commissioner of Canada or to a court. It is also possible, where reasonable, to obtain implied consent by providing a notice with an "opt out" opportunity. Express, written consent is, of course, easier to prove.

© 2021 Real Estate Council of Ontario

What are the limits to which a client or customer can consent? Consent is only valid if asked for under appropriate circumstances. The Privacy Commissioner has compiled a list of “No-Go Zones” that a reasonable person would consider inappropriate. The list includes: • Purposes that would be otherwise unlawful • Profiling or categorization that leads to unfair, unethical, or discriminatory treatment contrary to human rights law • Purposes that are known or likely to cause significant harm to the individual • Publishing personal information with the intended purpose of charging individuals for its removal In other words, no one can consent to their personal information being used for these purposes.

Can you use the information from a competitor’s expired listing to solicit new business for your brokerage? No, unless the seller specifically consented to the use of their personal information for this purpose. This is because the information in a listing contains personal information of the seller and, generally speaking, consent is required in order to use that information for a particular purpose. Most real estate board listing forms provide an option for the seller to opt in or opt out of being contacted after expiry.

© 2021 Real Estate Council of Ontario

What happens to personal information that is no longer required? Personal information that is no longer required to fulfill the identified purposes should be destroyed, erased, or made anonymous. All brokerages are to have procedures in place to govern the destruction of personal information.

Who should you report a privacy breach to? How are the risks of a privacy breach determined? Privacy breaches under PIPEDA must be reported to: • The Privacy Commissioner • Individuals affected by the breach (where it is reasonable in the circumstances to believe that the breach creates a real risk of significant harm to an individual) The factors that are relevant to determining whether a breach creates a real risk of significant harm include: • The sensitivity of the personal information involved in the breach • The probability that the personal information has been, is being, or will be misused Further, the brokerage is obligated to notify other organizations or government institutions of the breach if the brokerage believes that the other organization or government institution may be able to reduce the risk of harm or mitigate the harm resulting from the breach.

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What information should be included in a breach notification to the Privacy Commissioner? A notification to the Privacy Commissioner must include: • A description of the circumstances of the breach and, if known, the cause • The day on which, or the period during which, the breach occurred or, if neither is known, the approximate period • A description of the personal information that is the subject of the breach to the extent that the information is known • The number of individuals affected by the breach or, if unknown, the approximate number • A description of the steps that the brokerage has taken to reduce the risk of harm to affected individuals that could result from the breach or to mitigate that harm • A description of the steps that the brokerage has taken or intends to take to notify affected individuals of the breach • The name and contact information of a person who can answer, on behalf of the brokerage, the Commissioner’s questions about the breach

© 2021 Real Estate Council of Ontario

Lesson 1 | Page 7 of 26

Stella, a buyer client, entered into an agreement to purchase a condominium. Two months after the sale, her salesperson, Tom, placed an advertisement in a weekly real estate publication that showed the number of the unit, the building address, a photograph of its exterior, the original asking price, and an inserted caption that read “Sold for 99.3% of asking price”. Stella claims that her consent for this advertisement and the disclosure of her personal information had not been obtained. Is Tom’s advertisement considered a privacy breach under PIPEDA? There are four options. There is only one correct answer.

1

No; salespersons are allowed to advertise, as laid out in the customer service agreement. Since this advertisement was in regard to Stella’s home, no personal information was disclosed.

2

No; however, as a courtesy, both Tom and the real estate company employing him can acknowledge that the disclosure was made in error and without the consent of the complainant.

3

Yes; this would be considered a violation of consent under PIPEDA.

4

Yes; this would be considered a violation of accuracy under PIPEDA.

© 2021 Real Estate Council of Ontario

Lesson 1 | Page 8 of 26

The National Do Not Call List As you learned in Pre-Registration, the National Do Not Call List (DNCL) impacts all businesses involved in cold calling or telemarketing. The DNCL provides consumers with a choice to reduce the number of unsolicited telemarketing calls they receive by registering their land line, cellular phone, and fax machine numbers. By federal law, a telemarketer cannot contact a consumer whose name and telephone number are on the DNCL to solicit business, and any violations by a telemarketer could lead to penalties. The following four sections contain information on how the DNCL relates to trading in real estate.

Cold calling and telemarketing Brokerages and their registered employees who engage in cold calling or telemarketing are required under federal law to be registered with, and have access to, the DNCL. They must also ensure compliance with the National DNCL Rules, subscribe to the National DNCL, and pay for subscription-related services to avoid penalties.

Canadian Radio-television and Telecommunications Commission The authority to create and oversee the DNCL and the related National DNCL Rules rests with the Canadian Radio-television and Telecommunications Commission (CRTC). By way of subscription or query services, Bell Canada operates the DNCL service and provides the DNCL lists to telemarketers.

© 2021 Real Estate Council of Ontario

Express consent Telemarketers may make calls to consumers if the consumer has provided express consent to be called. Express consent includes a written form, an electronic form or an online form, or an audio recording of the consumer’s verbal permission.

Exceptions Telemarketers may make calls to persons with whom there is an existing business relationship. Telemarketers are free to call a consumer who: • Has purchased, leased, or rented a product or service from the telemarketer in the last 18 months • Has a written contract with a telemarketer that is still in effect or expired within the last 18 months • Has made an inquiry to a telemarketer about a product or service within the last six months However, if a telemarketer is making an exempted call, a consumer can ask the telemarketer to have their name and number put on the telemarketer’s own internal do not call list.

© 2021 Real Estate Council of Ontario

Lesson 1 | Page 9 of 26

Canada’s Anti-Spam Legislation As you learned in Pre-Registration, the federal government introduced Canada’s Anti-Spam Legislation (CASL) to protect Canadians from unsolicited commercial electronic messages (CEMs) that could potentially lead to spam, malware, and other internet-related threats. The intent of CASL is to provide a relatively secure online environment for consumers. As for impacting your daily work, before sending CEMs, you must: 1. Obtain consent from the recipient 2. Identify yourself 3. Provide a means for the recipient to withdraw consent © 2021 Real Estate Council of Ontario

Lesson 1 | Page 10 of 26

Which of the following scenarios represent correct use of the applicable legislations? There are five options. There are multiple correct answers.

1

The CEO of a hospital enters an open house and tells the salesperson that they would like to be contacted if there are other listings in the area. He gives them a business card with his work email. The salesperson then begins to send emails to the CEO’s business email.

2

A salesperson calls a past client who has registered their phone number on the DNCL. Their representation agreement expired 12 months ago.

3

A salesperson is making cold calls. They check a number against the DNCL and since it is not listed there, they go ahead and dial it. An angry homeowner answers, saying “I already told the people from your office to stop calling me!”

4

A salesperson sends out a batch of solicitation emails to business targets regarding a new listing that is in close proximity to these targets. Included in these targets is an insurance company. The salesperson obtained the emails from the insurance company’s website.

5

A salesperson conducts an open house and asks visitors for photo identification and explains that the only reason they are collecting this is for security purposes and reporting to the seller. The salesperson then calls these potential buyers to show them other properties.

© 2021 Real Estate Council of Ontario

Lesson 1 | Page 11 of 26

In Pre-Registration, you learned about the Competition Act, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), and the Income Tax Act. You will now review this legislation and take a closer look at the requirements that apply to your daily activities as a salesperson.

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Lesson 1 | Page 12 of 26

The Competition Act The Competition Act is a federal statute that aims to promote fair competition and efficiency in the Canadian marketplace and protect consumers against anti-competitive activities. The purpose of this act is to: • Maintain and encourage competition in Canada in order to promote the efficiency and adaptability of the Canadian economy • Expand opportunities for Canadian participation in world markets while at the same time recognizing the role of foreign competition in Canada © 2021 Real Estate Council of Ontario

• Ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy • Provide consumers with competitive prices and product choices The Competition Act affects you in three big ways: 1. You have to make independent business decisions (no price fixing) 2. You must not disparage a competitor because of their low-price policies 3. You must not engage in false, misleading advertising

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Lesson 1 | Page 13 of 26

Aspects of the Competition Act You should be familiar with the various ways that you may encounter the Competition Act. The following four sections contain information on what the Competition Act prohibits.

Misleading advertising Misleading advertising (for example, advertising yourself as the best salesperson in the area without factual evidence to support your claim) and other deceptive business practices in the promotion of a service or the supply or use of a product, is a violation of the Competition Act.

Conspiracies Conspiracies are unlawful agreements between competitors to fix or increase prices, manipulate markets, or control output in some way. In real estate, this could involve agreements to establish remuneration or amounts paid to co-operating brokerages.

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Price maintenance Price maintenance involves a person attempting to influence prices either in an upward direction or by discouraging individuals who are offering lower prices. Price maintenance provisions also extend to situations where a salesperson refuses to negotiate with, or otherwise deal with, a competitor because of that competitor’s pricing policy, remuneration structure, or business model.

Bid-rigging Bid-rigging is an agreement in response to a call or a request for bids or tenders in which one or more bidders agree not to submit a bid, or two or more bidders agree to submit pre-arranged bids. Bid-rigging is a criminal offence. In real estate, brokerages sometimes learn of opportunities to submit proposals. Registrants that meet with their competitors to fix the price together in order to win the proposal would be an example of bidrigging.

© 2021 Real Estate Council of Ontario

Lesson 1 | Page 14 of 26

Review of Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) FINTRAC, Canada’s financial intelligence unit, assists in detecting, preventing, and deterring money laundering and terrorist financing. FINTRAC was established by a law, called the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its Regulations, and it functions within its scope. You must comply with FINTRAC requirements in all of your transactions. The consequences of non-compliance with FINTRAC requirements include criminal and/or administrative penalties against salespersons and/or brokerages. You should familiarize yourself with what is required of you on FINTRAC reports, such as: • Client identification information sheet (Individual Identification Information Record) • Corporation/entity identification information • Identification mandatory/agent agreement • Consent agreement • Receipt of funds record This required information is then turned into the brokerage who is required to maintain it under FINTRAC. © 2021 Real Estate Council of Ontario

Lesson 1 | Page 15 of 26

When to Apply FINTRAC Regulations The brokerage is required to keep and retain records and verify the identity of any person or entity when they act as an agent in respect of the purchase or sale of real estate. Consequently, FINTRAC’s record-keeping requirements do not apply when executing leases. FINTRAC states that if you are a salesperson and you are acting on behalf of a brokerage, FINTRAC requirements are the responsibility of your brokerage except with respect to reporting suspicious transactions and terrorist property, for which you have independent obligations. Ultimately, it is the broker of record who is responsible for the actions of their brokers and salespersons, and therefore it is the broker of record who is required to draft a brokerage policies and procedures manual.

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Lesson 1 | Page 16 of 26

Individual Identification Information Record Client risk can be assessed on an individual level or against generic templates for commonly encountered parties, individuals, or entities. If the client matches the profile in the template, they fall into the association category of risk. For example, Canadian clients who are identified by the salesperson in person and who do not otherwise demonstrate high risk may be assessed as low risk. Brokerages are encouraged to develop their own profiles for

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clients they frequently encounter in their business. You should follow your brokerage’s policy and training. Some member associations, such as CREA, have developed several such generic templates. A client’s occupation should be defined in language commonly used to describe work performed by Canadians. The description should convey a precise and detailed idea of the work performed. However, FINTRAC has also advised that it is not necessary to provide your client’s employer, along with their occupation. For example, it is appropriate to list: • “Retired” if the client has retired • Doctor • Teacher • Information Technology Consultant (rather than “consultant”)

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Lesson 1 | Page 17 of 26

FINTRAC Business Relationship Due to ambiguity, FINTRAC has clarified its position with respect to when a business relationship is formed, and continued monitoring is required. The clarified position requires brokerages to focus on “activities” and not on the number of purchase or sale transactions. The following five sections contain information on how business relationships are determined.

Defining a business relationship A business relationship is formed the first time a real estate broker or salesperson is required to verify the identity of the client.

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Creating a business relationship A business relationship is created under the following circumstances: • Where the brokerage represents a buyer and a deposit is received from the buyer, there will be two activities counted towards the business relationship. The first activity is counted when the buyer is identified as a client and the second activity is counted when a receipt of funds record is kept (as the salesperson or the broker is required to identify the person providing the funds). • Where the brokerage represents the seller, there will likely only be one activity counted towards the business relationship – when the seller is identified. • Other scenarios are possible. For example, if you are filing a suspicious transaction, that counts as a separate activity towards the formation of a business relationship.

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Business relationship in practice In practice, the following apply to a business relationship: • Once a third activity is counted, the salesperson or the broker must complete a client information record (or implement a system where similar information is obtained) addressing the client risk and the business relationship. The brokerage must have policies and training in place regarding FINTRAC. • Brokerages need to have a photo identification policy in place, which brokers and salespersons must adhere to along with training on how to complete the client information record once a business relationship is established.

Business relationship expiration If it has been more than five years since the last activity with a party, individual, or entity, the brokerage no longer has a business relationship with them. In theory, this means that the brokerage is not obligated to perform ongoing monitoring with them.

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Ongoing monitoring Once a business relationship is formed with your brokerage, you must be sure to complete the following actions: • Keep a record of the purpose and intended nature of the business relationship • Re-assess the client’s level of risk of money laundering or terrorist financing • Ask the client if any client information has changed, and if so, document the changed information • Determine whether the client’s activity is consistent with the information obtained, including the broker’s risk assessment

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Lesson 1 | Page 18 of 26

The Income Tax Act It is important for you to understand the impact of taxation on various real estate transactions so you can advise a seller to consult with the appropriate third-party professional. These provisions are established under the Income Tax Act, which is reviewed next. You need to be aware of: 1. The concept of capital gains under the Income Tax Act 2. The residency clause in an agreement of purchase and sale 3. Your duty to advise a seller to obtain expert advice on tax implications when selling property

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Lesson 1 | Page 19 of 26

Review of the Income Tax Act The Income Tax Act may impact sellers and buyers, so you should be prepared to explain this legislation to both clients and customers. The following two sections contain information on the Income Tax Act.

Residency clause in agreement of purchase and sale A residency clause should be included in all agreements of purchase and sale to protect the buyer, in case they are purchasing from a seller who is a non-resident of Canada. If a seller is a non-resident, they will be required to pay any taxes owed under the non-residency provisions of the Income Tax Act. If the non-resident seller does not pay the income tax, then the burden of payment will shift to the buyer. The residency clause protects the buyer by allowing the non-resident seller to pay the income tax prior to the completion of the sale, and deliver the prescribed certificate, or a statutory declaration that the seller is not a non-resident of Canada. Otherwise, the buyer will be credited the amount of taxes owed by a nonresident seller towards the purchase price amount, if any, necessary for the buyer to pay to the Minister of National Revenue.

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You must be sure to draft and include a residency clause in any agreement of purchase and sale and explain it to the buyer. Note: If you are a member of a real estate board, OREA, and CREA, the agreement of purchase and sale provided by OREA will include a pre-printed residency clause, and no further addition would be required.

Property use and tax You should have a general understanding of significant tax provisions in the Income Tax Act. For example, the act provides for different tax treatment depending on whether a property is used for business or investment income, or as a primary residence. While taxes are payable on the business and investment income, the principal residence is generally excluded from taxation under the Income Tax Act. Further, the act also distinguishes between business income and property income when rent is received by an investor from real estate. Residents of Canada selling a property other than their principal residence, and non-residents of Canada selling property (even their principal residence) may face a tax on the sale of the property. The salesperson needs to direct the seller to their accountant or financial advisor.

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Lesson 1 | Page 20 of 26

Prohibition on the Purchase of Residential Property by Non-Canadians Act The Federal Government has brought into effect the Prohibition on the Purchase of Residential Property by NonCanadians Act in force from January 1, 2023. With a few exceptions, the Act will impose a two-year ban on the purchase of substantially all types of residential properties by individuals who are not Canadian citizens or permanent residents of Canada. The ban will also apply to corporations that are not incorporated in Canada or controlled by Canadian citizens or permanent residents of Canada. The Act has an impact on buyers who need to be aware of the restrictions imposed by the legislation. Any contravention can lead to them facing fines and financial losses on their property. For example, if a non-resident buyer purchases a residential condominium, there could be a court-ordered sale, where the buyer would only be © 2021 Real Estate Council of Ontario

entitled to the purchase price paid for the property. They would face a loss for their closing costs, as well as face a fine to a maximum of $10,000. Similarly, builders must ensure that their Agreement of Purchase and Sale includes an assurance from buyers that they are not non-Canadians. As a salesperson, you will have the responsibility to be properly educated about the Act, so that you can explain the restrictions to the relevant buyers. Any contravention of the Act can lead to a maximum fine of $10,000.

© 2021 Real Estate Council of Ontario

Lesson 1 | Page 21 of 26

Anjuli wants to sell her income property that she has owned for three years. She informs her salesperson, Kyle, that the property is a single-family dwelling that she has been leasing, but now she thinks it is time to sell it. Anjuli informs Kyle that she heard listings on the local listing service all incur a four per cent remuneration, and she would expect the same. What steps should Kyle take next? There are four options. There are multiple correct answers. 1

Ask for Anjuli’s photo ID prior to proceeding

2

Explain that since this is an income property, it would incur five per cent remuneration, not four per cent

3

Tell Anjuli that since she is selling her income property, she should speak with a third-party professional, such as an accountant or a financial advisor, as a sale may result in a capital gain

4

Explain the brokerage remuneration fee and state there is no fixed pricing for posting listings and brokerage services

© 2021 Real Estate Council of Ontario

Lesson 1 | Page 22 of 26

Which of the following scenarios represent violation of the applicable legislations? There are three options. There are multiple correct answers.

1

A salesperson never asks for identification when face to face with the customer. Later, the salesperson is given details of the client’s or customer’s driver’s licence over the phone but never looked at it.

2

A salesperson does not explain to a seller, who is a resident of Canada selling an income property, that the sale will be subject to tax.

3

A salesperson tells a seller client that they would like to lower the remuneration, but that no board member will show their property unless the remuneration is at least X per cent.

© 2021 Real Estate Council of Ontario

Lesson 1 | Page 23 of 26

The planning system established in Ontario came about largely through the Planning Act and related legislation. Planning is focal to real estate marketing, as permitted uses directly affect value. Further, accurate responses about a particular property can often make the difference between success and failure for that particular sale. Responses to such questions, or at least an understanding of where to get such answers, requires a working knowledge of planning responsibilities, operational basics within the province, the names and functions of government organizations involved in planning, and the scope of decisions made by such organizations.

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Lesson 1 | Page 24 of 26

Reviewing the Planning Act The Planning Act establishes parameters for the creation of local planning advisory committees. Planning involves a two-tiered structure for municipalities: upper and lower, each having specific rights and responsibilities in the process. These tiers make decisions on various matters, such as patterns of land use, road networks, schools, recreational facilities, and water supply. The long-range effect of such decisions has tremendous impact on brokers and salespersons. Most local planning is focused on the preparation, adoption, and revision of official plans within respective planning areas, the adoption of zoning bylaws for land use control, and strict controls over the process of dividing and developing land. You will learn more about the Planning Act and how it applies to your daily activities in the next lesson. © 2021 Real Estate Council of Ontario

Lesson 1 | Page 25 of 26

Tiers of Municipal and Regional Government Land planning and use in Ontario is governed by legislation at federal, provincial, and local (municipal) levels. The most direct controls are at the provincial level and municipal level. The provincial government established a policy framework for consistency, but delegates various powers to municipalities under the Planning Act, particularly regarding official plans and land use controls. The following two sections contain information on the tiers of municipal and regional government.

Upper tier: county or region – Land Division Committee The upper tier involves itself with the preparation, adoption, and revision of the official plan, and the process of dividing and developing land. Where an upper tier municipality exists, its council will often coordinate planning between the respective lower tier municipalities, as well as address matters for which it may be directly responsible, including roads and water or sewer systems. In some instances, the upper tier municipality may assume, by agreement, any of the planning responsibilities of the lower tier municipality. Example: Land severances that are required for an individual who wants to sell, mortgage, charge, or enter into any agreement (for at least 21 years) for a portion of their land usually require approval from an upper tier municipal council, depending on the area.

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Lower tier: city or town – Committee of Adjustment The lower tier involves itself with the preparation, adoption, and revision of the official plan and the adoption of zoning bylaws, interim control bylaws, and other bylaws. The lower tier municipality handles landuse matters within its jurisdiction, such as location, type, and density of development. The Planning Act contains provisions of considerable force, flexibility, and effect. Properly employed, these provisions enable municipalities to mount comprehensive planning programs tailored to particular needs, resources, and inclinations. Although the actual process is carried out by municipal organizations, the provincial government maintains the function of approving proposals, following passage by municipal councils. Example: When a building permit application is made for a new construction of any type, a comparison between the proposal and the minimum development requirements set out in the zoning bylaw is conducted. If there is a difference, a dispute can be taken to the Committee of Adjustments. In addition, when selling a property, it is important that all existing buildings on the property were constructed in compliance with the bylaw. If it is determined that one or more requirements of the bylaw have not been met, it may be possible to obtain minor variance approval to legalize the property.

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Lesson 1 | Page 26 of 26

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Demonstrate knowledge of federal legislation applicable to the day-to-day work of a salesperson • Demonstrate knowledge of municipal government applicable to the day-to-day work of a salesperson There are six sections on this page with a summary of the key topics that were discussed in this lesson.

Privacy

Any personal information obtained from a seller or buyer must be used appropriately and kept under compliance with PIPEDA. Failure to comply with the law could result in the registrant being subject to an investigation by the Office of the Privacy Commissioner of Canada, which could lead to serious consequences.

Telemarketing and spam

If you are participating in cold calling or telemarketing activities, you need to know the proper steps to take prior to making any calls. If a person’s number is on the national or your brokerage’s do-not-call list, you must not call it. You must also ensure the recipients of any sales information have consented to receive it, and all CEMs comply with CASL legislation. Understanding this information is crucial to ensure that your prospecting and solicitation follows the legislation.

Competition

You need to be aware of what is allowed regarding advertising and what is prohibited regarding price fixing and bid rigging under the Competition Act. This information will impact your independent business decisions, as you are prohibited from engaging in false or misleading advertising.

Taxes

You need to be aware and advise sellers that there are taxes on a capital gain when disposing of a property, as under the Income Tax Act. You must ensure that

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a residency clause is included in the agreement of purchase and sale to protect buyers in case they are purchasing a property from a non-resident seller.

Money records or receipt of funds

You need to know what identification is required from your sellers and buyers in order to maintain accurate FINTRAC records. This will require an understanding of: • FINTRAC’s role • What and when transactions should be reported and how to report suspicious transactions • What constitutes a “business relationship” • How to maintain records and complete the FINTRAC documents

Government planning

You need to know which municipal tier of government to contact or approach regarding land use issues. Depending on the division, when working with a seller or a buyer, you need to know if they should go to the lower tier of municipal government (for example, Committee of Adjustment for minor variances and severances, such as rezoning) or the upper tier of municipal government (for example, Land Division Committee for land severance).

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Lesson 2 | Page 1 of 17

Lesson 2: Review Regulatory Requirements: Provincial

This lesson provides an opportunity for you to demonstrate your knowledge of RECO’s mandate and that of other professional associations, including your requirement to comply with REBBA. You will demonstrate your knowledge of provincial legislation as they apply to the day-to-day work.

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Lesson 2 | Page 2 of 17

RECO is a not-for-profit corporation, responsible for administering REBBA and associated regulations on behalf of the Ontario Government and protecting the public interest through a fair, safe, and informed marketplace. Being informed includes understanding the various provincial legislation and how it impacts your day-to-day work. In this lesson, you will review provincial legislation as it applies to your real estate practice. Upon completion of this lesson, you will be able to: • Demonstrate knowledge of RECO’s role versus those of professional associations • Demonstrate knowledge of provincial legislation applicable to the day-to-day work of a salesperson Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 2 | Page 3 of 17

As you learned in Pre-Registration, RECO functions to protect the public interest through a variety of methods discussed in the next screen. There are also many provincial legislation governing the trade of real estate. As a salesperson, it is your responsibility to understand this legislation as they impact your day-to-day working life.

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Lesson 2 | Page 4 of 17

RECO and Other Professional Associations In addition to RECO registration, which is required to trade in real estate in Ontario, there are professional associations that you can belong to voluntarily. Real estate brokerage in Ontario is largely organized by professional associations who represent the interests of their members. The following three sections contain information about RECO’s role and other professional associations.

RECO protective measures RECO protects public interests by: • Administering the legislation governing the trade of real estate in Ontario • Enforcing the standards required to obtain and maintain registration • Establishing minimum requirements for preregistration, articling, broker, and continuing education • Conducting routine inspections of brokerage offices

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• Addressing inquiries, concerns, and complaints about the conduct of registrants and prosecuting breaches of the law • Establishing and administering insurance requirements

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• Promoting ongoing education • Educating and informing consumers about the marketplace

Levels of organized real estate Typically, organized real estate refers to three levels of associations: local, provincial, and national. Real estate boards represent brokers and salespersons at the local level. The brokerage makes the decision if they wish to join the board. If they do, then typically all brokers and salespersons with their brokerage must also join the board. Their responsibilities are as follows: • Local listing service – member services and education (local issues, board software, orientation) • OREA – member services and education (provincial issues, forms, clauses) • CREA – member services and education (federal issues), REALTOR® trademark, MLS®, CREA Code of Ethics When a salesperson joins a brokerage that is part of a real estate board, they typically are required to become a member of OREA and CREA. Boards and associations may opt out of membership in OREA, and at the same time maintain membership in CREA.

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Voluntary educational associations There are numerous other real estate related organizations that offer additional learning opportunities. In addition to those listed on this screen, you can consult with your broker of record or more experienced colleagues to see what other professional development opportunities they have pursued. Real Estate Institute of Canada (REIC) members are highly trained real estate professionals bound by the Institute's Code of Professional Standards. To become a designated member, an individual must meet REIC’s strong admissions, education, and practical experience requirements and maintain membership with REIC. Within REIC, there are specialized designations that a member could pursue, such as: • CPM® – Certified Property Manager® • FRI®– Fellow of the Real Estate Institute (the FRI designation elevates your status as a real estate salesperson who has acquired advanced skills and knowledge, and met nationally recognized business and ethical standards) • ARM® – Accredited Residential Manager® • ACoM – Accredited Commercial Manager • CRF – Certified in Real Estate Finance The Appraisal Institute of Canada (AIC), is the national society of professional real estate appraisers dedicated to serving the public interest by advancing high

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standards for members of the appraisal profession through the granting of professional designations, including: • CRA (Canadian Residential Appraiser) • AACI (Accredited Appraiser Canadian Institute) • P. App (Professional Appraiser) Practising members provide reasoned valuations widely respected by courts, chartered banks, real estate corporations, trust companies, mortgage and lending institutions, as well as all levels of government and private individuals. Members are governed by a Code of Ethics and Uniform Standards of Professional Appraisal Practice that establish minimum standards of performance in the rendering of professional services. The institute’s education program is available through most of its provincial associations and chapters. Certain universities and colleges also offer the program on a full-time basis. The national office of the AIC is located in Ottawa. Provincial offices are maintained in all provinces. The Certified Commercial Investment Member (CCIM) Institute provides education programs and services for professionals in commercial and investment real estate, as well as allied industries. The institute awards the CCIM designation to individuals completing a series of graduate-level courses based on advanced concepts and techniques in commercial real estate. Four core courses provide the fundamental skill sets required: financial, market, user decision, and investment analysis relating to commercial investment properties. The institute’s vision statement is to be the leading© 2021 Real Estate Council of Ontario

edge professional association to the commercial real estate industry. Two Canadian chapters of the institute have been formed: the Western Canadian Chapter and the Central Canadian Chapter. Various boards across Canada offer credit courses toward the CCIM designation. Refer to CCIM’s website (http://ccim.com) for current information.

© 2021 Real Estate Council of Ontario

Lesson 2 | Page 5 of 17

Reviewing Provincial Legislation As you learned in Pre-Registration, you must understand the following legislation, and how it impacts your work with clients and customers on a daily basis. The following seven sections contain information on this legislation.

Consumer Protection Act The Consumer Protection Act is designed to prohibit unfair practices in the offering of goods and/or services to consumers and prohibiting salespersons from participating in an unfair practice when offering their services. Unfair practices are defined as false, misleading, or deceptive practices, or unconscionable representations. Although the Consumer Protection Act does not affect representations made during the course of selling "real property", it does apply to real estate salespersons and brokers when representations are made during the course of offering their services to consumers. A seller or a buyer who complains that there has been an unfair practice in the offering of the registrant's services may request to cancel or nullify the contract, sue for damages, and/or file a complaint with the Ontario government. A violation of the CPA is the ground to cancel a contract within one year.

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However, the consumer may also choose to file a complaint with RECO. If RECO determines that a breach of REBBA has been committed, then RECO can take necessary steps to address the complaint with the registrant.

Ontario Human Rights Code The Ontario Human Rights Code is a provincial law that gives everybody equal rights and opportunities without discrimination, harassment, and reprisal with respect to employment, trade, self-governing profession, services, goods, contracts, and facilities. Under the Human Rights Code, you have a responsibility to ensure you are inclusive in your practice, doing your best to prevent and address discrimination and harassment. The prohibited grounds of discrimination are: • • • • • • •

Gender expression Gender identity Marital status Place of origin Race Sex Sexual orientation

You must be aware of this legislation in order to avoid discriminatory actions.

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Family Law Act Provisions of the Family Law Act protect interests in a matrimonial home when a marriage breaks down or a spouse dies. Notably, you will need to be aware of spousal consent regarding the matrimonial home, as you must know who needs to sign an agreement, and if they are signing as a seller or for spousal consent. One of the most important rights that spouses have in relation to a matrimonial home is the right of possession – the right to occupy it. In law, both parties have equal rights of possession. At a practical level, that means that one party cannot force the other party to leave the matrimonial home without either a signed agreement or a court order. Signed agreements and court orders giving one spouse the exclusive right to occupy a residence may be enforced by the police. When you list a property for sale, although the home may be under only one person’s name, you need to know if it is a matrimonial home for signing purposes. If it is a matrimonial home, you will need to provide each person their own copy of the agreement (listing agreement, amendments to the listing agreement, agreement of purchase and sale, and subsequent documents). You will also require spousal consent for the agreement of purchase and sale.

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Statute of Frauds The Statute of Frauds is a law providing that certain contracts, including some real estate contracts, must be in writing to be enforceable at law. The Statute of Frauds, although requiring written evidence of a contract for the transfer of an interest in land, does not require that any particular form be used. More specifically, this statute prohibits the bringing of any actions under certain circumstances, including any contract for sale of lands, unless some memorandum or note thereof is in writing and signed by the party to be charged. The Statute of Frauds applies to all contracts transferring an interest in real property, including: • Purchase and sale agreements • Leases exceeding three years • Easement agreements

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Consumer Reporting Act The Consumer Reporting Act is a provincial statute designed to protect consumers through specific rights. A consumer report can only be commissioned for specific reasons. Consumers have the right to: • Revise incorrect information about personal credit history • Know what is being reported • Ensure that information used by agencies is being correctly collected, stored, and reported The Consumer Reporting Act also provides that the consumer must be given notice when information concerning an extension of credit or the obtaining of personal information is involved. When the consumer requests, that person must also inform the consumer of the name and address of the consumer reporting agency being used. If benefits are denied, the consumer has the right to be told why and the source (credit board); they have 60 days to request where you obtained this information. This can happen in a lease scenario and cases where a seller is being asked to take back a mortgage. The Consumer Reporting Act is written so that contracting out of its provisions is not possible and all brokers and salespeople should be fully aware of requirements.

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Land Transfer Tax Act The Land Transfer Tax Act dictates how provincial land transfer tax is assessed on real property when property ownership is transferred. You must discuss the land transfer tax with buyers prior to beginning the process of purchasing to prepare them for this additional expense. Provincial land transfer tax and municipal land transfer tax (Toronto) is normally based on the value of the consideration (such as sale price) and you need to prepare a buyer for this expense early. Expert advice is required, as special rules apply concerning such things as disposition of property for natural love and affection. Seek legal advice on matters concerning provincial land transfer tax and the disposition of unregistered interests and exemptions concerning life leases. First-time buyers may qualify for refunds relating to both the provincial land transfer tax and the municipal land transfer tax (for example, Toronto) for new and resale homes. These applications are available online.

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Electronic Commerce Act Electronic signatures are legally permitted in Ontario. Consent from the seller and the buyer must be obtained to use electronic signature as outlined in the Electronic Commerce Act. The legislation was created to facilitate the exchange of electronic information and sets out the rules for conducting business electronically. This includes creating, recording, transmitting, and storing information and documents electronically. This means you must obtain informed consent from a seller or a buyer to proceed with electronic format for signature, and then include a clause in the agreement addressing this.

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Lesson 2 | Page 6 of 17

Which of the following scenarios are paired correctly with the applicable legislation? There are four options. There are multiple correct answers.

1

A salesperson claims to a prospective seller client that they can sell all of their listed properties in three weeks, even though this is not always the case. The applicable legislation is Ontario Human Rights Code.

2

A salesperson ensures that their seller client understands that they will be showing the property to anyone who is interested, regardless of their gender, race, place of origin, or sexual orientation. The applicable legislation is Consumer Protection Act.

3

A salesperson obtains the consent of both spouses when working to sell their home. The applicable legislation is Family Law Act.

4

A salesperson assumes that the seller and the buyer are both comfortable with electronic signatures and does not offer them the written alternative. The applicable legislation is Electronic Commerce Act.

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Lesson 2 | Page 7 of 17

Which of the following scenarios is paired correctly with the applicable legislation? There are three options. There is only one correct answer.

1

A salesperson has negotiated a commercial lease for a term of five years and delivers copies to the landlord and the tenant. The applicable legislation is Consumer Reporting Act.

2

A salesperson runs a consumer report and the consumer is denied a benefit. The consumer has the right to be told why and the source of this information (credit agency); they have 60 days to request where the salesperson got this information. The applicable legislation is Statute of Frauds.

3

A salesperson has a buyer looking to purchase a home for $400,000 and prepares them for the closing costs in addition to the purchase of the property. The applicable legislation is Land Transfer Tax Act.

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Lesson 2 | Page 8 of 17

Among provincial legislation, there are some that address environmental protection. Registrants face increasingly complex and comprehensive environmental legislation when listing and selling both residential and commercial properties.

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Lesson 2 | Page 9 of 17

The Environmental Protection Act and Conservation Authorities Environmental legislation can cover a broad array of topics, such as various licences, permits, and certificates of approval, remediation of contaminated lands, and land development. The following six sections contain information on the legislation.

Environmental Protection Act The Environmental Protection Act (EPA) has gradually expanded both in terms of jurisdictional authority, as well as degree of control or enforcement over environmental issues. Early in the transaction, you must consider the possibility of contamination from neighbouring property use. Failing to check if land is contaminated could lead to negative consequences for the buyer when they become the owner, as they may be held responsible for environmental impacts and remediation costs. For example, a salesperson is showing a property to a buyer who wishes to proceed with an offer, but there is a concern with the property about contamination because of a neighbouring heavy industrial factory. The salesperson needs to add a condition to the offer to protect the buyer’s interest if there are any environmental concerns affecting the subject property.

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Ministry of the Environment The Ministry of Environment, who oversees the EPA, is empowered to investigate matters concerning pollution, waste management, waste disposal, and litter management and disposal. The ministry exercises a wide range of powers, including search and seizure provisions to ensure adherence to environmental regulations. You should be aware of the mandate and role of the ministry in the trading of real estate. The ministry has demonstrated its desire to aggressively pursue polluters by powers vested in the EPA, as well as through the judicial process. The ministry has the ability to exercise broad powers granted under the EPA relating to search and seizure. The EPA empowers officers to enter and search premises, interview individuals, and to examine documents to ensure that violations of the EPA are dealt with expediently. For this reason, it is necessary to practice due diligence regarding the EPA. You need to know which clauses to add to an agreement should there be a concern with the property about contamination, approvals, or permits.

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Conservation authorities Conservation authorities are local watershed management agencies that deliver services and programs to protect and manage impacts on water and other natural resources in partnership with all levels of government, landowners, and many other organizations. Copyright © 2021 Conservation Ontario. All rights reserved

There are 31 conservation authorities operating in southern Ontario and five conservation authorities delivering programs and services in northern Ontario. Each conservation authority has its own board of directors comprising members appointed by local municipalities and most are elected municipal officials. Some properties may abut on land that conservation authorities have jurisdiction over. You must ensure they check with the conservation authority to properly represent the property and its permitted uses.

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Greenbelt Plan The Greenbelt Act provided the authority for the creation of the Greenbelt Plan (2017), which protects farmland, communities, forests, wetlands, and watersheds. It also preserves cultural heritage and supports recreation and tourism in Ontario’s Greater Golden Horseshoe. The Greenbelt Plan establishes the Protected Countryside and Urban River Valley designations. With respect to properties affected by Greenbelt Plans, you must ensure you check with the conservation authority to avoid inadvertently misrepresenting a property and its uses to the buyer.

Places to Grow Act In Ontario, the Places to Grow Act was created to achieve growth policy and implementation. This legislation enables: •

Designation of any geographic region of the province as a growth area with a specific focus

•

Development of a growth plan in consultation with local officials, stakeholders, public groups, and members of the public and Indigenous communities for a particular region

•

Decisions about growth to be made in ways that increase and promote greater housing and transportation options, investments in regional public service facilities in downtown areas, and that maximize infrastructure investments in

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communities, while balancing regional needs for farmland and natural areas •

If a salesperson is working with a developer and attends meetings with the local planning department, they should have a general knowledge of this legislation

The Clean Water Act The Clean Water Act ensures communities protect their drinking water supplies through prevention of pollution and contamination by developing collaborative, watershed-based source protection plans that are locally driven and based on science. This legislation established source protection areas and source protection regions. It also created a local multistakeholder source protection committee for each area. Some properties may abut land affected by the Clean Water Act. You must ensure to check with the conservation authority to properly represent the property and its uses and to avoid inadvertent misrepresentation.

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Lesson 2 | Page 10 of 17

The Planning Act The Planning Act is provincial legislation that sets out the ground rules for land use planning in Ontario. It describes how land use may be controlled and who may control them. You must be aware of the land planning process and procedures that must be followed when dividing land into separate lots, for sale or development, through a plan of subdivision or a land severance, in case your clients have separated lots. According to the Planning Act, a land severance is the authorized separation of a piece of land to form a new lot or a new parcel of land. This is commonly known as a consent. It is required if you want to sell, mortgage, charge, or enter into any agreement (for at least 21 years) for a portion of your land. If the two parts are split already, by a road or railway for example, consent is not needed.

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If you are working with a client who wants to sever their land, you might have to include a condition to the agreement or schedule to the agreement on the proposed severance of the land. Listing and marketing property to the public may be hinged on this condition being satisfied. Some pre-printed clauses might indicate that although it is possible to enter into an agreement for the purpose of affecting an interest in the property, the transaction must comply with the Planning Act. If such a condition is not included, then it needs to be added in the agreement or a schedule to the agreement, to indicate when the land must be successfully severed, or a final plan of subdivision approved. In addition, when community developments or changes are proposed, people do not always agree on how their communities should develop. Disputes often arise over land use planning issues, such as where industry should be located, where roads and transit should be built, or how to protect forests and farmlands. When people are unable to resolve their differences on community planning issues or have disputes with their municipal council that cannot be settled, the Ontario Land Tribunal (OLT) Tribunal provides a forum to resolve those disputes. The tribunal first began in January 2019 and was formerly known as the Ontario Municipal Board (OMB), and then later as the Local Planning Appeal Tribunal (LPAT), an independent adjudicative tribunal that conducted hearings and made decisions on land use planning issues and other matters.

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Lesson 2 | Page 11 of 17

The Ontario Land Tribunal If a consumer is unhappy with a decision involving a planning matter, there is an appeal process through the Ontario Land Tribunal (OLT). Once the OLT receives an appeal, they will process it and send an acknowledgment with the case number and designated case coordinator. Depending on the appeal, several hearing events may be scheduled, and a process will be initiated to structure how the appeal will be heard. The time it takes for the OLT to decide an outcome will depend on many factors, such as the case's complexity. A decision may include orders, motions, details on the next hearing event, or the next steps. The OLT may issue multiple decisions and interim orders before they make a final decision.

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Appeals may slow down the sales process. For example, if a subdivision is facing an appeal, then buyers may not want to wait to build their home and choose not to amend the agreement. Or perhaps a seller wants to make a minor adjustment, and the city denies it. The appeal may slow the sales process, as buyers may not want to wait for approval.

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Lesson 2 | Page 12 of 17

OLT Hearing Events There are different types of hearing events depending on the appeal. A formal process will decide how the appeal will be heard and how a party, participant and the public will participate. Hearing events can be done virtually or in person. A hearing plan is required for any appeals for a hearing of four days or more. A hearing plan outlines how the hearing will proceed and ensures the Tribunal provides enough time to deal with the matter.

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Parties may be required to participate in a Case Management Conference (CMC) before a hearing to identify and determine specific details about the case. Following the CMC, an order will be issued to establish and direct the hearing procedure to ensure the issues in dispute are handled in the most fair and cost-effective way. Mediation may be requested to address and settle any issue(s) raised in the proceeding. The matter will move to a settlement hearing if the mediation is successful, and a settlement is achieved. If the mediation is unsuccessful, the case will move to a hearing. Each party will present their case during a hearing, and direct examinations and cross-examination will follow. After cross-examination, further clarification questions may only be asked by the original party. Each party will then present their “final argument”, which is an overview of their case, what they wanted to prove, and how they would like the Tribunal to rule. A party can represent themselves at a hearing or hire a lawyer or agent to represent them. Consent, site plan, and minor variance appeals may not always be dealt with by the OLT. Instead, municipalities that meet certain minimum requirements may establish their own appeal board, called a “local appeal body”, to hear consent, minor variance, and/or site plan appeals. For example, the City of Toronto has established the Toronto Local Appeal Body. You should advise your client to contact their municipality to determine the appropriate appeal body for their area.

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Lesson 2 | Page 13 of 17

Determine whether the salesperson is practicing due diligence of the applicable legislations in the following scenarios. There are four options. There is only one correct answer.

1

A salesperson has a listing that is abutting some wetlands and does not have time to check with the conservation authority because they know the area.

2

A salesperson considers the zoning bylaws for a parcel of land but does not consider the possibility of contamination because of neighbouring property use.

3

A salesperson is showing a property to a buyer and wishes to proceed with an offer, but there is a concern with the property about contamination because of a nearby factory. The salesperson adds a condition to the offer to protect the buyer’s interest.

4

A salesperson is called to list a parcel of land and learns that the owner only wants to list and sell 4 out of the 10 acres they own. The salesperson advises the owner that severance can be obtained with minimal costs and process involved.

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Lesson 2 | Page 14 of 17

The listing and sale of properties involving residential tenancies must be handled in accordance with the Residential Tenancies Act, (RTA). Beyond free-hold properties, you may also work with condominiums, governed by the Condominium Act, which is “framework” legislation, setting the parameters within which individual corporations can make bylaws and rules to shape their community. You may encounter some clients and customers looking to invest in commercial buildings. Commercial tenancies are governed by the provisions of the Commercial Tenancies Act.

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Lesson 2 | Page 15 of 17

The Condominium, Condominium Management, Residential, and Commercial Tenancies Acts As a salesperson, you have encountered both residential and commercial tenancies, both governed by different legislation. These legislation have been covered in Pre-Registration, but are reviewed again. The following four sections contain information on the legislation.

Condominium Act It is important for you to understand the Condominium Act so you can comply with requirements when selling units to buyers. Some specifics of the legislation include: • To live in a new condominium before the buyer owns it, the developer or vendor will charge an interim occupancy fee. • The salesperson must review condominium documentation to assess what type of parking and locker space is being provided (freehold, leasehold, exclusive use common element, or allocated/assigned) and the proper identification for each. • The condominium corporation is required to give each person a status certificate with respect to a unit in the corporation, if requested. Be aware of the cost and length of time it takes to receive the

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status certificate, as this may impact a seller’s or a buyer’s options. • Use restrictions can vary significantly from one condominium to another. Be aware of the use restrictions as they impact buyers. For example, a buyer with a pet needs to know about a no-pet restriction. • Recent amendments to the Condominium Act prohibit condominium residents from creating a nuisance, an annoyance, or disruption through smoke, vapour, odours, light, noise, and vibration. Where previously, matters related to nuisance were taken to court, the new amendment allows condominium corporations to bring the matter to the Condominium Authority Tribunal (CAT). CAT’s new extended authority allows matters to be resolved quickly and in a less costly manner.

Condominium Management Services Act If a salesperson is ever considering becoming a condominium manager, they must obtain the necessary qualification requirements prior to providing any of those services. According to the Condominium Management Services Act, no one can provide condominium management services unless licensed as a condominium management provider or as a condominium manager.

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Residential Tenancies Act You need to be familiar with the Residential Tenancies Act because you may find yourself listing a property for sale that is tenant occupied. This includes providing the correct notice and required time for a showing of a property for sale when it is tenant occupied, along with written consent for photographs.

Commercial Tenancies Act You must understand that the Commercial Tenancies Act legislation is different from the Residential Tenancies Act and how it applies to a property used principally for business. Of the many differences, a commercial landlord can seize and lock up the property on the 17th day that rent is not paid by a commercial tenant. In contrast, eviction of a residential tenant who has not paid rent is much harder and can take up to 90 days. In general, commercial tenants have fewer rights. In addition, rent increases are more protective for residential tenancies than for commercial.

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Lesson 2 | Page 16 of 17

Identify the correct statements with respect to corresponding legislation and appropriate due diligence steps for the salesperson in the following scenarios. There are four options. There are multiple correct answers.

1

Asked to provide management services, a salesperson explains that they are not licensed as a condominium management provider and directs the tenant to someone with the necessary qualifications, such as the condominium board. The corresponding legislation here is Condominium Act.

2

A salesperson is selling a pre-construction condominium, and his buyer has asked for interim occupancy. The salesperson explains to the buyer that in this case, associated fees would not apply to the purchase price. The corresponding legislation here is Condominium Management Services Act.

3

A salesperson provides proper notification of at least 24 hours to an existing tenant for a showing request of a property that is listed for sale. The corresponding legislation here is Residential Tenancies Act.

4

A salesperson informs a landlord that if the tenant fails to pay rent, they can seize the property, as per the terms in the lease. The corresponding legislation here is Commercial Tenancies Act.

© 2021 Real Estate Council of Ontario

Lesson 2 | Page 17 of 17

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Demonstrate knowledge of RECO’s role versus the role of professional associations • Demonstrate knowledge of provincial legislation applicable to the day-to-day work of a salesperson There are six sections on this page with a summary of the key topics that were discussed in this lesson.

RECO mandate

RECO exists for consumer protection, educating and informing consumers about the marketplace and the value of a regulated industry while protecting consumers’ interests and concerns. Understanding the RECO mandate allows you to successfully navigate the education system and provide reliable service to your clients and customers.

Professional associations

Real estate associations are voluntary membership-based organizations set up to support their members. Organized real estate has three levels: local, provincial, and national. Real estate boards represent brokers and salespersons at the local level. When you join a brokerage that is part of a real estate board or association, you typically also become a member of OREA and CREA. You may choose to become a member of other professional associations such as REIC or CCIM, whose members often pursue additional professional development and designations.

Provincial legislation

Compliance with the following legislation is required when providing services to clients and customers: • The Consumer Protection Act prohibits unfair practices in the offering of services. When making a consumer representation to a seller or a buyer, you must always be transparent and truthful about your services. Unfair practices are defined as (1) false, misleading, or deceptive consumer representations, or (2) unconscionable consumer representations.

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• The Ontario Human Rights Code requires that you take action to avoid discrimination. • The Family Law Act and its provisions regarding the matrimonial home dictate if a spousal consent signature is required on an agreement. • The Statute of Frauds dictates which contracts need be in writing, such as the transfer of an interest in property and leases exceeding three years. • The Consumer Reporting Act dictates a consumer’s right to be told why they are denied a benefit and the source (credit board). They have 60 days to request where you obtained this information. • In practice, the Land Transfer Tax Act provides that you need to have early discussion with buyers about the land transfer tax, prior to beginning the process of purchasing and preparing them for this additional expense. • The Electronic Commerce Act dictates that when completing an agreement of purchase and sale, you must obtain informed consent to proceed with electronic format for signatures, and then include a clause in the agreement addressing this.

The Planning Act (including the Ontario Land Tribunal)

You need to be familiar with the Planning Act regarding its severance procedures, as well as its land planning dispute process. When people are unable to resolve their differences on community planning issues or have disputes with their municipal council that cannot be settled, the Ontario Land Tribunal is responsible for hearing appeals.

The Environmental Protection Act and conservation authorities

The Environmental Protection Act outlines procedures for contaminated land, which you should be aware of in case your client is interested in such land. Conservation authorities have jurisdiction over various parts of Ontario and need to be contacted if you have clients interested in property abutting their jurisdiction. Understanding environmental legislation and its impact on your practice will allow you to better serve your clients and customers who are working with affected land.

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The Condominium Act, the Condominium Management Services Act, the Residential Tenancies Act, and the Commercial Tenancies Act

Since it is likely that you will be working with various types of properties, it is important to be familiar with condominium management. You should also understand legislative differences between working with residential and commercial agreements, and be able to explain these differences to clients.

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Lesson 3 | Page 1 of 9

Lesson 3: REBBA Review: Duties and Obligations

This lesson reviews REBBA’s legislative framework and provides an opportunity for you to demonstrate your knowledge regarding your duties and obligations under the Act and the Code. This includes disclosure requirements and your responsibilities to the brokerage.

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Lesson 3 | Page 2 of 9

In this lesson, you will review REBBA’s legislative framework along with your obligations and responsibilities under the Act. You should understand that REBBA consists of the statute and regulations, which have direct bearing on real estate trading, including day-to-day listing and selling activities and brokerage administration. Upon completion of this lesson, you will be able to: • Demonstrate knowledge of a salesperson’s duties and obligations under the Act and Code Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 3 | Page 3 of 9

REBBA consists of the Act and associated regulations. Throughout this lesson, you will review sections of the legislation and how to apply it to your practice.

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Lesson 3 | Page 4 of 9

Overview of REBBA Along with the Act, three of REBBA’s regulations will have a direct impact on the activities of a brokerage, a broker, and a salesperson: • Ontario Regulation (O. Reg.) 567/05: General (includes regulations on registration, trust money, brokerage structure, and management) • Ontario Regulation 579/05: Other (includes regulations on educational requirements, insurance, and records) • Ontario Regulation 580/05: Code of Ethics

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Lesson 3 | Page 5 of 9

Disclosures and Responsibilities to Brokerage You must fulfill your disclosure obligations and other responsibilities to your brokerage. The following six sections contain information on these responsibilities.

Notice of changes to personal information According to REBBA, if a salesperson or broker moves, changes their name, or has any changes from what was previously reported to RECO, these changes need to be reported to RECO within five days of the event. A salesperson or a broker who fails to report these to RECO has violated REBBA.

Notice to Registrar regarding Applicant Disclosure Questions If there are any changes in the information that was provided to RECO regarding the Applicant Disclosure Questions, the salesperson or the broker must notify RECO, in writing, within five days after the change takes place and must set out the nature of the change.

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Disclosures A salesperson or a broker must, at the earliest practicable opportunity, disclose the following matters to the brokerage with which they are employed, and with another brokerage with respect to possible employment: 1. Any ownership interest that the salesperson or the broker has in another brokerage 2. Any conviction, absolute discharge, or conditional discharge received by the salesperson or the broker for an offence under any act 3. Any professional discipline proceeding under any act that resulted in an order against the salesperson or the broker

Termination of employment A salesperson or a broker who initiates the termination of their employment with a brokerage must give the brokerage written notice of the termination, including the date the termination takes effect, and shall forward a copy of the notice to RECO within five days after the termination takes effect. In addition, a brokerage that initiates the termination of the employment of a salesperson or a broker shall do the same.

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Restrictions to brokerage No salesperson or broker shall trade in real estate on behalf of any brokerage other than the brokerage that employs the salesperson or the broker. Also, no salesperson or broker is entitled to or shall accept remuneration for trading in real estate from any person except the brokerage which employs the salesperson or the broker. The legislation permits a brokerage to pay remuneration owed to a salesperson or broker for trading in real estate to a corporation that meets specific criteria. The corporation is referred to as a personal real estate corporation (PREC). A PREC is a corporation that a salesperson or broker may establish that is permitted to directly receive from a brokerage remuneration that is earned by the registrant. The use of a PREC may have financial advantages for the salesperson or broker.

Copies of agreement If a salesperson or a broker represents a client or a customer who enters into a written agreement that deals with the conveyance of an interest in real estate, the salesperson or the broker shall use their best efforts to deliver a copy of the agreement, at the earliest practical opportunity, to the brokerage that employs the salesperson or the broker.

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Lesson 3 | Page 6 of 9

Disclosures to Seller and Buyer You are also required to disclose certain information to your sellers and buyers. The following five sections contain information on these disclosure procedures.

Acquisition or divestiture by registrant An interest in real estate is defined as any benefit that a registrant may gain, now or in the future, from a transaction, beyond the remuneration they may or may not stand to earn on the transaction. This is referred to as acquisition or divestiture by registrant. According to REBBA, unless the registrant first delivers to all other parties to the agreement the notice of the interest and the other parties have acknowledged in writing receipt of the notice, no registrant shall, directly or indirectly: • Purchase, lease, exchange, or otherwise acquire for themself or itself, any interest in real estate, or make an offer to do so • Divest themself or itself of any interest in real estate, or make an offer to do so This topic will be covered further in later modules.

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Notice The notice referred to in this scenario shall be in writing and shall include: • A statement that the registrant is a brokerage, a broker, or a salesperson, as the case may be • Full disclosure of all facts within the registrant’s knowledge that affect or will affect the value of the real estate • The particulars of any negotiation, offer or agreement by or on behalf of the registrant for the subsequent sale, lease, exchange, or other disposition of an interest in the real estate to any other person All interests, whether direct or indirect, must include the required disclosures. A direct interest is when a registrant is the seller or the buyer. For example, a salesperson either sells a property they own or buys a property they will own. An indirect interest is not always evident. A few examples of an indirect interest in real estate include: • When a relative, such as a parent or a child of the salesperson, is the seller or the buyer • When a salesperson or their relative is a shareholder of a corporation, or a partner in a partnership, that is selling or buying

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• When a salesperson or their relative has another role in the transaction that is not evident, such as being the lender or the mortgagee This topic will be covered further in later modules.

Remuneration If you are involved in a transaction in which you will be receiving remuneration from more than one party to the transaction, you must disclose this fact before any offer is made. Your disclosure should include the following information: • Notice that you are a registered salesperson • All facts within your knowledge that may affect the value of the real estate involved • Notice of any negotiation, offer, or agreement that you have conducted or that has been conducted on your behalf, for the subsequent sale, lease, exchange, or other disposition of an interest in the real estate to any other person • Details of any payment that will be received from anyone as part of the transaction, other than what is listed in a representation or customer service agreement must also be disclosed

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Written acknowledgement The salesperson must obtain written acknowledgement from the other parties that they have received the required disclosure. These obligations apply regardless of whether the property involved is listed for sale with a brokerage or is a private transaction. A private sale would include instances where a salesperson approaches a seller who does not have their property listed for sale with a brokerage, or the salesperson is selling their own property privately and the buyer is not being represented by a brokerage. In both instances, written acknowledgement must be received prior to an offer. If a salesperson is unsure if they have a personal interest in a transaction, RECO recommends they exercise caution and provide disclosure.

Inducements An inducement occurs when a salesperson makes a representation, or a promise and it induces the person into an offer or into making an offer that is different than what they might otherwise have made. The following steps must be taken by a salesperson when making a promise of inducement to the seller or the buyer: • Put it in writing at time of making the promise • Sign and date • Give a copy to the person you made the promise to

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• Get them to acknowledge your brokerage copy • Complete this all before they enter the offer • Be prepared to follow through with the promise You should check with your broker of record if there is any office policy on this matter.

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Lesson 3 | Page 7 of 9

Barb, a listing salesperson, has sold a property for their seller client and receives remuneration. Barb has also been offered a finder’s fee from a lender for referral of the buyer customer obtaining financing. In order to abide by REBBA, what is Barb’s best course of action? There are four options. There is only one correct answer. 1

Disclose the finder’s fee to the seller and obtain written consent to receive this

2

Disclose the lender’s involvement to the seller

3

Split the amount of the finder’s fee with the seller and lender

4

Disclose the finder’s fee to the seller after the mortgage has been approved

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Lesson 3 | Page 8 of 9

A salesperson sells their client’s home. The seller wants to give a bonus to the salesperson because they did an amazing job. In order to abide by REBBA, what is the best course of action the salesperson should take? There are five options. There is only one correct answer. 1

Ensure the bonus is provided to the brokerage and then the brokerage can pay the salesperson

2

Accept the bonus, if they receive written acknowledgement from the client

3

Accept the bonus, as they have not offered the client an inducement for it

4

Refuse the bonus, explaining that this is illegal

5

Take the bonus, but only with consent from the brokerage

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Lesson 3 | Page 9 of 9

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Demonstrate knowledge of a salesperson’s duties and obligations under the Act and the Code There are four sections on this page with a summary of the key topics that were discussed in this lesson.

REBBA

REBBA consists of the Act and associated regulations, which have direct bearing on real estate trading including day-to-day listing and selling activities and brokerage administration. The associated regulations include aspects of the procedures and programs resulting from RECO’s bylaws, established in 1997, to enhance consumer protection. The inclusion of these additional regulations allows for stronger enforcement on items such as registration and education requirements, insurance, handling of trust money, management of a brokerage, and recordkeeping.

Disclosure requirements

You must notify the Registrar and your brokerage of any name changes, address changes, termination of employment, convictions, or any professional discipline proceeding that resulted in an order against you. If there are any changes to their original application, you need to notify the Registrar and your brokerage, in writing, within five days after the event.

Responsibilities to your brokerage

Remember your responsibilities to your brokerage: • You are only allowed to trade within and collect payment from the brokerage that employs you • You need to deliver copies of your agreements to the brokerage at the earliest opportunity

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• You must not do or omit to do anything that causes the brokerage to contravene REBBA

Disclosure to sellers and buyers

You are required to disclose to sellers and buyers: • Direct and indirect interests • Receiving payment from more than one source involving the same transaction These obligations apply regardless if the property involved is listed for sale with a brokerage or is a private transaction. In both instances, written acknowledgement must be received prior to an offer. If you are unsure of whether you have an interest in a transaction, RECO recommends that you exercise caution and provide disclosure.

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Lesson 4 | Page 1 of 9

Lesson 4: REBBA Review: Service Agreements

This lesson compares the differences between single and multiple representation and provides an opportunity for you to demonstrate your knowledge of the Code of Ethics requirements regarding representation and service agreements, including disclosures and written copies.

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Lesson 4 | Page 2 of 9

As you learned in Pre-Registration, you must be able to identify and explain the possibility of multiple representation to your clients, as it will limit your obligations to them, should it occur. You must be careful to prevent inadvertently placing one client in an advantageous position over the other client. Regardless if the decision made by the consumer is representation or customer service, the agreements must be put in writing, signed by the salesperson, and then provided to the seller or the buyer to sign. Each person signing must be given their own copy, immediately upon signing the agreement. Upon completion of this lesson, you will be able to: • Demonstrate knowledge of requirements regarding representation and service agreements Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 4 | Page 3 of 9

As you learned in Pre-Registration modules, there are differences between single and multiple representation: • In single representation, the brokerage represents only one client in a transaction. • Single representation could involve either a seller or a buyer. The other party can be represented by a different brokerage or could be provided services only as a customer by either brokerage or could have no brokerage involvement. • Multiple representation occurs when the brokerage represents more than one client in the same transaction. • Multiple representation could involve a buyer client placing an offer on the property of a seller client, or could be two or more buyer clients who are placing offers at the same time on the same property. • For a brokerage to operate under multiple representation, the brokerage must make certain disclosures to each client and obtain their written consent to multiple representation, to ensure each client understands limitations to the services being provided, and how that would affect them.

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Lesson 4 | Page 4 of 9

Single and Multiple Representation Example Single representation: A brokerage is representing the seller in the listing of their property. The listing salesperson is working with the buyer customer who places an offer on the property. The brokerage represents the seller with the listing and the sale of the property. The buyer is being treated as a customer and is provided services only, rather than being represented. Multiple representation: A salesperson who works at a branch office has listed a property for sale. Another salesperson, from the main office of the brokerage, is representing a buyer who wants to place an offer on the property. Even though both salespersons are operating from different locations, they are employed by the same brokerage. As the relationship is established with the brokerage and not the salesperson, the brokerage is representing both the seller and the buyer. This scenario illustrates multiple representation because the brokerage is representing two clients in the same transaction.

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Lesson 4 | Page 5 of 9

Obligations for Multiple Representation You are required to disclose and explain the limitation owed to each client in a multiple representation relationship, as well as receive informed consent to continue from both clients. The requirements under REBBA for a brokerage to operate under multiple representation are as follows: • Disclosure before a representation agreement: You must inform a seller or a buyer at the earliest opportunity and definitely before an offer is presented that multiple representation could occur and obtain consent to proceed. A leading practice would be to discuss how the services provided would change at the earliest practicable opportunity and to obtain acknowledgement that the information has been provided before entering into a representation agreement.

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• Disclosure before an offer: You must disclose, at the earliest opportunity and before any offer is made, that the brokerage proposes to represent two or more clients in the same transaction, and explain the differences between the obligations the brokerage would have if it represented only one client. • You must disclose in writing, at the earliest opportunity and before any offer is made, the nature of the brokerage’s relationship to each party. This can be documented on any piece of paper. If the clients are a seller and a buyer, their consent would be captured on the same document; however, if the clients are both buyers, their consent would be captured on separate documents. Note: If you are a member of a real estate board, OREA, and CREA, an example of a document that can be used to record this disclosure is OREA Form 320—Confirmation of Co-operation and Representation. However, if you are not a member of a real estate board, OREA, and CREA, you must still document and retain this information to satisfy requirements under REBBA.

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Lesson 4 | Page 6 of 9

Agreement Requirements When entering into agreements with clients and customers, you are required to meet the Code requirements. The following six sections contain information on representation and customer service agreement requirements.

Information before an agreement Before entering into an agreement with a seller or a buyer, you must inform them of the following: 1. The types of service alternatives that are available in the circumstances, including a representation agreement or another type of agreement 2. The services that the brokerage would provide under the agreement 3. The fact that circumstances could arise in which the brokerage could represent more than one client in respect of the same trade in real estate, but that the brokerage could not do this unless all of the clients represented by the brokerage in respect of that trade consented in writing 4. The nature of the services that the brokerage will provide to each client if the brokerage represents more than one client in respect of the same trade in real estate 5. The fact that circumstances could arise in which the brokerage could provide services to more

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than one customer in respect of the same trade in real estate 6. The fact that circumstances could arise in which the brokerage could, in respect of the same trade in real estate, represent both clients and provide services to customers 7. The restricted nature of the services that the brokerage would provide to a customer, in respect of a trade in real estate, if the brokerage also represents a client in respect of that trade

Seller representation agreements If you enter into a seller representation agreement and the agreement is not in writing, you must, at the earliest practicable opportunity and before any buyer makes an offer, reduce the agreement to writing, have it signed on behalf of the brokerage, and submit it to the seller for signature.

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Buyer representation agreements If you enter into a buyer representation agreement and the agreement is not in writing, you must, before the buyer makes an offer, reduce the agreement to writing, have it signed on behalf of the brokerage, and submit it to the buyer for signature.

Agreements with customers If a person decides to become a customer instead of a client, you must, at the earliest practicable opportunity, reduce the agreement to writing, have it signed on behalf of the brokerage, and submit it to the customer for signature.

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Contents of written agreements All agreements, regardless of the type, must: • Specify the date on which the agreement takes effect and the date on which it expires • Specify or describe the method for determining the amount of any remuneration payable to the brokerage • Specify the amount of any remuneration payable to any other brokerage, typically in the case of an agreement with a seller • Describe how any remuneration payable to the brokerage will be paid • Set out the services that the brokerage will provide under the agreement The expiry date must not be more than six months after the date on which the agreement takes effect unless the date on which the agreement expires is prominently displayed on the first page of the agreement. In that case, the appropriate party (seller or buyer) must initial next to the expiry date to confirm that they are aware of the duration of the authority. Lastly, the agreement must contain only one date on which it expires.

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Copies of written agreements If a brokerage and one or more other persons enter into a written agreement in connection with a trade in real estate, the brokerage shall ensure that each of the other persons is immediately given a copy of the agreement.

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Lesson 4 | Page 7 of 9

A listing salesperson with ABC Realty Ltd. explains the possibility of multiple representation to their sellers while they sign a client representation agreement. Meanwhile, the salesperson’s colleague from the same brokerage shows their buyers the property, who make an offer on it. What must the listing salesperson disclose to the sellers? There are four options. There is only one correct answer.

1

The listing salesperson has already discussed the possibility of multiple representation at time of listing the property, so does not need to take further action.

2

The listing salesperson does not represent the buyers. Therefore, no multiple representation has taken place and there is nothing to disclose.

3

The listing salesperson must inform the sellers that the brokerage is in multiple representation and must obtain their written consent.

4

The listing salesperson must tell the sellers that the brokerage is in multiple representation and their consent has already been provided in the representation agreement.

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Lesson 4 | Page 8 of 9

Sue is working with her seller clients, who have decided to list their property for sale with her brokerage. She has completed the listing agreement, but her clients have told her they work on opposite shifts from one another and she will have to meet with them separately. Sue is able to meet with one of them and obtain their signature that afternoon. However, she is not able to meet with the other and obtain the signature until 7 p.m. When should Sue provide the copies of the listing to each seller? There are four options. There is only one correct answer. 1

Email both sellers after 7 p.m., when the second seller has signed

2

Provide a copy to the first seller at the first meeting, then provide a copy to the second seller at the second meeting

3

Provide a copy to the first seller for them both to share

4

Provide both copies to the second seller, as now both signatures have been acquired

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Lesson 4 | Page 9 of 9

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Demonstrate knowledge of requirements regarding representation and service agreements There are four sections on this page with a summary of the key topics that were discussed in this lesson.

Single and multiple representation

In single representation, the brokerage represents only one client in a transaction, while multiple representation occurs when the brokerage represents more than one client in the same transaction. You need to know this distinction to follow the proper procedures when dealing with clients or customers.

Multiple representation requirements

In multiple representation, the brokerage must disclose the details at the earliest opportunity and before an offer is presented, and they must also obtain informed consent to proceed. You need to know how and when to carry out proper multiple representation procedure to ensure your clients or customers are best represented.

The Code requires that salespersons review the terms and services to be Code requirements for representation agreements provided under representation agreements to their clients. The salesperson then must sign the agreement first, ask their client to sign, and distribute copies. These requirements allow a salesperson to best represent their clients, ensuring they know the services provided.

Code requirements for customer service agreements

For customer service agreements, the Code requires that the salesperson review the terms and services to be provided. The salesperson can then sign the agreement, have the customer sign, and distribute copies. These requirements ensure best representation and that you build a trustworthy reputation.

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Lesson 5 | Page 1 of 13

Lesson 5: REBBA Review: Disclosures This lesson reviews your obligations when conveying offers, competing offers, record keeping, and the collection of remunerations. You will demonstrate your knowledge of material facts, the requirements when a collateral agreement exists, and the rules governing rebates.

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Lesson 5 | Page 2 of 13

Regardless of whether you are working with a client or a customer, offers must be conveyed in compliance with the Code of Ethics. Abiding by the Code includes maintaining proper record keeping, correctly handling competing offers, and making the required disclosures. You need to be able to recognize material facts to ensure they are disclosed at the earliest opportunity, as they may influence the individual’s decision to go forward with the transaction. Additionally, you need to know ways to address payment of remuneration in representation agreements and service agreements. You must also know the appropriate steps for disclosing terms of collateral agreements and rebates. Upon completion of this lesson, you will be able to: • Demonstrate knowledge of actions regarding offers, disclosures, and agreements • Review a salesperson’s responsibilities regarding remuneration and rebates Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented. © 2021 Real Estate Council of Ontario

Lesson 5 | Page 3 of 13

When conveying offers to clients and customers, you must present all offers and subsequent documents (for example, counteroffer, amendments, etc.) to the seller at the earliest practicable opportunity. Whether or not an offer is accepted, your brokerage must retain a copy of the accepted offer, or in the case of an unsuccessful offer(s), a completed offer summary documents and any related documents. All offers and agreements pertaining to a purchase must be in writing. These concepts will be examined in greater detail.

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Lesson 5 | Page 4 of 13

Offers All offers and documents pertaining to an interest in real estate must adhere to certain Code obligations. The following three sections contain information on these obligations.

Conveying offers When conveying offers, you must comply with the Code, ensuring that all offers are: • Presented in writing • Conveyed to the client or the customer at the earliest practicable opportunity (unless written direction from the client or the customer instructed otherwise) • Received by someone on behalf of you, if you are not available at the time the offer is submitted

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Record retention time The brokerage is required to retain all documents and records for a minimum of six years. If an offer is rejected and you are representing the seller, you must submit a copy of the offer or a summary document to your brokerage, who must retain it for a minimum of one year.

Written and legible agreements All agreements involving a conveyance of interest in real estate must be written and legible. This includes agreements of purchase and sale, amendments to the agreement, or any other subsequent documents.

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Lesson 5 | Page 5 of 13

Competing Offers Competing offers are an inevitable part of the competitive nature of real estate. When working with competing offers, you must abide by certain obligations, including making the appropriate disclosures. The following three sections contain information on your disclosure obligations regarding competing offers.

Offer disclosures In cases of competing offers, if you are the listing salesperson, you must disclose to all buyers: • The number of written competing offers (however, the contents of any offer may not be disclosed) • If you have submitted an offer on behalf of a buyer • If a competing offer has been submitted by a buyer representative within your brokerage • If two buyer representatives from the same cooperating brokerage have submitted offers (as this may be a multiple representation situation for the co-operating brokerage, and consent is needed)

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Possibility of multiple representation In the case of competing offers, the potential of multiple representation could be a possibility for a cooperating brokerage. When there are competing offers from the same cooperating brokerage, as the listing salesperson, you must contact both salespersons from the co-operating brokerage; inform them that two of the competing offers are from their brokerage; and disclose the identity of each salesperson from the same brokerage to the other. If both buyers are clients – then the co-operating brokerage is in multiple representation and must disclose and obtain consent from each of their buyers.

Remuneration reduction If you or your brokerage has a remuneration reduction agreement with a seller, or if a competing offer from another brokerage is proposing a remuneration reduction, you must disclose these terms to any person who makes an offer at the earliest practicable opportunity, and before an offer is accepted. The purpose of this disclosure is to ensure that the buyer is aware of the remuneration reduction, as it may influence whether the offer is accepted by the seller. You will learn more about remuneration reduction later in this lesson.

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Lesson 5 | Page 6 of 13

Seller Property Information Statement If you are working with a seller client, and you know that they have completed a written statement providing information to buyers about their property (such as a Seller Property Information Statement), unless the seller directs otherwise, you must: • Disclose the existence of the statement to every buyer who expresses an interest in the property • When requested by a buyer, provide them with it at the earliest possible opportunity The disclosure of this statement may impact a buyer’s decision about the property. © 2021 Real Estate Council of Ontario

Lesson 5 | Page 7 of 13

Material facts Material facts must be disclosed to your client at the earliest opportunity, as they may influence the individual’s decision to sell or to purchase a property. The following four sections contain information on how to handle material facts.

Subjectivity of material facts For the purposes of the Code, a material fact can be defined as “…a fact that would affect a reasonable person’s decision to acquire or dispose of the interest…” What is considered a material fact to one seller or buyer may not be to another, so it is better to identify and disclose what you find.

Disclosing material facts When working with a client, you must take reasonable steps to determine all material facts relating to a property. When working with a customer, you need to only disclose what is known or ought to be known. In many instances, material facts affecting a property may already be known by a seller. However, you should still be diligent in determining these factors, as the seller may not understand the potential impact of the material facts.

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In addition, you must also disclose known material facts to the buyer’s salesperson in accordance with the requirements under the fairness and honesty provisions of the Code. However, you should discuss any disclosures with your seller before doing so.

Material facts for the seller Examples of material facts of importance for a seller may include: • The highest and best use of the property as this impacts the value • Capital gain on sale of investment property and tax implication on year of disposition • Costs for an early discharge of the mortgage registered on title to the property • Costs associated with paying out a rental or a rent to own contract, such as a furnace

Material facts for the buyer Examples of material facts of importance for a buyer may include: • Condition of the structure, such as a roof leak, mechanical or electrical deficiencies, or basement water seepage • Environmental hazards, such as asbestos, lead, mould, or previous use as a grow-op • Building measurements or lot size • Property taxes • Zoning

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• Previous, present, and potential use of the property or surrounding properties • Easements or restrictions registered on title • Renovations completed without permits or inspections • If the property is located in a flood plain • The type of insulation and wiring • Any rights-of-way, allowances, or restrictions regarding use of the property established by the municipality, region or other governmental agency • Existence of nearby businesses or facilities that may impact quality of life (such as prisons, quarries, industrial facilities, airports, and rail lines)

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Lesson 5 | Page 8 of 13

Joseph, a salesperson with ABC Realty Ltd., shows a property to his buyer client, Raul. Raul really likes this property and instructs Joseph to draft an offer. Raul signs the offer and Joseph registers it with the listing brokerage, XYZ Realty Ltd. The listing salesperson from XYZ Realty Ltd. tells Joseph that there are six competing offers, including one other from ABC Realty Ltd., which is from salesperson Victoria. Joseph calls Victoria and discovers both of their buyers are clients of their brokerage. How should Joseph proceed? There are four options. There multiple correct answers. 1

Joseph must disclose the identity of Victoria’s client

2

Joseph should advise Raul to submit an offer without any conditions

3

Joseph must disclose to Raul that the brokerage is representing two competing buyer clients

4

Joseph must disclose the exact number of competing offers to Raul

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Lesson 5 | Page 9 of 13

A seller had subcontracted the construction of their home, which is now 18 months old. The seller has been residing in the home since the completion of its construction, but due to a job transfer, they have listed the property for sale with salesperson Florence. The seller has provided Florence with a written seller property information statement signed by the seller disclosing the fact that they had subcontracted the building of the house themselves and that no Tarion warranty exists. Florence is showing the property to her buyer customers, the Kims. While showing the property, the Kims express their interest in proceeding with an offer. What disclosure actions should Florence take to prepare the Kims for making an offer on this property? There are four options. There multiple correct answers.

1

Florence should ensure that the Kims understand the impact of purchasing the seller’s home that does not have Tarion warranty coverage.

2

Florence should provide the Kims with a copy of the seller’s property information statement.

3

Florence should recommend adding a clause to their offer regarding the fact that the seller’s home does not have Tarion warranty coverage and allow an opportunity for a lawyer’s review.

4

Florence should put together a list of the subcontractors that the seller employed and provide it to the Kims as an assurance that professionals were hired for the construction of the home.

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Lesson 5 | Page 10 of 13

You must agree upon and convey, in writing, the remuneration amount or structure to your client or your customer, while also disclosing any collateral agreements and rebates surrounding offers. The following screens will review your obligations regarding remuneration and rebates.

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Lesson 5 | Page 11 of 13

Salespersons’ Responsibility Regarding Remuneration It is important for you to understand how to address remuneration by way of commission or other structure, and any related disclosure obligations. The following four sections contain information on protocol regarding paying and receiving remuneration.

Remuneration, which includes commission and fees According to REBBA, all remuneration payable to a brokerage in respect of a trade in real estate must be an agreed-upon amount or percentage of the sale price or rental price, or a combination of both. This may be expressed as a series of percentages that decrease at specified amounts as the sale price or rental price increases. Additionally, you must never indicate that renumeration is fixed across the industry.

Collateral agreements According to the Code, the listing brokerage must disclose the existence and details of the following: • If an agreement between a listing brokerage and a seller client contains terms that relate to a remuneration reduction, in the event that the brokerage sells the property to a buyer with whom they are also working.

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• If a co-operating brokerage is proposing a remuneration reduction that may affect whether an offer is accepted. The brokerage must disclose the existence and details of the remuneration reduction to any person who makes a written offer to buy at the earliest practicable opportunity and before any offer is accepted. This is to ensure that competing buyers have the opportunity to voluntarily make adjustments to improve their offers.

Rebates Paying any form of compensation to an unregistered person for activities that would be defined as “in furtherance of a trade” is prohibited. However, the payment of rebates or other remuneration to a party to a transaction (seller or buyer) is not prohibited.

Finder’s fees A finder’s fee (sometimes referred to in the industry as a “bird dog fee”) is defined as: “some form of compensation paid to a third party to a real estate transaction in recognition of that person’s referral of a lead resulting in the person becoming a seller or buyer dealing with either the brokerage firm and/or a specific broker or salesperson”. The type of compensation is not relevant and could be anything from a cash payment to a gift.

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However, according to REBBA, these arrangements are prohibited.

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Lesson 5 | Page 12 of 13

Paul, a salesperson with QRS Realty Ltd., was retained to list a commercial property on Queen Street. The seller representation agreement stated total remuneration of 4 per cent of the sale price of the property or 3 per cent should the property be sold directly by the listing salesperson, Paul. The seller representation agreement also authorized QRS Realty Ltd. to pay the co-operating brokerage remuneration of 2.25 per cent of the sale price of the property. The seller received nine offers in total. One of the offers was from Paul’s buyer client. Paul advised all other representatives who had submitted offers that there were “over five” multiple offers received, but did not confirm or follow up with the exact number of offers, or advise them of the collateral agreement. Paul told the other representatives that the seller was “reviewing all offers presented”. A few days later, an agreement was reached, and the property was sold to Paul’s buyer at a price of 4.6 million dollars. A buyer from one of the competing offers was upset and did not understand why his offer of 4.7 million dollars was not accepted. What did Paul fail to disclose that could have prevented this situation? There are four options. There multiple correct answers. 1

Paul failed to confirm and disclose the exact number of competing offers to all buyers

2

Paul failed to disclose the fact that one of the competing offers was from his own buyer client

3

Paul failed to disclose the details of the remuneration

4

Paul should have disclosed the competing offer amounts to all buyers

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Lesson 5 | Page 13 of 13

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Demonstrate knowledge of actions regarding offers, disclosures, and agreements • Review a salesperson’s responsibilities regarding remuneration and rebates There are four sections on this page with a summary of the key topics that were discussed in this lesson.

Conveying offers

When conveying offers to a seller, keep in mind that all offers must be: • In writing and legible • Presented at the earliest practicable opportunity (either by you, or another salesperson or a broker if you are unavailable)

Document retention

A brokerage is required to retain all documents and records for a minimum of six years. If an offer is rejected and you are representing the seller, you must submit a copy of the offer or a summary document to your brokerage, who must retain it for a minimum of one year.

Competing offers

In cases of competing offers, as a listing salesperson, you must disclose to all buyers: • The number of offers (however, the content must not be disclosed) • When submitting an offer drafted on behalf of their own buyer • If another salesperson from the listing brokerage has registered or submitted a competing offer • The identity of one salesperson to the other, if they are from the same cooperating brokerage and have registered or submitted competing offers

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• If you or your brokerage has a remuneration reduction agreement with a seller, or if a competing offer from another brokerage is proposing a remuneration reduction

Material facts

You need to be able to recognize material facts to ensure they are disclosed at the earliest opportunity, because it may influence the individual’s decision as to whether or not to go forward with the sale or purchase of a property. When working with a seller, you must ensure that they understand what constitutes a material fact and the need to disclose them to potential buyers. You must also disclose any existence of a written statement (such as SPIS) to the buyer and, upon request, make it available to them at the earliest practical opportunity. However, this is not necessary if the buyer has directed you otherwise.

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Lesson 6 | Page 1 of 15

Lesson 6: REBBA Review: Due Diligence, Misrepresentation, and Consequences This lesson reviews the importance of providing accurate and true information, compliant advertising, what could be considered misrepresentation and fraud, and possible outcomes for misconduct. You will demonstrate your knowledge of compliance.

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Lesson 6 | Page 2 of 15

The consequences of misconduct could result in loss of registration, fines, incarceration, additional educational requirements, and publication on RECO’s website. This lesson will focus on preventative and corrective measures of misrepresentation. You can use previous salespersons’ infractions as a learning opportunity to discover areas for self-improvement and thereby prevent the same thing from happening to you. Upon completion of this lesson, you will be able to: • Review a salesperson’s responsibilities regarding due diligence • Review a salesperson’s responsibility regarding misrepresentation • Review the consequences of misconduct • Review trading compliance for salespersons and brokers Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 6 | Page 3 of 15

As you learned in previous modules, you must take reasonable steps in order to satisfy the legal requirements as they pertain to selling or buying real estate. This includes promoting your clients’ best interests, knowing when to refer consumers to third-party professionals, and always providing accurate information.

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Lesson 6 | Page 4 of 15

Providing Services and Obtaining Advice To review, the Code provides that you must: • Treat every person you encounter throughout the course of a trade with fairness, honesty, and integrity • Promote and protect your client’s best interests • Provide conscientious service to clients and customers and demonstrate reasonable knowledge, skill, judgement, and competence in providing those services

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• Refer clients and customers to obtain services from another party if you are not able to provide the services with reasonable knowledge, skill, judgement, and competence, or are not authorized by law to provide the services

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Lesson 6 | Page 5 of 15

Accurate Representation It is important to make accurate representations with respect to a trade or about your services being provided. For this reason, you need to ensure listings and other forms of advertising contain accurate information to avoid misrepresenting both the property and your services to consumers. Failing to put forth your best efforts in providing accurate and truthful information may result in a tainted reputation and dissatisfaction of the client or the customer and possibly lead to prosecution.

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Lesson 6 | Page 6 of 15

False Advertising An advertisement is a notice or announcement in a public medium that promotes a registrant’s business, services, or trades (for example, broadcast, print, electronic media, or publication on the internet, which may include websites and social media sites). REBBA prohibits false, misleading, or deceptive statements in advertising by registrants. Remember that whenever you advertise, you are doing so on behalf of your brokerage. Advertising is regulated by other statutes in addition to REBBA, including the Competition Act, PIPEDA, trademark and copyright statutes, provincial laws relating to consumer protection, and municipal bylaws regarding things such as signage.

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If a registrant engages in false advertising, the Registrar may order the cessation of the advertisement, and/or the registrant to print a retraction. The Registrar could also order the registrant to submit all advertising material for pre-approval before publication. False advertising can also lead to prosecution.

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Lesson 6 | Page 7 of 15

Misinformation and Fraud As stated in REBBA, no registrant shall make a false, misleading, or deceptive statement in relation to a trade in real estate or offering of services. Doing so could result in misinformation or fraud. The following five sections contain information on how each of the following statements and situations could be considered misinformation or fraud.

Misleading statement A misleading statement in advertising is one that causes a reader to have a wrong idea or impression. Examples: A salesperson advertises that they personally have completed “over 100 transactions last year”. In reality, however, the salesperson had contributed to their entire team’s completion of 100 transactions. A salesperson boasts that they are the “#1 Salesperson in Town”. In reality, however, they are the leading salesperson only in a particular neighbourhood of that town.

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False statement A false statement in advertising is one that can be shown to be factually incorrect. Generally, there is little room for interpretation in these situations. Example: A listing salesperson does not verify information given to them by the seller. The salesperson advertises that a property generates a rental income of $5,400 per month instead of the actual rental income of $4,500 per month.

Deceptive statement A deceptive statement in advertising is one that causes something to be easily mistaken for something else or causes the reader to believe something that is not true. In other words, it is a statement that is purposefully misleading. Example: A property is advertised as a “pool-sized” lot. However, after the transaction closes, the buyer learns that an easement, which the salesperson knew of, runs across the rear portion of the lot, will not permit the installation of a swimming pool.

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Vague or incomplete statement Making a statement that is true, but is vague or incomplete, could be considered an inaccurate representation in advertising. It may or may not be misleading and/or deceptive. Example: An advertisement states that a property has “great views and a lovely waterfront”. The property, however, does not have water frontage, and only has access to the water from the property through a right-of-way path along the neighbour’s lot-line.

Fraud Sometimes an attempt to help a client can lead to accidental fraud. You must use your best judgement to prevent error, misrepresentation, fraud, or any unethical practice in respect of a trade. Example: A salesperson writes an offer on behalf of their buyer. The salesperson makes the offer conditional upon the buyer’s arrangement of a new first mortgage. The salesperson also prepares a separate document for the buyer, who has entered into a seller take-back mortgage, not wanting the lender to know about their private second mortgage.

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Lesson 6 | Page 8 of 15

Failing to comply with the principles we just reviewed could have serious consequences. The following screens will review potential consequences of misconduct, and leading practices to avoid them.

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Lesson 6 | Page 9 of 15

Misconduct and Compliance Most registrants conduct themselves professionally and comply with all their obligations under REBBA. However, there are situations that result in misconduct for noncompliant practices. Outcomes of misconduct may include: • Warnings and additional mandated education courses • Publication of the misconduct

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• Fines • Paying compensation or restitution • Suspension or revocation of registration • Imprisonment Any misconduct could also impact your reputation as a salesperson, as well as your brokerage’s reputation. You will learn more about misconduct and disciplinary outcomes in Addressing Non-compliance and Complaints. Leading practices for compliance include: • Treating all individuals you come across during the course of a trade with fairness, honesty, and integrity • Protecting your clients’ interests to the best of your abilities • Following through on necessary due diligence steps and disclosures • Consulting your broker of record or other colleagues if you need help • Declining work that you are unable to complete yourself • Referring individuals to a third party if you are not able to provide services with reasonable knowledge and skill • Taking continuing education courses to invest in your skill set and knowledge Engaging these practices can help you avoid accidental misconduct.

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Lesson 6 | Page 10 of 15

Contravention of REBBA Examples of salesperson’s contravention of REBBA and its regulations, other than the Code of Ethics, include: • Failing to notify the Registrar of a change in information included in their registration application • Trading while registration is suspended • Failing to participate in Professional Liability Insurance Program • Failing to complete mandatory continuing education courses • Directing someone else to complete the mandatory education courses on their behalf We will discuss these contraventions and their penalties in more detail in a later module. © 2021 Real Estate Council of Ontario

Lesson 6 | Page 11 of 15

Common Infractions of the Code of Ethics You are expected to provide ethical, competent, and professional service to consumers. The displayed graphic provides an overview of the most common types of Code infractions. Awareness of this information can be used as a learning opportunity to help you avoid finding yourself in a similar breach of obligations. You will learn more about this in a later module.

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Lesson 6 | Page 12 of 15

Lawrence, a salesperson, prepared an offer on behalf of his buyer clients. However, they were not present at the time of signing, so their daughter Jennifer signed on their behalf. At no point did Jennifer actually provide a valid Power of Attorney (POA) concerning the purchase of the property on behalf of her parents. Furthermore, Lawrence signed as a witness to the buyers’ signatures on the agreement of purchase and sale. The buyers failed to close the transaction. What should have been Lawrence’s leading practice for compliance? There are three options. There is only one correct answer. 1

Lawrence should have asked Jennifer to produce a copy of the POA from her parents.

2

Lawrence should have called the buyers to notify them that Jennifer was planning to sign the offer on their behalf.

3

Lawrence should have emailed the buyers asking for their written permission for Jennifer to sign the offer on their behalf.

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Lesson 6 | Page 13 of 15

Trading Compliance and the Brokerage Finally, remember your compliance duties to your brokerage: • Under REBBA, you are only permitted to trade on behalf of the brokerage that employs you. • You are only entitled to accept remuneration for trading in real estate from the brokerage that employs you. • When entering into an agreement with a client or a customer, you must deliver a copy of the agreement to your brokerage at the earliest practicable opportunity. As you learned earlier, the brokerage is required to retain all documents and records for a minimum of six years.

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Lesson 6 | Page 14 of 15

Anna is a salesperson with ABC Real Estate Inc. Her husband, John, is a salesperson with XYZ Realty Ltd. Anna goes out of town for the weekend, and while she is away, she receives word that an offer on one of her listings has come through. This property is exclusively listed with ABC Real Estate Inc. Not wanting to delay the offer, Anna calls John and asks if he can help her out, since the sellers are good friends of Anna and John’s. John agrees to present the offer to the sellers. Are John’s actions permissible? There are three options. There is only one correct answer.

1

Yes; although Anna and John work for different brokerages, Anna has given her husband permission to work with her client on her behalf.

2

Yes; John is permitted to help his wife with the trade, as long as he does not collect remuneration.

3

No; because John works with XYZ Realty Ltd., he is not permitted to work with clients from ABC Real Estate Inc.

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Lesson 6 | Page 15 of 15

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Review a salesperson’s responsibilities regarding due diligence • Review a salesperson’s responsibility regarding misrepresentation • Review the consequences of misconduct • Review trading compliance for salespersons and brokers There are four sections on this page with a summary of the key topics that were discussed in this lesson.

Due diligence

You must take reasonable steps in order to satisfy the legal requirements as they pertain to selling or buying real estate. When you do not have the knowledge, ability, or skill to provide a specific service, you should refer your client or customer to a third-party expert who does. You need to verify the information found in your listings and advertisements and ensure that it is accurate.

Misrepresentation

A misrepresentation is a statement that does not accurately reflect the condition of a property, your services, or the circumstances surrounding a transaction. Knowingly making an inaccurate representation is a violation of the Code. To ensure compliance, you must use your best efforts to prevent error and misrepresentation.

Consequences of misconduct

Misconduct can result in: • Loss of registration • Fines • Incarceration • Warnings and additional educational requirements

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• Publication on RECO’s website Understanding the severity of these consequences can help you to be more diligent in practicing compliant behavior.

Trading compliance and the brokerage

Remember your obligations to your brokerage: • You are only permitted to trade and receive remuneration from the brokerage that employs you • You must be aware of the brokerage’s requirements to retain records and your obligation to deliver agreements to your brokerage at the earliest practical opportunity

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Lesson 7 | Page 1 of 7

Lesson 7: Summary Practice Activities

This lesson provides a series of activities that will test your knowledge on the entire module.

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Lesson 7 | Page 2 of 7

The lesson contains summary decision points that will test your knowledge regarding the topics covered in this module on compliant practices of a salesperson during the initial stages of the trade.

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Lesson 7 | Page 3 of 7

A salesperson has just joined ABC Realty Ltd. The salesperson is reviewing the policies of that brokerage and the broker of record is explaining to them the process of filing. What must the salesperson do to help the brokerage comply with document retention? There are four options. There are multiple correct answers.

1

The salesperson must keep a copy of the document for six years.

2

The salesperson must deliver a copy of any agreement at the earliest practicable opportunity to the brokerage that employs them.

3

The salesperson delivers copies of waivers and notice of fulfillment of condition at the earliest practicable opportunity to the brokerage that employs them.

4

The salesperson delivers copies of the agreement when the offer becomes firm and binding.

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Lesson 7 | Page 4 of 7

Valerie, a salesperson with ABC Realty Ltd., is negotiating a transaction on behalf of a buyer client for the purchase of an investment property. An individual identity verification form was completed during this transaction. Her broker of record discusses the transaction with Valerie and informs her that a business relationship has been created between the buyer and the brokerage. As a result, ABC Realty Ltd. now has specific FINTRAC obligations. Which of the following obligations under FINTRAC must Valerie carry out? There are four options. There are multiple correct answers.

1

Valerie must file a Suspicious Transaction Report.

2

Valerie must maintain up-to-date information on the identity of the buyer client.

3

Valerie must complete an assessment to determine the client’s risk level.

4

Valerie must record the measures of the business relationship.

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Lesson 7 | Page 5 of 7

Sam is a salesperson with KLM Realty Ltd. and lists his daughter’s property for sale. When his daughter purchased the property, Sam provided the down payment; she plans to pay him back from the proceeds of the sale. The listing fee to KLM Realty Ltd. is 5 per cent, with 2.5 per cent offered to the co-operating brokerage. He tells his daughter that he will rebate his listing portion of the remuneration to her after the completion of the sale, and adds this to the listing agreement. Which of the following facts is Sam required to include in his disclosure document to buyers? There are four options. There is only one correct answer.

1

Sam must disclose that the seller is his daughter.

2

Sam must disclose that he will rebate his listing portion of the remuneration to his daughter after completion of the sale.

3

Sam must disclose that his daughter’s loan for the down payment will be paid from the proceeds of the sale.

4

Sam must disclose that he will pay the required remuneration to the co-operating salesperson on behalf of the seller on closing.

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Lesson 7 | Page 6 of 7

A buyer client of ABC Realty Ltd. has just signed an agreement of purchase and sale prepared by his salesperson, Joseph, with an irrevocable period expiring at 9 p.m. the following day. Joseph contacts the listing brokerage, XYZ Realty Inc. and registers his buyer’s offer. Joseph is informed by Karen, the listing salesperson from XYZ Realty, that there are currently four other offers registered and all offers will be presented at 2 p.m. the next day. Joseph is invited to attend the offer presentation, which will take place at the seller’s home. What obligations do Joseph and Karen have at this point? There are four options. There are multiple correct answers.

1

Joseph must inform Karen that his buyer will improve his offer if necessary.

2

Joseph must inform his buyer of the number of competing written offers.

3

Karen must disclose the substance of Joseph’s buyer’s offer to all other salespersons.

4

Karen must inform the other salespersons of the updated number of competing written offers.

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Lesson 7 | Page 7 of 7

Congratulations, you have completed the lesson!

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Module Summary | Page 1 of 3

Module Summary

This lesson contains a summary of the entire module.

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Module Summary | Page 2 of 3

Congratulations, you have completed this module! This lesson will present a summary of Learning Objectives.

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Module Summary | Page 3 of 3

There are six sections on this page with a summary of the key topics that were discussed in this module.

Review Regulatory Requirements: Federal and Municipal

This lesson reviewed federal legislation, and prepared you to demonstrate your knowledge of how this legislation impacts your day-to-day activities as a salesperson. To do this successfully throughout your career, you must maintain a knowledge of the following acts and always ensure compliance: • PIPEDA: Sets out requirements on how you should collect and use consumer information • DNCL and CASL: Protect individual’s privacy by limiting solicitation via phone or internet • The Competition Act: Protects consumers against anti-competitive activities • FINTRAC: Assists in detecting, preventing, and deterring money laundering and terrorist financing • Income Tax Act: Covers the impact of taxation on various real estate transactions You also reviewed the impact of municipal government on your day-to-day work, addressing local planning and advisory committees. Completion of this lesson has enabled you to: • Review federal legislation applicable to the day-to-day work of a salesperson • Review the impact of municipal government on the day-to-day work of a registrant

Review Regulatory Requirements: Provincial

RECO has a mandate to ensure salespersons comply with REBBA. You must maintain a knowledge of the following provincial statutes and always ensure compliance:

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• Ontario Human Rights Code: Guarantees equal rights and opportunities without discrimination, harassment, and reprisal with respect to employment, trade, self-governing profession, services, goods, contracts, and facilities • Family Law Act: Protects interests in a matrimonial home when a marriage breaks down or a spouse dies • Statute of Frauds: Provides that certain real estate contracts must be in writing to be enforceable at law • Consumer Reporting Act: Protects consumers through specific rights • Land Transfer Tax Act: Dictates how provincial land transfer tax is assessed on real property when property ownership is transferred • Planning Act: Establishes the framework for orderly planning system throughout the province of Ontario and parameters for the creation of local planning advisory committees You must understand how environmental legislation may impact your trading activities. The following legislation cover a broad array of topics, such as various licences, permits, and certificates of approval, remediation of contaminated lands, and land development: • Environmental Protection Act • Greenbelt Plan • Places to Grow Act • Clean Water Act You also need to know about conservation authorities and the extent of their jurisdiction, as it may be necessary to obtain certain approvals from them. And finally, this lesson reviewed legislation that applies specific types of real estate and how they impact your trading activities: • Condominium Act • Condominium Management Services Act

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• Residential Tenancies Act • Commercial Tenancies Act Completion of this lesson has enabled you to: • Demonstrate knowledge of RECO’s role versus those of professional associations • Demonstrate knowledge of provincial legislation applicable to the day-to-day work of a salesperson

REBBA Review: Duties and Obligations

After an overview of REBBA’s legislative framework, you were asked to demonstrate your knowledge regarding your duties and obligations as a salesperson under the Act and its regulations. This includes disclosure requirements and your responsibilities to your brokerage. Remember that you are required to notify RECO and your brokerage of any personal information updates (for example, name change, change of address, etc.) as soon as possible. You must also disclose the following to RECO and your brokerage: • Any ownership interest that you have in another brokerage • Any conviction, absolute discharge, or conditional discharge that you have received for an offence under any legislation • Any professional discipline proceeding under any legislation that resulted in an order against you Completion of this lesson has enabled you to: • Demonstrate knowledge of a salesperson’s duties and obligations under the Act and the Code

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REBBA Review: Service Agreements

This lesson reviewed the difference between single and multiple representation: • In single representation, the brokerage represents only one client in a transaction. • In multiple representation, the brokerage must disclose their representation of more than one client involved in the same real estate transaction at the earliest opportunity and before an offer is presented. You need to understand this distinction in order to follow the proper procedures when working with clients. You were also asked to demonstrate your knowledge of Code requirements regarding representation and service agreements, including disclosures before and distributing written copies after. Completion of this lesson has enabled you to: • Demonstrate knowledge of requirements regarding representation and service agreements

REBBA Review: Disclosures

After reviewing a registrant’s obligations regarding conveying offers, competing offers, and record keeping, you were asked to demonstrate your knowledge of material facts and other disclosures. You need to be able to recognize material facts to ensure they are disclosed at the earliest opportunity, because it may influence the individual’s decision as to whether or not to go forward with the sale or purchase of a property. After reviewing the collection of remuneration, you were asked to demonstrate your understanding of collateral agreements and rebates. Completion of this lesson has enabled you to: • Demonstrate knowledge of actions regarding offers, disclosures, and agreements • Review a salesperson’s responsibilities regarding remuneration and rebates

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REBBA Review: Due Diligence, Misrepresentation, and Consequences

In this lesson, you were asked to demonstrate your due diligence requirements when providing services, and when to obtain expert advice and services from third parties. You reviewed the importance of providing accurate and true information, compliant advertising, what could be considered misinformation and fraud, and possible outcomes for misconduct. Completion of this lesson has enabled you to: • Review a salesperson’s responsibilities regarding due diligence • Review a salesperson’s responsibility regarding misrepresentation • Review the consequences of misconduct • Trading compliance for salespersons and brokers

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V7

Module 2: Reviewing Compliance when Initiating Activities in Respect of a Trade Disclaimer: This is a reference document which contains pages from the Accessible eLearning module. You should complete the eLearning module to proceed to the next step. Please note that the accessible module on the LMS only contains the interactive pages and you need to go through the content of this document thoroughly to attempt the interactive activities in the module. Please use Adobe Acrobat Reader (Recommended version 9 or above) to navigate through this PDF. Real Estate Salesperson Program © 2021 Real Estate Council of Ontario. All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or in any means – by electronic, mechanical, photocopying, recording or otherwise without prior written permission, except for the personal use of the Real Estate Salesperson Program learner.

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Module 2: Reviewing Compliance when Initiating Activities in Respect of a Trade The relationship between a seller or a buyer and a brokerage may seem straightforward, but there are many aspects to it. First, the type of relationship must be established: either client or customer. You should be able to clearly communicate both relationship options so an informed decision can be made. As you learned in PreRegistration, the duties and obligations of a salesperson and a brokerage differ when working with clients and customers. This module reviews the duty of care owed to clients and customers and demonstrates through different scenarios how to service the client or customer relationship. The module also provides opportunities to review scenarios about the common mistakes in marketing and demonstrates, through corrective measures, how you can avoid miscommunication and misrepresentation. To check your understanding of this module, you must complete all the activities in the online module. While navigating through the online module, click the Legislation button to view laws and regulations related to this module. The contents of the thumbnails Accessible PDF.

and References from the module are added to support your learning throughout this

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Menu: Reviewing Compliance when Initiating Activities in Respect of a Trade Number of Lessons

Lesson Number

6 Lessons

Lesson Name

Lesson 1

Service Alternatives for Consumers and the Obligations of a Salesperson

Lesson 2

Compliant Practices of a Salesperson when Initiating a Trade

Lesson 3

How to Service a Client Relationship

Lesson 4

Miscommunication and Misrepresentation Through Words in Advertising and Marketing

Lesson 5

Summary Practice Activities Module Summary

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Lesson 1 | Page 1 of 9

Lesson 1: Service Alternatives for Consumers and the Obligations of a Salesperson This lesson details your obligations towards all parties involved in the trade and the Code sections that apply to client and customers.

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Lesson 1 | Page 2 of 9

This lesson reviews the distinction between the duties and obligations owed to a customer and those owed to a client. You must be able to explain to a seller or a buyer the various service alternatives that are available and what obligations the brokerage would owe them as a client or as a customer. The lesson will also examine sections of the Code that affect everyone involved in the real estate transaction: buyers, sellers, third-party professionals, salespersons, and brokerages. The focus will be on the initial stages of the trade. Upon completion of this lesson, you will be able to: • Review the service alternatives available to consumers and resulting obligations for a salesperson

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Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 1 | Page 3 of 9

You will now review the differences between duty of care owed to a client and to a customer.

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Lesson 1 | Page 4 of 9

A Salesperson’s Obligations to Clients and Customers The differences in duty of care owed to clients and customers illustrated in the flowchart are as follows: BROKERAGE DUTIES TO: CUSTOMERS • DUTY OF CARE o Limited duty to customer:  Provide Information  Provide Functions (If Any)  Limited Disclosure and Privacy Obligations

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• GENERAL OBLIGATIONS o Exercise Care and Skill o Ensure Honesty CLIENTS • DUTY OF CARE Duty To Client Involves Everything Done For That Client • GENERAL OBLIGATIONS o Exercise Care and Skill o Perform Mandate o Obey Instructions o Act in Person o Ensure Honesty o Disclose Information o Maintain Confidentiality o Negotiate Favourable Terms • FIDUCIARY OBLIGATIONS o Not Misuse Confidential Information o Not Make Secret Profit o Disclose Conflicts o Avoid Conflicts of Interest o Maintain Utmost Loyalty REGULATORY OBLIGATIONS • Disclosure: Representative Capacity • *Agency Relationships/Forms • To Deliver Agreements, Offers, and Statements © 2021 Real Estate Council of Ontario

• To Account • Remuneration Provisions Not To Induce, Breach, or Make Certain Promises *Regulatory obligations regarding Agency Relationships/Forms do not apply to customers.

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Lesson 1 | Page 5 of 9

Applying the Code to All Parties Certain sections of the Code set out standards that you must apply to all parties throughout the course of a trade. The following six sections contain information to review these Code standards.

Fairness, honesty, and integrity You must treat everyone involved in the transaction with fairness, honesty, and integrity. These principles must be at the core of every relationship you have with all parties, including salespersons from other brokerages, the clients and customers of other brokerages, and all third-party professionals you interact with throughout a trade.

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Providing opinions You must demonstrate reasonable knowledge, skill, and competence when providing real estate services. You must provide opinions based on your education or based on the experience you have acquired in real estate transactions.

Inaccurate representations You must not knowingly make inaccurate representations in respect of a trade, as well as about the services you provide.

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Error, misrepresentation, or fraud You must use your best effort to prevent misrepresentation, fraud, or unethical practice in respect of a trade.

Unprofessional conduct You must not engage in any act or omission that would reasonably be regarded as disgraceful, dishonorable, or unprofessional conduct.

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Abuse and harassment You must not abuse or harass any person in the course of the trade in real estate.

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Lesson 1 | Page 6 of 9

Differences Between a Client and a Customer As you know, explaining the difference between services owed to a client and those owed to a customer will help the consumer make an informed decision. The following three sections contain information about the main differences between a client and a customer.

Giving advice One distinguishing aspect of a client relationship from a customer relationship is that you are expected to give advice to your client. Although you cannot provide advice to a customer, you must provide them with correct information.

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Best interests You must promote and protect your client's best interests. You are required to keep them informed and provide guidance and advice so that they can make informed decisions throughout the entire course of a trade. When working with a customer, you are not obligated to work in their best interests.

Disclosing material facts It may be difficult for you to judge what facts are important to a seller or a buyer. You should discuss this with them and ask what information and facts about a property would be important to them in making a selling and buying decision. This information should be documented in a schedule to the representation agreement or customer service agreement or in the agreement itself, to avoid any misunderstandings and/or unpleasant surprises. You are required to take reasonable steps to determine and disclose material facts to your client at the earliest practical opportunity. For a customer, you are required to disclose only anything you know, or ought to know, at the earliest practical opportunity.

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Lesson 1 | Page 7 of 9

Applying the Code to Clients and to Customers The Code contains provisions that establish minimum standards of performance you must maintain while working with clients and customers. You will now review the Code obligations that are applicable to both. The following three sections contain information to review these Code obligations.

Documenting agreements When working with a client or a customer on an agreement that deals with the conveyance of an interest in real estate, you are required to use your best effort to have the agreement in writing and ensure the agreement is legible. If you enter into a verbal agreement with a client or a customer, it must be reduced to written form at the earliest practicable opportunity. You must sign on behalf of the brokerage and submit it to the client or the customer for their signature. For a client and a customer, the representation or customer service agreement must be completed, signed on behalf of the brokerage and presented to the client or the customer for signature before an offer is made. The Code does not require the client or the customer to sign the agreement, though it is a leading practice to acquire their signature. Your brokerage may have a

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policy that requires written evidence of the relationship signed by the party prior to continuing any work.

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Completing a written agreement When entering into a written agreement with a seller or a buyer, the agreement must include the following: • The effective date • Amount of remuneration payable to the brokerage, and in the case of an agreement with a seller, the amount of any remuneration payable to any other brokerage • How any remuneration payable to a brokerage will be paid • Services provided • The expiry date: o The agreement must contain only one expiry date o If the expiry date is more than six months after the date on which it takes effect, it must be prominently displayed on the first page of the agreement and initialed by the seller or the buyer You are required to give each person who is a party to the agreement their own copy immediately upon signing. The same applies to subsequent documents, such as amendments to the agreement, or suspension or cancellation of an agreement.

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Disclosures of interest When you are selling or buying property, you are required to disclose any direct or indirect interest at the earliest practicable opportunity and before an offer is made. Where a property is posted to a listing service, it is important to note the broker’s or the salesperson’s interest in the property for other registrants and for anyone else who might have access to the listing. For example: • If you were to list a property that you own (direct interest), this disclosure should begin with adding a comment to the remarks section of the listing that the owner is a registered salesperson or broker and that a written disclosure is available as an attachment for download. • If you were to list a property owned by a relative (indirect), this disclosure should begin with adding a comment to the remarks section that you are related to the seller and that a written disclosure is available as an attachment for download.

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Lesson 1 | Page 8 of 9

Amanda, a salesperson with ABC Realty Ltd., lists a business for sale and places an advertisement in the local newspaper. James, a buyer, calls Amanda regarding the advertisement and asks her to draft an offer for him. Two days following the call, James receives an agreement of purchase and sale by email and notices that Amanda has stated that ABC Realty Ltd. is representing both the seller and the buyer. James initials, signs, and dates the agreement of purchase and sale and returns it to Amanda by email. What steps was Amanda required to take prior to James signing the agreement of purchase and sale? There are four options. There are multiple correct answers. 1

Amanda was required to provide information about service alternatives.

2

Amanda was required to provide a written disclosure of interest.

3

Amanda was required to reduce the service agreement to written form.

4

Amanda was required to explain the possibility of multiple representation and its impact on the information shared.

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Lesson 1 | Page 9 of 9

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Review the service alternatives available to consumers and resulting obligations for a salesperson There are two sections on this page with a summary of the key topics that were discussed in this lesson.

Conduct towards all parties The Code requires you to treat everyone involved in the trade (seller, buyer, involved in the transaction other salespersons and/or brokers, and third-party professionals) with fairness,

honestly, and integrity. You must make your best efforts, be it to a client or a customer, to prevent errors, misrepresentations, or fraud, and conduct yourself with professionalism and ensure that no known inaccurate representations are made.

Difference between a client Remember the main differences between your obligations to clients versus customers. and a customer Your obligations toward clients include the following: • You are required to give advice to your clients • You must promote and protect your client's best interest throughout the course of the transaction • You are required to take reasonable steps to determine material facts and at the earliest practical opportunity disclose them to your client Your obligations toward customers include the following: • You are to provide the customer with information • You are prohibited from providing advice

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• You are required to disclose to a customer, at the earliest practical opportunity, any material fact that is known or ought to be known

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Lesson 2 | Page 1 of 7

Lesson 2: Compliant Practices of a Salesperson when Initiating a Trade

This lesson re-examines the importance of making disclosures, and the obligations owed to the seller or the buyer when they are being represented by the brokerage.

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Lesson 2 | Page 2 of 7

You are obligated to provide information about available services to a seller or a buyer before they enter into a representation or a service agreement. Failing to do so may cause confusion regarding the service options available; it can mislead the seller or the buyer and may also result in the selection of the wrong type of relationship with the brokerage. You must also explain the possibility of a multiple representation.

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At times, you may find yourself in a situation where you will need to add a schedule to a representation agreement or a service agreement to ensure that conversation is captured in written form. It may be deemed essential for the party deciding to go forward with the agreement. Upon completion of this lesson, you will be able to: • Review compliant practices for disclosures, terms of services, documentation, and agreements when initiating activities relating to trade Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Disclosures are meant to inform a seller or a buyer about the nature of services provided by your brokerage, to allow them to make informed decisions. In addition to printed material, it involves a discussion, explanation, and the opportunity for the consumer to ask questions to fully understand the decision being made. Many salespersons use the Working with a REALTOR® brochure, which includes an area for acknowledgement of receipt. However, your brokerage may have produced their own document that explains their service options, which will also include an area for acknowledgement of receipt. As a leading practice with your record-keeping procedures, you should get the seller or the buyer to acknowledge in writing that they have received the information. © 2021 Real Estate Council of Ontario

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Disclosures You will now review the disclosures you will need to make to your seller or buyer before they enter into a relationship with the brokerage. Some of these apply only to clients. The following five sections contain information to review these disclosures.

Service options It is important to provide information about service alternatives as soon as possible. If information is not communicated early, the seller or the buyer may assume that you are working for them and they might share information they ought not and that is not in their best interest. You must take steps to prevent that from happening.

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Possibility of multiple representation When you review the representation agreement with the seller or the buyer, you must disclose the possibility of multiple representation, which can happen in one of two ways: • The buyer client wishes to proceed with an offer on a property that is listed by your brokerage. • The seller’s property is listed with another brokerage and there are competing offers. Other competing offers are buyer clients of your brokerage. Let the consumer know that should multiple representation occur; you will disclose it to them at the earliest practicable opportunity and before an offer is presented. You will also obtain their written consent.

Limitations of multiple representation Ensure that the seller or the buyer understands what your limited obligations to them would be under multiple representation. Explain that you would not be able to disclose the following: • That the seller may or will accept less than the listing price, unless otherwise instructed in writing by the seller • That the buyer may or will pay more than the offered price, unless otherwise instructed in writing by the buyer • The motivation of, or personal information about, the seller or the buyer, unless otherwise

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instructed in writing by the party to which the information applies, or unless failure to disclose would constitute fraudulent, unlawful, or unethical practice • The price the buyer should offer or the price the seller should accept • The listing brokerage shall not disclose to the buyer the terms of any other offer However, it is understood that factual market information about comparable properties, and deciding what is a comparable property involves some level of discretion. The parameters used by the broker or the salesperson to determine the applicability of the comparable must be clearly and specifically described to the seller and the buyer. Information known to the listing brokerage concerning potential uses for the property can be disclosed to both seller and buyer to assist them to come to their own conclusions.

Nature of multiple representation relationship When you are working with a client and find yourself in multiple representation, this requires disclosure and consent to proceed. OREA Form 320: Confirmation of Co-operation and Representation is an example of a form that can be used for disclosure and obtaining consent.

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Agreement with third parties After discussing your recommendations for a thirdparty professional or contractor, you may decide to hire them on behalf of your client. However, before entering into a contract with the third party, you must make sure both your client and the third party understand the obligations of the agreement. Before you hire a contractor, you must review and document the following details with your seller client: • Nature of services to be provided • Who will be paying for the contractor’s services? • Associated costs It is a leading practice to get your seller to sign and date your brokerage copy. You should provide the contracted party with a written confirmation that the client will be paying for the labour and the material costs. If your buyer client is facing financial difficulties, then you should recommend the services of a mortgage broker. There are associated fees that the buyer will be responsible for. Before obtaining the services of a mortgage broker for your buyer, you must document the details of the nature of the services, including who will be paying for these services, and have the buyer sign a copy before submitting it to the contracted party.

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Lesson 2 | Page 5 of 7

Documenting Conversations The terms of a representation agreement or a customer service agreement may be addressed in the pre-printed clauses. However, there may be a need for a schedule relating to additional terms specific to that agreement.

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You should ensure that the detail of the conversation is captured in written form, which may be deemed essential for the party deciding to go forward with the agreement. A record will help avoid misunderstanding and error on the seller’s or the buyer’s behalf. Example: A seller is interested in being represented by your brokerage. However, they state that they already have two buyers interested in the property and do not want to pay remuneration to your brokerage if either of the buyers purchase the property. You inform the seller that you can exclude the buyer names from the listing for a period of one week and that there will be no remuneration payable to your brokerage if they purchase the property directly from the seller without any brokerage involvement. The seller is pleased with the arrangement and you record this exchange in a schedule to the listing agreement. OREA Form 203 Schedule – Listing Agreement – Authority to Offer for Sale is an example of how you might document this term of contract.

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Lesson 2 | Page 6 of 7

Ray is a salesperson with XYZ Realty Ltd., and is reviewing the listing agreement with Aaron, a seller. Ray explains multiple representation and how it could occur. Aaron signs the listing agreement. Should multiple representation occur, what are Ray’s responsibilities to Aaron? There are four options. There are multiple correct answers. 1

Obtain Aaron’s written consent to represent both him and the buyer.

2

Remain impartial and equally protect Aaron and the buyer.

3

Disclose the multiple representation at the earliest practicable opportunity.

4

Disclose what the buyer is willing to pay Aaron.

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Lesson 2 | Page 7 of 7

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Review compliant practices for disclosures, terms of services, documentation, and agreements when initiating activities relating to trade There are three sections on this page with a summary of the key topics that were discussed in this lesson.

Explaining service options

You are obligated to provide information about the available service alternatives to a seller or a buyer. You must do this to avoid any confusion regarding the service options available and ensure that the consumer makes an informed decision.

Providing disclosures

The Code requires you to make the following disclosures to clients and/or customers: • Make them aware of the possibility of multiple representation. • Disclose the nature of your relationship with all parties involved. • Document, to clients specifically, the details of any agreement involving a third-party professional. You will need to get the client’s written consent.

Recording conversations

The terms of a representation agreement or a customer service agreement may be addressed in the pre-printed clauses. However, there may be a need for a schedule relating to additional terms specific to that agreement. The conversation should be recorded in a schedule to the representation or the customer service agreement. Documenting a conversation will help you and your brokerage maintain a record of the details of the transactions.

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Lesson 3 | Page 1 of 10

Lesson 3: How to Service a Client Relationship

This lesson describes your duty of care and general obligations owed to a client. The lesson also identifies the needs of the seller and the buyer and ways in which you can advise the client.

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Lesson 3 | Page 2 of 10

In accordance with the Code, you must put your client’s needs first and ensure that you are working in their best interests. This includes sharing your knowledge and helping them achieve a level of understanding that ensures they are making informed decisions. Although your obligations to your clients will be the same regardless of whether they are a seller or a buyer, their needs will be distinct. Therefore, it is important for you to have a clear understanding of what each individual may need and how to work in their best interests. Upon completion of this lesson, you will be able to: • Review the actions a salesperson should take to service the client relationship Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 3 | Page 3 of 10

You will now review obligations of providing services to clients.

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Services Owed to a Client You are obligated to practise reasonable care and skill when providing services to your clients. The following four sections contain information to review these obligations.

Educating the client about market conditions During the initial stage of a transaction, it is essential for you to educate your client about market conditions. If you are representing a seller, you should research similar properties recently sold and similar properties that are currently listed for sale. This information will help the seller make an informed decision about what they might expect and help them to establish the list price. If you are representing a buyer, you must gather information from them regarding their needs and wants, and their price range. Based on the buyer’s budget, you must educate them about what is available in the market. It is important to manage their expectations.

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Determine their needs and options During the initial stages of the transaction, it is important that you listen to your clients to get a sense of what they need. You must use your best efforts to get a clear understanding of what they want by asking questions and providing them with options. Example: You have a buyer client with mobility issues. Without making any assumptions, you should ask the client questions like, “What kind of house style are you looking for?” or “Would you consider doing renovations?” The specific requirements that a client has can be documented in a schedule to the agreement.

Fulfilling obligations It is your duty to practise due diligence and fulfill the obligations to the client. You should also keep the client informed and meet with them regularly to discuss the progress of the trade. Example: After having an initial discussion with your buyer clients about what they are looking for, you promise to contact them within two days to inform them of prospective properties. You must be diligent and research properties so that you can inform them within the time frame that you committed to.

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Keeping a record and following up You should keep a record of all actions you have taken to service the client relationship. You should also follow up on appointments you have booked for the client.

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Lesson 3 | Page 5 of 10

You will now focus on the importance of understanding the seller’s needs and advising them accordingly. The advice you give to your seller clients will help them anticipate and be better prepared for the changes in the trade.

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Meeting Your Seller Client’s Needs You may think you know what the seller wants and needs from you to sell their property, but the only way to know for sure is to ask. Research and documentation may also be needed to support what you learn. Determining a seller’s needs will help you advise them accordingly. The following two sections contain information about questions to ask your seller clients.

Circumstances of the property You should ask the client questions about the property, like: • Is the property tenant-occupied? If so, ask them about tenancy details. • Who are all the rightful owners of the property? Confirm the ownership by obtaining ownership documents and asking them about any matrimonial home arrangements. • Are there any systems in the home, such as heating or cooling and water heater or softener? What is the age and the status? Leased, rented, rent-to-own, or owned? Ask to see any documentation and review the obligations and limitations for transfer. • Is there any existing financing on the property? If so, you need to verify the details with the lender.

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Property conditions and obligations about disclosing latent defects When you must inspect the seller’s property, you should make note of your observations. In addition: • Ask the seller if they are aware of any defects with the property or if they have had problems with the property, or if they have made improvements or necessary repairs, and if so, if they have receipts and necessary permits • Explain to the seller their obligation to disclose known latent defects to a prospective buyer and the risks of failing to disclose them • Remind the seller that if they become aware of any material changes to the condition of their property during the listing period and up to the completion date of the sale, they are required to disclose the information to you and to the prospective buyer

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Lesson 3 | Page 7 of 10

When working with a buyer, one of the first things you must do is establish a profile for them and their needs and wants. You will need to conduct a detailed interview with the client and use the information you receive from the buyer to determine their preferences, such as the type and style of property they are interested in, the desired location, and any specific features. A focused and pertinent interaction with the buyer can help you establish priorities, and ensure you are representing their interests in the correct capacity. It also helps the buyer differentiate between what they want and what they need.

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Lesson 3 | Page 8 of 10

Working with a Buyer Client You must conduct a detailed interview with the buyer to assess their current circumstances, and what they are looking for in a property, in order to advise them appropriately. The following four sections contain information about your obligations to a buyer client.

Buyer circumstances Before you can help the buyer find the right property, you should ask questions, such as: • Are they currently renting, or do they own a home? • If they rent, are they on a fixed term lease? If so, when does the lease expire? • By when do they need to move? • Do they need to sell their home before purchasing a new one?

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Neighbourhood specifications You should ask the buyer questions about characteristics in the neighbourhood that are important for them, such as: • Do they want to live downtown or be able to walk to work? • Do they want to live close to schools and parks? • Will they need regular access to public transportation? • Do they need to live in the proximity of a relative or family?

Property specifications A few examples of what you must ask the buyer about their needs and wants in a property are: • What kind of home are they looking for? • Any finishes and aesthetic preferences • How many bedrooms and bathrooms they want? • Whether they need the house to accommodate any specifications • How many garage spaces do they need? • Whether they have any floor plan requirements • Whether they have any lot size requirements

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Financial considerations You should not make assumptions about a client’s financial situation but ask questions instead. You need to explain to the buyer the expenses they should anticipate, including: • Legal fees and land transfer tax • Costs of a home inspection, home appraisal, and condominium status certificate • Moving costs • Extra expenses for utility hookups If the client requires financing for the purchase of the property, you should encourage them to get preapproved with a mortgage lender. Advise them on how this will benefit them when they eventually do find a property that they would like to make an offer on and how it would help in negotiating with the seller.

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Lesson 3 | Page 9 of 10

Trish and Pat want to list their residential property. Trish has accepted a new job, and they will be moving to Montreal. Their property has an existing mortgage. Trish and Pat sign a representation agreement with Ryan, a salesperson with ABC Realty Ltd. and explain their circumstances to him. What should Ryan ask Trish and Pat to advise them appropriately on the listing of their home? There are four options. There are multiple correct answers.

1

Ask when Trish needs to be in Montreal for her job and any flexibility in timing to move.

2

Ask about the details of Pat and Trish’s existing mortgage and what they are planning to do with it.

3

Ask Trish and Pat about their future plans of purchasing property in Montreal.

4

Ask Trish about details of her new job.

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Lesson 3 | Page 10 of 10

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Review the actions a salesperson should take to service the client relationship When working with a client you must be prepared to do the following:

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• Educate them about market conditions: Whether representing a seller or a buyer, you need to educate them about the market conditions of the area. You should try to bring them to your level of understanding so that they can make informed decisions. • Negotiate favourable terms: You should try to negotiate the best possible terms for the client. While interacting with the seller or the buyer, you will get information about their situation and their requirements. You must take these into account and ensure that you negotiate terms that meet the client’s needs and requirements. • Ensure their best interests: This is an obligation under the Code. You must always ensure that you work in the best interests of seller and buyer clients. •

Determine and disclose material facts: You must put your best efforts into determining material facts about the property your client is selling or buying. You should inform the seller that they are obligated to disclose any known latent defects with their property.

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Lesson 4 | Page 1 of 7

Lesson 4: Miscommunication and Misrepresentation Through Words in Advertising and Marketing This lesson demonstrates how miscommunication happens in advertisement and marketing activities and corrective measures.

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Lesson 4 | Page 2 of 7

You must use your best efforts to prevent error or misrepresentation in advertising or while communicating with the consumer during the initial stages of the trade. You must ascertain that the statements you make regarding the services you provide are clear and accurate. These statements must be disclosed or explained to a consumer, as they can be material facts that affect a reasonable person’s decision. It may influence the price a consumer offers or the conditions they add to the agreement of purchase and sale. Upon completion of this lesson, you will be able to: • Review common causes of miscommunication and misrepresentation Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 4 | Page 3 of 7

You will now review examples of how miscommunication and misrepresentation can occur in marketing activities and advertising activities, through both words and actions. You will also review examples of preventative measures that could have been taken.

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Lesson 4 | Page 4 of 7

Miscommunication and Misrepresentation in Advertising and Marketing To maintain professionalism and avoid misrepresentation, it is important for you to communicate with the consumer frequently and clearly. The following two sections contain information about how to avoid miscommunication.

Avoiding miscommunication and misrepresentation in advertising When engaging in advertising activities, you must try to convey your message clearly. An advertisement must be genuinely accurate and truthful. Example: A salesperson is seeking to cater to a buyer client. The advertisement reads, “If you purchase a property through me, I will pay your legal fees.” This is a vaguely worded statement and can result in a misunderstanding of services. Preventative measure: The advertisement should state, “If you purchase a property through me, I will pay $500 towards your legal fees.” You determine the amount you are prepared to pay toward legal fees, if any. This is just an example.

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Avoiding miscommunication and misrepresentation in marketing activities When marketing your services to a consumer, you should say what you mean and mean what you say. Examples of marketing activities include: • Conducting seminars: o First-time homebuyer seminar o How to buy a recreational property? o How to buy your first investment property? o How to build wealth through real estate? • Target marketing in a new area • Holding open houses • Making cold calls • Door-to-door marketing • Exhibiting from a booth at a home show Example: After checking the national DNCL and the internal brokerage DNCL, a salesperson is cold calling property owners to market their services. During a call with a homeowner, the salesperson states that market conditions are good for anyone considering listing their property for sale. Without seeking any further clarification, the owner assumes that there are many buyers interested in their specific property. Preventative measure: The salesperson should discuss with the property owner the market conditions that govern their area specifically. Giving the homeowner realistic details about the selling and buying conditions in their own area would properly

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inform the homeowner and reduce the likelihood of them assuming that there are buyers looking to purchase their specific property.

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Lesson 4 | Page 5 of 7

Communicating the Intent At times, miscommunication can be caused by using certain words or performing certain actions. You will review examples of how it can happen and how it can be prevented. The following five sections contain examples of misrepresentation.

Cloning information from an old listing and failing to verify rental items Copying information from a previous or old listing without verifying it can cause misrepresentation (for example, if the information has changed or was always incorrect). Failing to verify rental items can also lead to misrepresentation. Example: A seller installs a new hot water tank on a rent or lease basis. However, the old listing did not indicate that the item was owned. Preventative measure: The salesperson must verify with the seller if there are any rental or lease items on the property and ask to see receipts and utility bills, as some rental items may be through the utility provider.

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Mistaken use of the word “new” The use of the word “new” without providing information about when the item was purchased or installed. Example: A salesperson speaking to a seller client in January is told about an improvement regarding the furnace. The owner states that the furnace is “new” and, “We installed it within the last few months.” The salesperson makes a note of this and the advertisement for the house states that the furnace is “new”. The house changes ownership in July and the new homeowners are under the mistaken impression that the furnace has just been installed, when in fact it is one or several years old. Preventative measure: The salesperson should have included the date the furnace was installed in the listing and verified with a receipt: “New furnace (installed December 2019).”

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Failing to record details in a schedule to the representation agreement You should use a schedule to the agreement to record any specific, additional requirements of the seller or the buyer. Example: While speaking to a seller, a salesperson says, “If you list with me, I can provide a one-hour consultation with my home stager, feature your home in XYZ publication, have my videographer record a video of your property and upload it on YouTube, and have colour brochures produced.” The seller assumes that their home is going to be staged, and receive all of those marketing activities. The seller may not recall everything the salesperson was saying and may decide to list their property with the salesperson based on what they thought the salesperson was going to do. It may have influenced them to list the property with the salesperson and if any of those services are not performed, there may be some conflict. Preventative measure: The salesperson should have included the details of the services they would provide when listing the property. Leading practice is to use a schedule and to review it with the seller. Obtaining the seller’s initials to confirm you reviewed it together is also a good idea. An example of a schedule that accomplishes this is OREA Form 203 Schedule – Listing Agreement – Authority to Offer for Sale.

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Failing to verify information Miscommunication can also happen due to lack of verification. Example: When listing the property, a seller informs the salesperson that all areas under the carpet are hardwood. The salesperson accepts the statement without further investigation and includes a notation in the remarks section of the listing. However, unbeknownst to the salesperson, only the floors in some select rooms are actually hardwood and many rooms contain only plywood. Preventative measure: To use the proper description for the floor, the salesperson should have physically checked to confirm if the flooring is hardwood, engineered wood, or laminate flooring. The salesperson could have also asked for receipts.

Using vague wording The use of ambiguous wording without clarifying meaning. Example: A salesperson states on a listing that states “Property tax $2,845”. A prospective buyer would assume that the given information is accurate and for the current year. Preventative measure: The salesperson should have prevented speculation by including the tax year and the actual amount without any rounding, “2019 Property tax $2,845”.

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Lesson 4 | Page 6 of 7

Martha, a salesperson from EFG Realty Ltd., listed and sold a property on Buckingham Drive, AnyCity in January for the sale price of $997,500 with a completion date of June 25. In February, with written permission of the seller and the buyer, Martha distributed an advertising flyer to other property owners on Buckingham Drive. The flyer stated, “I just sold your neighbour’s home at 123 Buckingham Drive, and set a record-breaking sale price for the street.” However, two years ago, a residential property located on Buckingham Drive had sold for $1,129,500. Therefore, the sale price was not “record breaking”. What should Martha have done differently to prevent this error? There are four options. There are multiple correct answers. 1

Martha should have investigated the historical sale price of properties on Buckingham Drive.

2

Martha could have stated “I just sold your neighbour’s home for a record-breaking price for this street over the past year.”

3

Martha should have instead stated in the flyer, “List with me if you want a record-breaking sale price.”

4

Martha should have instead stated in the flyer, “I just sold your neighbour’s property!” without any identifiers.

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Lesson 4 | Page 7 of 7

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Review common causes of miscommunication and misrepresentation When advertising your services to attract sellers or buyers, you must be prepared to do the following:

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• Ensure that the consumer is aware of the fine print of the of the advertisement. This is to ensure that the advertisement is not misleading. • Avoid using information without verifying their accuracy. •

Avoid vague wording, as it can cause misunderstanding and miscommunication. In order to avoid these issues, it is best to have a clear written description in a schedule to the representation agreement.

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Lesson 5 | Page 1 of 6

Lesson 5: Summary Practice Activities

This lesson provides a series of activities that will test your knowledge on the entire module.

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Lesson 5 | Page 2 of 6

The lesson contains a summary of decision points that will test your knowledge regarding the topics covered in this module on compliant practices of a salesperson during the initial stages of the trade.

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Lesson 5 | Page 3 of 6

Casey, a salesperson, receives a phone call from Vlad, a buyer. Vlad came across Casey’s property listing in the newspaper and is interested in seeing the place as soon as possible. Casey agrees to meet Vlad at the property that afternoon to show him around. As they go through the property, Vlad tells Casey that he is very impressed with the property. He tells Casey that he has an appointment with his financial advisor tomorrow but promises to get back to her afterwards. Casey has failed to disclose the various service options available to Vlad during this appointment. What are the potential negative outcomes that can result from Casey's failure to take the appropriate actions? There are four options. There are multiple correct answers. 1

Vlad may feel misled that Casey did not disclose the service options with him at the first meeting.

2

Vlad could have assumed that Casey was working on his behalf.

3

Casey will be obligated to disclose any relevant information that Vlad shared with the seller.

4

Vlad may decide to return to the property with a different salesperson and purchase it.

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Lesson 5 | Page 4 of 6

Salesperson Shaina enters into a representation agreement with a buyer couple, the Salazars. During her initial conversation with them, Shaina learns that the Salazars are currently renting an apartment and have a fixed-term lease that expires in six months. They have two small children and are looking for a spacious home to accommodate their family. Shaina also learns that the Salazars will need to obtain financing. Given what she now knows about the Salazars’ situation, how should Shaina advise them? There are four options. There are multiple correct answers.

1

Shaina should advise the Salazars to consider the school districts in the areas they are interested in exploring.

2

Shaina should advise the Salazars to first obtain preapproval from their lender.

3

Shaina should recommend that the Salazars wait until they are closer to the end of their lease before they begin looking at properties.

4

Shaina should ensure that the Salazars understand that they still have legal obligations to their landlord for the duration of their lease.

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Lesson 5 | Page 5 of 6

Alina, a salesperson, is door knocking in a popular neighbourhood that has recently been in high demand with her brokerage, KLM Realty Ltd. She knocks on the door of a beautiful house, and the owner, Maggie, answers. Alina introduces herself and asks Maggie if she has ever considered selling her home. Alina tells Maggie, “My brokerage has a lot of interested buyers who would love to buy this house!” What she means is that her brokerage has a lot of buyers who are frequently interested in properties like Maggie’s. However, Maggie misunderstands, and believes that Alina has buyers who are already interested in buying her home. What should Alina do so as not to leave Maggie with the wrong impression? There are four options. There are multiple correct answers. 1

Alina should clarify that her brokerage has buyers who are interested in properties like hers, but not necessarily her specific house.

2

Alina should give Maggie some information about the type of properties her brokerage’s represented buyers are seeking.

3

Alina should ask Maggie if she can call her to arrange a time to discuss further.

4

Alina should begin looking through buyer profiles for potential property criteria similar to Maggie’s home.

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Lesson 5 | Page 6 of 6

Congratulations, you have completed the lesson!

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Module Summary | Page 1 of 3

Module Summary

This lesson contains a summary of the entire module.

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Module Summary | Page 2 of 3

Congratulations, you have completed this module! This lesson contains a summary of the entire module.

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Module Summary | Page 3 of 3

There are four sections on this page with a summary of the key topics that were discussed in this module.

Service Alternatives for Consumers and the Obligations of a Salesperson

You should be able to explain the service alternatives to consumers. You must explain the difference between a client representation agreement and a customer service agreement, including the fiduciary duties that are owed to a client. Going forward in a trade, you must treat the client, the customer, and other third-party professionals with fairness, honesty, and integrity. The Code of Ethics also elaborates on the expected code of conduct you must comply with when working with the clients and the customers. Completion of this lesson has enabled you to: • Review the service alternatives available to consumers and resulting obligations for a salesperson

A seller or a buyer, before they enter into any agreement with the brokerage, Compliant Practices of a Salesperson when Initiating must be informed about service agreements, seeking services from a third-party professional, the possibility of multiple representation, and its impact on the a Trade information shared with the seller or the buyer. Completion of this lesson has enabled you to: • Review compliant practices for disclosures, terms of services, documentation, and agreements when initiating activities relating to trade

How to Service a Client Relationship

It is your duty to take care of the client’s best interests. Identifying the needs of the seller and the buyer helps you advise the client better. It is necessary that you educate the client about what to expect going forward. Educating them about market conditions helps the client make an informed decision. Completion of this lesson has enabled you to: • Review the actions a salesperson should take to service the client relationship

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Miscommunication and Misrepresentation Through Words in Advertising and Marketing

You must be careful while conducting marketing activities on behalf of your client or your customer and practise due diligence to avoid any misunderstanding or miscommunication in marketing your services. Whatever you promise to do, you must be clear in your communication. When things are worded vaguely, it causes misunderstanding and miscommunication. In order to avoid these issues, it is best to have a clear, written description of what is included in the marketing activities in the listing by using a schedule. Completion of this lesson has enabled you to: • Review the causes of miscommunication and misrepresentation

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Module 3: Reviewing Compliance During Activities in Respect of a Trade Disclaimer: This is a reference document which contains pages from the Accessible eLearning module. You should complete the eLearning module to proceed to the next step. Please note that the accessible module on the LMS only contains the interactive pages and you need to go through the content of this document thoroughly to attempt the interactive activities in the module. Please use Adobe Acrobat Reader (Recommended version 9 or above) to navigate through this PDF. Real Estate Salesperson Program © 2021 Real Estate Council of Ontario. All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or in any means – by electronic, mechanical, photocopying, recording or otherwise without prior written permission, except for the personal use of the Real Estate Salesperson Program learner.

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Module 3: Reviewing Compliance During Activities in Respect of a Trade Reviewing Your Roles and Responsibilities Trading activities require a great deal of effort in managing timelines, maintaining communication, and meeting expectations. The key to balancing obligations during trading activities is keeping clear communication and welldocumented records regarding your sellers and buyers. This module will review your working knowledge of your roles and responsibilities during trading activities. All documents prepared for a client or a customer should: • Establish timelines, communications, and obligations of the relationship • Outline your obligations and what is owed to the brokerage • Foster transparency among all parties including the seller, the buyer, the brokerage, and any third parties involved in the trade By the end of this module, you will be able to demonstrate your understanding of compliant behaviours and practices during a trade. Through high-level examples, you will demonstrate your ability to act in the best interests of clients in the selling and buying processes. Even though your obligations to customers are limited, you must still treat them with integrity and honesty.

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To check your understanding of this module, you must complete all the activities in the online module. While navigating through the online module, click the Legislation button to view laws and regulations related to this module. The contents of the thumbnails Accessible PDF.

and References from the module are added to support your learning throughout this

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Menu: Reviewing Compliance During Activities in Respect of a Trade

Number of Lessons

Lesson Number

7 Lessons

Lesson Name

Lesson 1

A Salesperson’s Roles and Responsibilities to Sellers

Lesson 2

A Salesperson’s Roles and Responsibilities to Buyers

Lesson 3

A Salesperson’s Obligation to Disclose Information to Clients and Customers

Lesson 4

A Salesperson’s Role in the Offer Handling Process

Lesson 5

A Salesperson’s Personal Safety During Trading Activities

Lesson 6

Summary Practice Activities Module Summary

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Lesson 1 | Page 1 of 16

Lesson 1: A Salesperson’s Roles and Responsibilities to Sellers This lesson reviews your responsibilities to your sellers in the listing process, including timelines, communication, and limitations. Through examples, this lesson will also show you how to correct any missteps in the listing process.

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Lesson 1 | Page 2 of 16

Throughout the course of your relationship with a seller, you must adequately record the terms of the agreement and any changes that may occur, so that you and your seller understand what each party owes the other. Completion of this lesson will enable you to: • Demonstrate knowledge of a salesperson’s roles and responsibilities when dealing with a seller client and a seller customer Throughout this lesson, you will participate in decision points to test your knowledge of a salesperson’s responsibilities to the seller client in the listing process and how to solve some key mistakes that can occur while on the job.

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Lesson 1 | Page 3 of 16

Maintaining a relationship with the seller client is an ongoing part of the listing process and beyond. By now, you know that you must act in accordance with the Code, but there are also policies set out by your brokerage and the local real estate board that you must abide by. While you are required to act in accordance with your seller’s needs, there will be instances where brokerage policy and real estate board bylaws will take precedence. You will now review the details and examples of these policies and bylaws.

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Lesson 1 | Page 4 of 16

Responsibilities to the Seller Client Your ability to communicate is at the core of your professional obligations. Your responsibility to keep your seller client informed throughout the listing process does not end after the listing agreement, or after a sales agreement is signed. The following three sections contain information on three ways to keep your seller client informed while documenting the listing process.

Agreements Your brokerage may have their own variation of representation forms or schedules that brokerage policy may require you to use. If you and your brokerage are members of an association, such as OREA, you can use their forms with pre-printed clauses to document the terms of a representation relationship. You must document any verbal terms by amending the agreements or attaching a schedule to the agreement with the seller’s signatures or initials to note their agreement with the changes.

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Following up You should follow up with your seller on items such as appointment requests, comments regarding their property that require attention, offer presentations, and approaching expiration dates. Further, if there is anything your client has to do, such as making repairs or preparing the property for appointments (e.g., snow removal, taking pets out of the home, etc.). You should follow up with them to ensure they understand their responsibilities.

Instructions You must record all instructions your seller provides on how to access their property, including the use of lockboxes, or how offers, including the possibility of pre-emptive offers, are to be handled. You must be diligent in getting these instructions documented early in the relationship. Any changes to these instructions must also be documented and then disclosed to all interested parties if these instructions will affect them too.

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Lesson 1 | Page 5 of 16

Responsibilities to the Seller Client During the Listing Process When you enter into a client relationship with a seller, you have specific obligations to them that you would not owe them if they were a customer. The following four sections contain more information on your responsibilities to the seller client.

Documentation You are responsible for preparing the seller representation agreement. The agreement must clearly specify the following: • A commencement date and an expiry date • The services to be provided • The terms, conditions, and the obligations of both parties • The amount of remuneration payable to your brokerage • Any amount that is payable to a co-operating brokerage After you have prepared the representation agreement, you must then: • Sign on behalf of the brokerage and submit it to the seller for their signature • Give copies of the fully signed agreement to each person on title and then to the brokerage

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Communication To comply with the Code, you must adhere to the following communication requirements when working with seller clients: • Contact the seller when arranging to introduce a buyer to the property • Report back to the seller with buyer feedback • Arrange for an offer presentation if the buyer wants to proceed with an offer • Communicate any conditions in an accepted offer that the seller must fulfill

Limitations Your brokerage may have an office policy regarding: • Length of time for the listing period • Required real estate fees If listing through a real estate board, the board may also have limitations and bylaws regarding: • A minimum listing period • Requirements that a property be ready for appointments and showings once the listing is uploaded to the system

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Changes to the representation agreement Should changes be required in a seller representation agreement, it is your obligation to explain the changes fully and if the seller agrees to the changes, document them and ensure these changes are lawful and comply with brokerage policy and real estate board bylaws, if applicable. Changes must be recorded using an amendment to the representation agreement. Signed copies of the amendment must be provided to both the seller and the brokerage. An amendment to the seller representation agreement is required if there are any changes to, among others, the: • Marketing of the property • List price • Expiry date • Remuneration clause

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Lesson 1 | Page 6 of 16

Once you have listed the property, you will discuss the next steps in the listing process with the seller. Many times, you will receive instructions from the seller, of which you will be required to have written record. You will now review why instructions require written record and what you must do with them.

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Lesson 1 | Page 7 of 16

Seller’s Instructions You must follow any written instructions that your seller provides you with. If the property is tenant-occupied, written instructions may also be provided by the tenant. These instructions will be essential when communicating with interested buyers, other salespersons, and brokers. The following five sections contain information on what seller instructions may contain.

Access A seller may require you to be present for all appointments. They may trust only you with their home keys or security code and will want assurance that the home will be securely locked after an appointment. If the seller permits buyers to view the property with another representative and does not require you to attend as well, those instructions are to be documented. The seller may also provide instruction for obtaining identification from visitors at an open house, for security purposes. This instruction must also be documented so that you can convey it to visitors.

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Lockbox The seller may authorize the installation of a lockbox. However, you must fully explain to your seller the risks of having a lockbox before installing it, including a key going missing, someone accessing the lockbox without authorization, or the lockbox not closing properly. You are to document the seller’s authorization to install a lockbox. When you receive an appointment request from a salesperson, you must first arrange with the seller, and then confirm the appointment by communicating with the brokerage office and providing the lockbox code. You should never give out a lockbox code over the phone directly to the salesperson requesting an appointment. If the seller chooses not to use a lockbox, they may provide you with a key to be kept at the brokerage. Any salesperson who wishes to show your seller’s property must sign out the key from your brokerage office.

Appointments The seller may provide restrictions regarding appointments, such as times when they are and are not permitted. The seller’s instruction must be written and followed. There may also be local listing service rules and regulations that will prevent you from going forward with the listing or about how showings are to be scheduled and software to be used.

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Marketing Sometimes the seller may provide restrictions on marketing activities. For example, some people may not want public open houses or even advertising of the property. These restrictions are to be documented in the agreement or by using an amendment to the representation agreement if there are pre-printed terms.

Offer handling Any instructions received from the seller regarding the holding of offers for presentation on a specific date and time, or the handling of pre-emptive offers, must be produced in writing at the earliest practicable opportunity. Should the seller change their instructions, you are required to provide written documentation to override any previous instructions. This will be discussed in greater detail in the next lesson.

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Lesson 1 | Page 8 of 16

What Could Go Wrong During the Listing Period and How to Correct It When you are the listing salesperson, you must be proactive in predicting what could go wrong during the listing period and be prepared to prevent or correct it. The following five sections contain information on some proactive measures you can take to ensure the safety of your seller.

Theft during an open house Here are some precautions you can take to protect a seller’s belongings during an open house: • Use a sign-in sheet to track all those entering the property with verified identification and contact information. You must be clear about the purpose of gathering this personal information, letting visitors know that it is only for security purposes. Remember, you may not use this information for any other purpose without specific authorization to do so. • Ask for help from another salesperson. This person can meet visitors, obtain their identification, and brief them on the property. • Restrict access to the property so that only a limited number of visitors are in the property at a time.

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Tenant-occupied property If the seller’s property is occupied by a tenant, with your seller’s permission, you will need to contact the tenant for consent on the following issues: • Taking photographs both outside and inside the home for marketing purposes • Appointment requests • Gaining access to the home if the tenant is not available and permitting a key to be used If the tenant refuses interior photos, you are to take only exterior photos of the property, ensuring the tenant’s vehicle is not in any photographs. You must communicate with the seller and report the tenant’s feedback provided to you. This is in the best interest of your seller client, with considerations relative to the Residential Tenancies Act (RTA) in their role as a landlord. As you know, the RTA requires that landlords respect tenants’ rights relating to: • Quiet enjoyment—This includes the noninterference of the landlord or their salespersons. • Notice before entry—A landlord must provide written notice 24-hour in advance to allow a potential buyer to view a tenant’s rental unit. Entry without written notice is permitted only if the tenant consents at the time of entry or under a few very specific circumstances.

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Cancelled appointments When handling cancelled appointments, be courteous and respectful of those impacted. The following are suggested approaches: • If a buyer or a co-operating salesperson are unable to keep a scheduled appointment, you should discuss alternative opportunities with the buyer’s salesperson, or the buyer if they are unrepresented, and immediately contact the seller and see if alternate arrangements can be made. You should report a cancelled appointment to the seller even if the home was vacant, or the seller was unavailable. • If your seller client is cancelling a scheduled appointment, you should ask the seller if they can suggest an alternate time to reschedule the appointment. Then you should immediately contact the buyer’s salesperson, or the buyer if they are unrepresented, to cancel the appointment and to arrange an alternate time to view the property.

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Appointment requests When handling appointment requests, adhere to the following protocol: • Should an appointment be requested during a seller restricted time, you should let the cooperating salesperson know that this may not be possible. You can contact the seller to see if alternate arrangements can be made. • If the seller’s instruction is for you to be present at every showing, but you have a conflict with one appointment request, you should discuss other options with the seller (for example, having another salesperson from your brokerage attend the appointment in your absence).

Issues with the property If the seller has knowledge of any pre-existing issues about the property (such as defects or deficiencies), the seller might have a legal obligation to disclose them to buyers. Some variables as to whether it needs to be disclosed are the severity of the defect and whether it is latent or patent. In order to prepare for this, you could discuss with the seller to have a contractor investigate the property and provide a quote to repair or replace whatever is causing the issue. Once the quote is obtained, the seller may be willing to make the necessary repairs or replacements. If the seller is not willing, this quote can also be disclosed to the buyer, with the seller’s permission. It is also recommended

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that the seller speak to their lawyer about any disclosure requirements.

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Lesson 1 | Page 9 of 16

Salesperson Jung has a seller client who has listed their tenant-occupied property for sale. The seller provides Jung with the tenant’s contact information. Jung contacts the tenant and asks if they will consent to Jung’s photographer taking photographs of the property’s interior, but the tenant refuses. This will affect Jung’s ability to promote the property and to prepare a quality listing, if using a multiple listing service for the seller. How should Jung address the tenant’s refusal to allow interior photos, and ensure he can promote the property effectively? There are four options. There are multiple correct answers. Reference Links: Code, Sec. 3, Residential Tenancies Act, 2006 1

Consult the seller to see if they have any photos of the property while it was vacant

2

Use exterior photos of the property

3

Tell the buyer when they come to view the property that they can take photos on their phone

4

Tell the tenant that the seller has authorized him to take photos of the property

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Lesson 1 | Page 10 of 16

Salesperson Anderson has a seller client who wants as much exposure for their property as possible. After a few private showings, the seller contacts Anderson to request that an open house be scheduled for every Sunday afternoon until the property is sold. This will be a significant time commitment for Anderson, who already has appointments scheduled for the upcoming weekend and is not currently available to make this commitment for every Sunday. How should Anderson manage this seller’s request and his prior commitments for next weekend? There are four options. There are multiple correct answers. 1

Advise the seller on alternatives to increase exposure of the listing

2

Ask if the seller would be comfortable having another salesperson from the brokerage conduct some of the open houses

3

Explain that he will not be able to personally accommodate this request for every Sunday

4

Ask the seller to conduct the open house on his own

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Lesson 1 | Page 11 of 16

It is important for you to work within the limitations set within a seller customer service agreement. Even in conversation, you must be mindful about misrepresenting the level of service you owe to the seller customer. Reviewing the seller customer service agreement provides an opportunity to confirm what obligations are owed between the customer and the brokerage.

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Lesson 1 | Page 12 of 16

Responsibilities to the Seller Customer A seller may wish to sell their property but not want to list it nor want to enter into a representation agreement with a brokerage. In such a case, they may simply choose to enter into a seller customer service agreement, which is a remuneration agreement, where the brokerage is permitted to introduce and show a buyer the seller’s property. The seller customer service agreement is a non-exclusive agreement, which means the seller can enter into similar agreements with other brokerages. In some circumstances, a seller may list their property with a brokerage under a representation agreement but will not be paying remuneration to a co-operating brokerage. In this case, the listing brokerage may give permission to a co-operating brokerage to contact the seller directly and discuss remuneration arrangements. If the seller agrees to compensate the co-operating brokerage, a commission agreement is entered into by the two parties. A document such as OREA Form 202: Seller Commission Agreement with Co-operating Brokerage for A Listed Property can be used for this purpose. The agreement is only meant to pay commission and the seller will acknowledge in the form that the brokerage is neither representing them nor providing services to them. The following three sections contain information on your responsibilities to a seller customer.

Timelines When working with a seller customer, you are obligated to discuss and explain timelines. Your conversations must include the following: • Accurate conveyance of irrevocability timelines for the offer presented • If there is an accepted offer containing conditions to be fulfilled by the seller, the conditions must be completed prior to the end of the condition expiration date

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Communication You must adhere to the following communication requirements when working with a seller customer: • Contact the seller when arranging to introduce a buyer to the property • Provide feedback about any property showing and if a buyer has an interest in purchasing the property • Arrange an offer presentation if the buyer wants to proceed with an offer • Communicate the status of any conditions in an offer

Code obligations In compliance with the Code, you must: • Treat all customers with fairness, honesty, and integrity • Provide conscientious and competent service • Obtain services from others • Disclose to the seller material facts that are known or ought to be known by the salesperson • Convey to the seller the buyer’s offer • Avoid error and misrepresentation

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Lesson 1 | Page 13 of 16

Martin is a salesperson with XYZ Real Estate Ltd. and is attempting to locate an acceptable commercial property for Jones, his investor client. Jones has specified a geographic location that has a special significance to his business. Martin has located a property that meets Jones’s criteria, which is being offered for sale privately by the owner. Martin approaches the owner of the property and arranges for an appointment to show it. To ensure that remuneration will be paid by the seller and to confirm other matters, like services to be provided and who will hold the deposit should an agreement be realized, Martin prepares a seller customer service agreement and asks the seller to sign it. Following the showing, the buyer has decided to submit an offer on the property. What obligations does Martin owe to the seller customer? There are four options. There are multiple correct answers. 1

Martin is to explain the benefits of representation to the seller

2

Martin is to present the buyer’s offer

3

Martin is to coordinate with the seller to set up a showing for the buyer

4

Martin is to communicate any buyer feedback after showing the property

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Lesson 1 | Page 14 of 16

Complications with the Seller Customer Relationship Sometimes, complications can arise when working with a seller customer. The following four sections contain information on potential problems when working under a customer service agreement, and what you can do to prevent or correct them.

Failure to maintain communication In some instances, a seller customer may not understand that an offer presented has a time limitation and that they can accept the offer if they wish. If the seller fails to understand the buyer’s allowed timeline of offer acceptance and the expiry time, the offer becomes invalid and cannot be accepted by the seller. If a seller customer wants to accept an offer from a buyer that you introduced to them, they must communicate the acceptance of the offer before the irrevocable time expires. The only way to ensure this happens is to remain in communication with them prior to the expiry. Further, if there are conditions for the seller in the agreement of purchase and sale, the structure of the condition may require the seller to provide written notice to the buyer by a specified time and date. You must be diligent and remain in communication with the seller prior to the expiry time. The seller should also be made aware of the following limitations on conditions:

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• Condition precedent: If the condition structure is condition precedent and the condition has been fulfilled, or if the seller wishes to remove their condition and proceed with the transaction, written notice must be provided to the buyer within the conditional time period. Failure to provide this notice would make the offer null and void. • Condition subsequent: If the condition structure is condition subsequent and the condition has been fulfilled, or if the seller wishes to proceed with the transaction despite the condition being unfulfilled, this does not necessarily require documentation. However, if the seller does not wish to proceed because the condition was unfulfilled, the seller must give written notice to the buyer to terminate the agreement. If notice is not provided, the transaction will proceed automatically.

Holdover The service agreement applies to only one buyer introduced to the seller’s property. If the seller chooses to list their property for sale with another brokerage, the listing brokerage must exclude this specific buyer from the listing. The seller must understand that if this specific buyer’s name is not excluded from the listing, they could be responsible for paying remuneration twice if this specific buyer purchases the property.

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Disclosure of other service agreements You have no way of independently discovering other agreements the seller may have entered. You should ask the seller if they have entered into any other service agreements, and if they have, check to make sure that your buyer has not been introduced to their property under the other agreements that may still be valid. If the buyer has been introduced to the property by another brokerage, there may be a seller customer service agreement that is still in effect with that brokerage; even if it has expired, the holdover period may still be in effect. In such a case, the seller should be advised not to proceed with a new service agreement, as they already must pay remuneration to the other brokerage if the buyer purchases the property. However, if the holdover period with the other brokerage has expired, there is no issue with entering into a new customer service agreement.

Disclosure of other offers The seller could accept an offer from another buyer and the property can be sold without your knowledge. You must ask the seller to contact you should they receive other offers while your buyer is considering the seller’s property.

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Lesson 1 | Page 15 of 16

Reynold, a salesperson for ABC Realty Ltd., has a seller customer service agreement with Marlie. Reynold introduces a buyer client to Marlie’s property who is interested in submitting an offer. Two days later, Reynold submits an offer on behalf of the buyer to Marlie. The irrevocable period is 9 p.m. the following evening and Marlie indicates that she needs to get independent advice before accepting this offer. The following evening, around 7 p.m., Reynold has still not heard from Marlie. He calls Marlie to ask if she has had an opportunity to get legal advice and whether she has made a decision about the buyer’s offer. Marlie says: “Yes! I have accepted the other offer.” Reynold is in shock because he was never told the seller had other offers. What could Reynold have done to prevent this from happening? There are three options. There is only one correct answer.

1

Reynold could not have known about other offers, so he could not have prevented this situation from happening.

2

Reynold should have made sure Marlie understood the importance of disclosing other offers.

3

Reynold should have told Marlie that she is not allowed to accept other offers during an active service agreement.

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Lesson 1 | Page 16 of 16

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Demonstrate knowledge of a salesperson’s roles and responsibilities when dealing with a seller client and a seller customer There are four sections on this page with a summary of the key topics that were discussed in this lesson.

Communication with the seller client

It is your responsibility to reduce all agreements in written form at the earliest practicable opportunity. Clarity on the terms of a client relationship between you and a seller can prevent any consequences later in the listing process. Strong communication between the seller and the brokerage must be documented throughout the course of the listing process.

Instructions for accessing a seller’s property

Along with consent to access the property for appointments, you must document and retain a seller’s instructions on who can access the property. You must be able to explain the extent to which your sellers can restrict access to property (when the property can be accessed, which rooms cannot be viewed by public, and so on). The seller may authorize the installation of a lockbox. However, you must fully explain to your seller the risks of having a lockbox before installing it, including a key going missing, someone accessing the lockbox without authorization, or the lockbox not closing properly. Sometimes the seller may not want public open houses or even advertise the property. You must document the restrictions in the agreement or by using an amendment to the representation agreement if there are pre-printed terms. Any instructions received by the seller about the holding of an offer presentation on a specified date and time or the handling of pre-emptive offers must be produced in

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writing; in case of change of instructions from the seller, it should be accordingly noted and followed.

Seller customer relationships

Obligations owed in a seller customer relationship differ from a client relationship. When providing information or performing functions on behalf of a customer, you must understand the limitations, to avoid establishing an unintended client relationship, which can lead to misunderstandings or legal ramifications for you and your brokerage. You must also explain the limitations of a customer relationship to the seller and the implications if you have another customer or client in respect of the same trade.

Navigating the listing process with clients and customers

You should be able to demonstrate your knowledge of the different seller agreements and how to remain compliant with the Code, as well as your obligations to your seller, whether they are a client or a customer.

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Lesson 2 | Page 1 of 11

Lesson 2: A Salesperson’s Roles and Responsibilities to Buyers This lesson will review your responsibilities to your buyers. Through examples, this lesson will reassess your knowledge on the documentation involved in a buyer relationship.

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Lesson 2 | Page 2 of 11

The importance of communication between you and your buyer is imperative throughout the buying process. You and your buyer must work together to find properties of interest, schedule appointments, draft an offer, and negotiate the offer in the buying process. Upon completion of this lesson, you will be able to: • Demonstrate knowledge of a salesperson’s responsibilities regarding documentation when dealing with a buyer client and a buyer customer Throughout this lesson, you will participate in decision points to test your knowledge of a salesperson’s responsibilities to the buyer and how to solve some key problems that can occur while on the job.

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Lesson 2 | Page 3 of 11

When representing a buyer, you must do your best to locate properties that meet their criteria. Throughout the buying process, you should be able to see potential problems that could arise with the buyer and know how to resolve these situations in a professional manner. You can help your buyer make an informed decision by providing data on neighbourhood trends, features, and advantages and disadvantages of living in a community, providing market reports on property values, and more. Ultimately, you are expected to be a valuable resource for your buyer. If they require advice that is beyond the scope of your knowledge, you should direct the buyer to a third-party professional to answer their question. You will now review your responsibilities to a buyer client.

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Lesson 2 | Page 4 of 11

Responsibilities to the Buyer Client When you enter into a client relationship with a buyer, you have specific obligations to them that you would not owe to a customer. The following six sections contain information on your responsibilities to a buyer client.

Documentation Prior to preparing a buyer representation agreement, you must first discuss with the buyer the nature of the services to be provided by the brokerage, including an explanation of your fiduciary obligations. As a client, the broker or the salesperson will be providing advice regarding various matters affecting any transaction. Written acknowledgment from the buyer that these matters have been discussed must be obtained. You are responsible for preparing the buyer representation agreement. The agreement must clearly specify the following: • A commencement date and an expiry date • The amount of remuneration payable to your brokerage After you have prepared the representation agreement, you must then: • Sign on behalf of the brokerage and submit it to the buyer for their signature

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• Give copies of the fully signed agreement to each buyer (if there is more than one) and one to the brokerage

Timelines When working with a buyer client, you are obligated to discuss and explain timelines. Your conversations must include: • Explanation of the dates when reviewing an offer with the buyer (irrevocability, when deposits are to be made, when conditions expire, etc.). • Attentiveness to the dates found in the accepted agreement of purchase and sale; inform your buyer in advance of any expiry or due date. You will have to arrange to meet with them for signing of subsequent documents for conditions in the agreement.

Communication When working with a buyer client, you must ensure that the buyer: • Is able to attend appointments, meet conditions detailed in the offer, and make deposits. • Understands their obligations prior to them signing an agreement of purchase and sale. For example: o Will remuneration be paid by the seller or the listing brokerage?

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o Is there a shortfall that the buyer will have to pay? o If no remuneration is paid by the seller or the listing brokerage, is the buyer prepared to pay the full remuneration?

Changes to the representation agreement Once the buyer representation agreement is signed, there may be circumstances that will require changes to be made to what was agreed upon previously. You must document any changes to the buyer representation agreement using an amendment (e.g., extension to expiry date, search criteria, etc.).

Locating suitable properties You must work on locating suitable properties based on the buyer’s criteria without having regard to the amount of remuneration offered. For example: • Your search should not be limited to properties found on the local listing service • If a For Sale By Owner (FSBO) property owner is not willing to pay remuneration, you still need to tell the buyer about this property and that they will be obligated to pay remuneration based on the terms of the representation agreement, thereby allowing them to make an informed decision about considering the property

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Negotiating in the interest of the buyer When you locate a property and the buyer wants to proceed with an offer, you must take steps to work in their best interests. Here are some examples of what you could do: • Complete market research to arrive at the market value range for the specific property • Review market research with the buyer so that they can make an informed decision on purchase price • Advise the buyer on what should be included in the agreement of purchase and sale and how the terms will affect them • Include conditions in the offer that protect the buyer’s interests • Use your negotiating skills to benefit your buyer client

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Lesson 2 | Page 5 of 11

Facing Challenges when Working with the Buyer Client, I Throughout the course of a transaction, you may face some challenges with your buyer client. The following four sections contain information on possible challenging circumstances with your buyer client and actions you can take towards preventing or resolving them.

Purchase from For Sale by Owner Sometimes a buyer may choose to purchase a For Sale by Owner property, meaning the seller is not represented by a brokerage. If the seller is not willing to pay remuneration, the buyer will be responsible to pay the agreed upon remuneration to your brokerage. You are required to inform the buyer about this remuneration obligation and, prior to the buyer signing the agreement, document the details using a confirmation of co-operation and representation form.

The excluded property You may have a buyer that chooses to purchase a property that was properly documented as an exclusion to the buyer representation agreement. If the buyer decides to purchase this excluded property, chances are that they would need to terminate the buyer representation agreement, since they no longer require your services. You could choose to terminate the agreement or simply let the representation agreement run its course.

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Competing offers In a seller’s market, the buyer may be facing competing offers when they find a suitable property on which they wish to make an offer. Buyers can get frustrated in a competitive market to the point where they reconsider buying any property at all. You need to educate the buyer regarding market conditions and be prepared to offer proactive solutions such as: • Advising the buyer to obtain a pre-approval for financing • Recommending, if they need to sell their property prior to a purchase, that they sell their current property before making an offer to prevent adding a condition requiring the sale of their current property before completing the transaction, though there may still be a risk that the sale does not close • Ensuring their property is ready to sell (“showready”) • Ensuring that you have everything ready for the listing of their property If your client wishes to cancel the agreement before the expiry, your brokerage can decide whether to permit the cancellation. Your brokerage may have a way of documenting the cancellation. Some associations may also have a form you can use for the cancellation of the agreement to document the release of the buyer from the terms of the representation agreement. The © 2021 Real Estate Council of Ontario

reasons for the cancellation must also be recorded and typically must be acknowledged or approved by the broker of record.

The sale of the buyer’s property A buyer may enter an accepted agreement that is conditional on the sale of their present property and with an escape clause for the seller. In such cases, complications can arise. For example, a seller’s property remains on the market and the seller receives an offer they wish to accept. The seller provides written notice to the buyer. The buyer has a specific period (e.g., 24 to 72 hours) to decide whether to remove their condition(s) regarding the sale of the property and proceed with the purchase or terminate the agreement, where the parties release one another from liability. To avoid complications, you should ask the buyer early in the process if they must sell their home to proceed with a purchase. If so, you should advise them to consult with their financial advisor or a mortgage broker about their finances to determine if they would be able to qualify for a loan to afford each property.

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Lesson 2 | Page 6 of 11

Facing Challenges when Working with the Buyer Client, II The following three sections contain additional information on possible challenging circumstances with your buyer client and actions you can take towards preventing or resolving them.

Pricing issues in a competitive market The buyer representation agreement provides a description of what the buyer is looking for, such as property type and geographic locations. Prices may increase, so the buyer may have to consider making changes to the criteria. You can amend the agreement to broaden their geographical location or property type. You can then begin to look for properties according to the new criteria stated in the amendment.

The first-time homebuyer Miscommunication between salespersons can affect the outcome of a trade. Under the Code, it is required that you treat all those involved in the trade fairly, while promoting and protecting the best interests of your clients. Even so, some things can be overlooked inadvertently. Example: You are working with a first-time buyer and they like the first home you show them. You email the listing salesperson telling them that your buyer intends to

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submit an offer but wants to see a few other properties first, as this is the first home they have seen. The buyer’s salesperson assumes that the listing salesperson will advise them if other offers are submitted on the property. The listing salesperson, not hearing from the buyer’s salesperson, proceeds with other offers that have been registered since the showing took place. The property gets sold and the buyers are disappointed about the missed opportunity.

Circumstances preventing a purchase Circumstances may arise in a buyer’s life that may prevent them from completing a transaction. For example: • The buyer loses their job and will not be able to make the mortgage payments • The buyer does not qualify for a loan because they have recently started a new job that does not meet the probationary period • The buyer does not qualify for a loan due to a revised bank appraisal causing an unapproved loan to value ratio • The money transfer required to pay for the home has not been received or is delayed In some of these cases, you can amend the agreement using an amendment to the agreement of purchase and sale. But in other cases, the offer will fall apart, and

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a termination will be required, along with a request for return of the deposit. The use of sale-related documents in the offer-handling process will be discussed later in this module.

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Lesson 2 | Page 7 of 11

Salesperson Andrew locates a home for his buyer clients, the Coopers, in their ideal neighbourhood. The home is the perfect size for the Coopers’ growing family and the asking price is within their budget. During the showing, Andrew notices several rusty staples in the baseboard and wall paneling in the finished basement. This minor item went unnoticed by the Coopers. Andrew then looks in the unfinished basement areas, suspecting that moisture might be an issue. Andrew asks the seller about these potential issues and is told that there had been some leakage from a basement window a couple of years ago but no further problems had occurred once the external window was repaired. He communicates this to the Coopers, who then instructed him to prepare an offer. How can Andrew protect his buyer client? There are four options. There are multiple correct answers.

1

Include a condition in the offer that requires the seller to disclose any claims made on their homeowner’s insurance policy.

2

Make a written record of what was asked and how the seller responded.

3

Include a representation and warranty clause in the agreement of purchase and sale regarding water penetration in the basement.

4

Include a home inspection condition in the agreement of purchase and sale for the buyers.

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Lesson 2 | Page 8 of 11

As with all customers, you have limited obligations when working with buyer customers. You must practice honesty, exercise duty of care, and avoid misrepresentation. You should also be proactive in predicting potential problems that could arise when working with the buyer customer and know how to prevent or correct them.

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Lesson 2 | Page 9 of 11

Responsibilities to the Buyer Customer The customer service agreement is a limited service agreement for buyers. It is a non-exclusive agreement, meaning that the buyer may have signed a similar document with other brokerages. The following four sections contain information on your responsibilities to the buyer customer.

Documentation You must document any changes to the buyer customer service agreement using an amendment such as: • Extension to expiry date • Search criteria When the buyer has identified a property on which they wish to make an offer, you must prepare the agreement of purchase and sale and any subsequent documentation that may be needed, such as: • Amendment to completion date • Notice of fulfillment of conditions, waiver • Notice to remove condition • Termination of agreement

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Communication There are certain expectations and limitations when communicating with a buyer customer, such as: • Giving information but not providing advice • Answering questions truthfully • Notifying the buyers of any property that meets their criteria • Arranging to show properties • Arranging for any third-party inspections

Timelines When working with a buyer customer, you must explain the dates when reviewing the agreement of purchase and sale with the buyer, including irrevocability, when deposits are to be made, and when conditions expire. You must also be attentive to the dates found in the accepted agreement of purchase and sale and inform the buyer in advance of any expiry date. You will have to arrange to meet with them for the signing of subsequent documents for conditions in the agreement.

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Code obligations Under the Code of Ethics, when working with buyer customers you are obligated to: • Treat all customers with fairness, honesty, and integrity • Provide conscientious and competent service • Disclose material facts that are known or ought to be known by you • Avoid error and misrepresentation • Direct customers to obtain services from others when you do not have the knowledge and skill to provide the service • Comply with regulatory requirements concerning the conveying of offers

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Lesson 2 | Page 10 of 11

Identifying Potential Missteps in the Buyer Customer Relationship As with the buyer client, you may face some challenges with your buyer customer throughout the course of the transaction. The following three sections contain examples of what could go wrong in a buyer customer relationship, and how you can prevent or correct it.

Party to a buyer representation agreement During the course of your activities with a buyer customer, if you learn that they are a party to a buyer representation agreement with another brokerage for the purchase or lease of a real property with the same criteria as their customer service agreement, you cannot continue working with them. You must tell them that you are not able to help them and they must work solely with the other brokerage.

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Purchased property with another brokerage A buyer may purchase a property through another brokerage. Since the buyer customer service agreement typically is a non-exclusive agreement, they can do this. This can occur even if you had communicated to be notified if they found a property that was of interest to them to arrange a viewing. When this happens, there is no corrective action that you can take. You must cease dealing with them in respect of that transaction.

Accepted offer with conditions If conditions are not fulfilled or waived, the offer becomes null and void. You should determine why the conditions were not fulfilled. If the problem was with a home inspection, and the buyer no longer wants the property, then the search for a property will continue. If the buyer still wants the property, but at a reduced price, or if the seller is willing to correct the problem, then you should prepare an amendment to the accepted agreement of purchase and sale for consideration of all parties. If the problem was that the buyer did not qualify for a new mortgage, then you will have to prepare the documents for the parties to release one another from the terms of the agreement. Depending on what you have learned, the search may come to an end or you may have to refine the search criteria.

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Lesson 2 | Page 11 of 11

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Demonstrate knowledge of a salesperson’s responsibilities regarding documentation when dealing with a buyer client and a buyer customer There are two sections on this page with a summary of the key topics that were discussed in this lesson.

The buyer client relationship

One of the differentiating factors of a buyer client relationship is that you must work in their best interest throughout the course of a transaction. You owe the client what is called a fiduciary duty. This can be accomplished by: • Informing them of any property that meets their criteria • Preparing market value range for a property that is of interest to them • Providing advice on all aspects of the transaction that is in the buyer’s best interest, including advice on offers • Drafting the offer and including clauses to protect the buyer • Using negotiating skills on buyer’s behalf when presenting the offer

The buyer customer relationship

Obligations owed in a buyer customer relationship are limited to: • Providing information (not advice) • Treating them with fairness, honesty, and integrity • Providing conscientious and competent service

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Lesson 3 | Page 1 of 20

Lesson 3: A Salesperson's Obligation to Disclose Information to Clients and Customers This lesson will review your obligations to disclose information regarding material facts, inducements, reduced remuneration, and other financial disclosures according to the Code of Ethics. Through examples, this lesson will review your experience of handling competing offers.

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Lesson 3 | Page 2 of 20

It is important for you to disclose pertinent information to both clients and customers that may affect the course of a trade. Doing so will help to set accurate expectations for consumers and prevent issues and misunderstandings in a transaction. Making disclosures is also a part of your obligation to treat all parties with fairness and honesty. Upon completion of this lesson, you will be able to: • Review a salesperson’s obligations regarding disclosures to clients and customers Throughout this lesson, you will participate in decision points to test your knowledge of a salesperson’s obligations regarding disclosures to clients and customers through the use of examples.

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Lesson 3 | Page 3 of 20

As you learned in Pre-Registration, the seller is obligated to disclose at their earliest practicable opportunity, any latent defects of which they are aware. Additionally, your seller may choose to complete a seller property information statement (SPIS), which can include detailed disclosure of the seller’s property (such as renovations, septic system, or a pool, etc.). With this statement, you can attach receipts, invoices, and other documentation to supplement the information provided by the seller. You are required to disclose the SPIS to buyers, unless the seller gives specific instructions not to.

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Lesson 3 | Page 4 of 20

Disclosing a Statement Reporting Issues on the Seller’s Property If the seller has completed a seller property information statement (SPIS) for their property, you must disclose the existence of this document to all interested buyers and, upon request, you must provide them with a copy at the earliest opportunity, unless the seller has given specific instruction not to do so. There are a few things sellers should be aware of before choosing to complete an SPIS: • There is no legal obligation to complete an SPIS. The only exception to this would be if the seller agrees to complete one as a condition in the accepted agreement of purchase and sale. • If they complete one, they may give instruction that it is not to be disclosed, except if it is a term of an agreement.

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• By completing any information statement regarding the condition of their property, the seller is disclosing all details that they are aware of, such as: o Improvements made to the property o Existing structural deficiencies o Any problems with heating and electrical systems, moisture, water penetration, etc. The risk of disclosing this information is that the buyer could use it as leverage in the negotiation process or create future liability should any post-closing issues emerge with the property. The details of a property information statement must be completed by the seller, not you as their listing salesperson. This can be problematic if the seller is not familiar with legal issues or terms, such as: zoning bylaws, restrictive covenants, drainage restrictions, etc. You may need to thoroughly explain the document to the seller so that they understand what is being asked and how they should disclose information about their property to the best of their knowledge. Buyers rely on this statement to be complete and accurate. If there was a problem in the past and the seller has repaired it, that information should be included in the statement.

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Lesson 3 | Page 5 of 20

Disclosing Material Facts If you have a client, you are obligated to take reasonable steps to discover material facts and disclose them at the earliest practicable opportunity. If you have a customer, you must disclose any material facts that you know or ought to know, at the earliest practicable opportunity. Remember, a material fact is any fact that would impact a reasonable person’s decision to sell or to purchase a property. The range of what may be considered material fact can be quite broad. For example, it could include matters such as defects in a property, zoning considerations, taxation issues, etc. The following four sections contain some examples about the proper handling of specific material facts for sellers and buyers.

The seller’s mortgage An example of a material fact may be a discharge penalty that the seller would have to pay when removing the existing mortgage from the property’s title. This issue, due to the cost, may influence the seller’s decision to continue with the listing. To deal with the above example, here are some reasonable steps you can take: Ask the seller to sign a mortgage verification form that will permit the lender to disclose pertinent information about the mortgage to a third-party. When the details of the mortgage are obtained, which should include any discharge penalties, then meet with the client to discuss the penalty and how it may impact the net proceeds of the sale.

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The seller may determine that the consequences of discharge penalties are not as severe as originally thought and decide to proceed with the listing. This is an example of how a salesperson could take reasonable steps to determine the details of a material fact and disclose those details to a client to aid in their decision making.

The buyer that builds A material fact can include additional costs over and above the purchase price. These costs may influence a buyer’s decision to go forward with the purchase of a property. If a buyer client wants to purchase a vacant lot to build a home with specific building plans, you should consider the following: • Will zoning bylaws permit this structure to be built on this lot? • What are the costs for development charges? • What are the costs for the various utility and lateral hookups? Reasonable steps you should take for the client: • Contact the local municipal office, zoning, and building departments and make enquiries with the above questions • Disclose your findings to the buyer The buyer client may decide not to purchase the vacant lot. If they do decide to proceed with the purchase of the property, the purchase price may be affected,

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and/or additional clauses can be included to address the building permit and development charges.

The seller customer A material fact that you know or ought to know may influence a customer’s decision to go forward with the sale of a property. If the seller customer wants to sell a portion of their lot, yet to be severed, you ought to know there are costs associated with this and you must inform them at the earliest practicable opportunity. The costs associated with the severance of land may influence their decision to sell. If they wish to proceed, this may affect the purchase price and clauses in the agreement of purchase and sale.

The buyer customer A material fact that you know or ought to know may influence a customer’s decision to go forward with the purchase of a property. If a buyer customer wishes to purchase a vacant lot and build a home on it, you ought to know that they will encounter additional costs with land development and building permits, and you must disclose this information. The information may influence their decision to buy. If they wish to proceed, this may influence the purchase price offered and clauses in the agreement of purchase and sale.

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Lesson 3 | Page 6 of 20

A listing salesperson shows a buyer customer, who is not represented by a brokerage, through one of their new listings and provides them with a copy of the listing from the local listing service. The listing for the property states that the property has a concrete foundation. The buyer’s offer was accepted, and the transaction was completed. Upon completion, the buyer discovers that the house is supported by wooden piers and posts that have been enclosed and resemble a full foundation. The buyer files a complaint against the listing salesperson, who stated that they had simply copied information from a former listing. How could the listing salesperson have properly handled material facts in this case? There are three options. There is only one correct answer.

1

The salesperson should have completed a thorough inspection of the property to gather material facts for the listing.

2

The salesperson recommends that a home inspection condition be included in the unrepresented buyer’s offer as this would reveal any material facts.

3

The salesperson should have asked the seller about the foundation when completing the listing.

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Lesson 3 | Page 7 of 20

Remember that inducements are legally binding promises made by the salesperson and that some inducements are not permitted under the Code. No matter how you record these, you should not induce a seller or a buyer unless you can deliver on your promise and it is captured in writing. Legally, you can enter into a promise of inducement as long as it is done correctly. However, your brokerage’s office policy may restrict you from doing so, because the consequences not only affect you, but also your brokerage. A brokerage can be vicariously liable for the mistakes of its salespersons and brokers, even if the brokerage was not directly involved in the wrongdoing. Handling remuneration reduction agreements, also referred to as collateral agreements, can prove tricky and will require approval from your broker of record or manager. The existence of a remuneration reduction agreement must be done at the earliest practicable opportunity and before an offer is accepted. You will now review the proper handling of inducements and remuneration reduction agreements.

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Lesson 3 | Page 8 of 20

Common Examples of Inducements When writing an inducement, you must include the full details of what you have promised so the seller or the buyer can make an informed decision. The following three sections contain common examples where salespersons make inducements and how these are handled.

Arranging a new mortgage A buyer likes a property and asks their salesperson to draft an offer conditional on arranging a new mortgage. The salesperson says to the buyer: “You do not need to include a financing condition. I want you to make the most attractive offer possible to the seller. Your financial status is great. I promise to get you your financing.” The salesperson must: • Document the promise or inducement and sign it • Provide a copy to the buyer • Ask the buyer to acknowledge receipt on the brokerage copy This must be done prior to the buyer signing an agreement of purchase and sale without the financing condition. If the offer is accepted, and the buyer does not get approved for a new mortgage loan, the salesperson is obligated to arrange or provide financing so that the

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transaction can be completed. Failure to do so could result in the salesperson’s liability and possible disciplinary action, as the requirements of the inducement are not fulfilled by the salesperson.

Sale of buyer’s present property A buyer likes a property and asks their salesperson to draft an offer conditional on the sale of their present property. The salesperson says to the buyer: “You do not need to include this condition for the sale of your home. I want you to make the most attractive offer possible to the seller. Your property is in a desirable area and will sell fast. I promise I will sell it in two weeks, or else I will buy it.” After this conversation, the salesperson must: • Document the promise of inducement and sign it • Provide a copy to the buyer • Ask the buyer to acknowledge receipt on the brokerage copy This must be done prior to the buyer signing an agreement of purchase and sale without the condition for the sale of buyer’s real property. If the buyer’s offer is accepted, and the buyer’s property does not sell, and the transaction fails, the promise includes an obligation of the salesperson to buy the buyer’s property.

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Sale of the seller take-back mortgage A salesperson is presenting an offer to the seller, which includes a seller take-back mortgage. The seller says to the salesperson: “I really like the purchase price and the terms except for the take-back mortgage. Let us send this offer back and change this to read the buyer can have 10 days to arrange a new first mortgage. I just want cash; I do not want to hold a mortgage.” The salesperson says to the seller: “This is an incredible price that I will not be able to get for you if you do add this condition. I promise I can sell the mortgage and get you cash for it. Just accept the offer as is.” After this conversation, the salesperson must: • Document the promise of inducement and sign it • Provide a copy to the seller • Ask the seller to acknowledge receipt on the brokerage copy This must be done prior to the seller accepting the agreement of purchase and sale, which includes the seller take-back mortgage. If the salesperson has any difficulty selling the mortgage as promised to the seller, the salesperson could be obligated to buy the mortgage themselves.

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Lesson 3 | Page 9 of 20

Remuneration Reductions You must check with the broker of record on whether remuneration reductions are permitted within their policies and, if so, what specific conditions exist and what wording must be used. The brokerage may already have a prepared schedule to address remuneration reductions for the listing agreement, as well as wording to be used for disclosing the remuneration reduction to all buyers who have made a written offer. A remuneration reduction arrangement may present itself, even during the presentation of competing offers. The existence of a remuneration reduction must be disclosed, including details of the terms, to any person who makes a written offer.

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As a listing salesperson, you must disclose immediately the terms and details of the remuneration reduction to any buyer that has made a written offer. All buyers are given the information to ensure that the offer process is fair. This will give the other buyers an opportunity to make improvements to their offer if they so wish.

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Lesson 3 | Page 10 of 20

When to Disclose Remuneration Reductions Even experienced salespersons can make mistakes when disclosing remuneration reductions using collateral agreements. You must make every effort to avoid mistakes. The following two sections contain information on scenarios where a remuneration reduction must be disclosed.

Remuneration reduction at time of listing When you are the listing salesperson and have a remuneration reduction arrangement for any buyer working with your brokerage, you must be aware of when, how, and to whom this must be disclosed. For example, there may be two competing offers: one from a salesperson from your brokerage and one from another brokerage. As a listing salesperson, you are required to disclose the terms of the remuneration reduction to any person who makes a written offer. A leading practice is to announce the presence of the remuneration reduction on the local listing service, notify all competing offers of the details, and place the terms in the confirmation of co-operation of representation or similar document for each of the competing offers.

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Remuneration reduction during presentation of competing offer When you are a listing salesperson and are presenting competing offers, a remuneration reduction arrangement may present itself with one of the other offers. As soon as you are aware, you are required to disclose the terms of this remuneration reduction to all other buyers to ensure that the offer process is fair. This will give the other buyers an opportunity to amend their offer if they so wish. A leading practice is to share in writing with each party submitting an offer the terms of the remuneration reduction. This will also be included in the confirmation of co-operation of representation for each of the competing offers.

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Lesson 3 | Page 11 of 20

Salesperson Antony has a buyer client whose offer is accepted, but they are unable to secure financing from their commercial bank. The client’s financing condition is expiring soon. As an inducement, Antony would like to guarantee that he can arrange financing for the transaction and have the buyer remove the financing condition. What can Antony do if he wants to move forward with the inducement? There are four options. There are multiple correct answers. 1

Check to see if his office policy allows for inducements.

2

Sign a promissory note to reduce the client’s remuneration requirements so that the client would have to pay less.

3

Make a verbal inducement of promising the buyer that he will get them the financing and put the inducement in writing.

4

Remove the financing condition in the agreement of purchase and sale if the buyer is willing to accept Antony’s guarantee to arrange financing.

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Lesson 3 | Page 12 of 20

Khan, a salesperson with XYZ Real Estate Inc., has listed a property for sale. The listing agreement states a remuneration of five per cent of the sale price, with a remuneration reduction of one per cent, if the accepted offer is from a buyer working with XYZ Real Estate Inc. Khan has received two competing offers, one from another brokerage and the other from a salesperson at their own office. How should Khan proceed with the disclosure requirements of a remuneration reduction? There are three options. There is only one correct answer. Reference Link: https://www.reco.on.ca/registrars-bulletin/commission-reduction-agreements/// 1

Inform all buyers after acceptance of an offer

2

Inform the seller of the remuneration reduction

3

Inform all buyers who have made written offers

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Lesson 3 | Page 13 of 20

You must convey an offer to your seller as soon as possible. An exception arises if the seller has given clear, detailed, and express written direction to do otherwise. Your seller may want to delay their consideration of offers to a specific time and date, typically as part of a marketing strategy to set the stage for multiple offers. This may prompt some buyers to submit a pre-emptive offer. These often expire before the date and time of the delayed offer presentation in an effort to avoid, or “pre-empt” the established offer process. The written directions you receive from your seller must explicitly outline how you are to handle pre-emptive offers, regardless of whether the offer comes from a buyer you represent, is from a buyer represented by another brokerage, or not represented at all. You will review examples of how to properly disclose competing offers and handle pre-emptive offers according to your seller’s instructions.

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Lesson 3 | Page 14 of 20

Disclosing Competing Offers As a listing salesperson, you are required to disclose the number of competing offers to all buyers who have submitted a written offer. However, the terms and conditions of each offer are confidential and must not be disclosed. The following three sections contain various examples of how to handle competing offers.

When to disclose and to whom As soon as you receive a second offer or confirmation of a second offer, you are responsible for disclosing to the first buyer that there is now a competing offer situation. This step is repeated depending on the number of offers, as it changes, and the same steps are taken to notify all competing buyers.

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What to disclose in a competing offer situation If a competing offer situation arises, you are required to disclose the following: • The number of written competing offers (but not the substance of each competing offer) • If a competing offer has been made by you for your own buyer • If a competing offer has been made by a buyer representative within your brokerage • If two buyer representatives from the same cooperating brokerage have submitted offers (as this may be a multiple representation situation for the co-operating brokerage and consent is needed) • The existence of any collateral or commission reduction agreements that may make one buyer’s offer more attractive than others

How to disclose competing offers Leading practices for disclosure are to: • Immediately notify all buyers or their representatives by way of phone, text message, or email • Document the disclosure in the confirmation of co-operation and representation for each offer

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Lesson 3 | Page 15 of 20

How to Correctly Handle Pre-emptive Offers In an active market, a delayed offer approach may prompt some buyers to submit pre-emptive offers, also known as bully offers. These often expire before the delayed offer presentation in an effort to avoid the established offer process. It is your responsibility to ensure that your seller’s instructions on pre-emptive offers are adhered to. The following three sections contain information on how to handle pre-emptive offers in different situations.

Date and time The moment you discuss with the seller the strategy of delaying the presentation of offers, you must be ready to discuss the benefits and risks. Further, you must have clear instructions on what to do in the event a preemptive offer is submitted. Accepting a pre-emptive offer will interfere with the offer presentation date that was already established, so it is important to inform all buyers when a pre-emptive offer is being considered by the seller, so other buyers know that the seller’s instructions have changed, allowing the seller to benefit from other offers. You must work with the seller to establish clear instructions on what to do if a buyer makes a preemptive offer. If offer presentation instructions change due to a preemptive offer or for other reasons, you must disclose to all buyers who have expressed interest in the property how the instructions have changed, so the seller can benefit from receiving and considering other offers.

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These are called interested parties and can include buyers who have an offer to submit, offers that are active, buyers who have viewed the property, and those that have future appointments booked. This is important for the seller to have the greatest exposure to receive the most offers. It is in their best interest to do so. It is a good idea to keep and update all seller instructions in the case that the offer does not end in a sale.

Details within the offer A seller can specify how much detail they want to know about the offers submitted before a full presentation is made (e.g., offers above or between a certain price point, offers that contain a certain term, etc.). The seller can choose to be notified simply that an offer has come in, without receiving any details about the offer. Unless the seller provides written direction stating that they do not wish to receive any pre-emptive offers, you are obligated to convey them to the seller, as soon as practicable.

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Changes to the instructions When it comes to pre-emptive offers, your client can change their instruction at any time. However, a new written direction is required to override any previous instructions made. You must also follow the seller’s instruction if you have a buyer interested in the property. You cannot advance the interest of your buyer ahead of that of others. Following receipt of these new directions, you must notify all buyers who have expressed an interest in the property, preferably in writing. This notification will give buyers time to decide if the changed instructions present an opportunity for their buyer. By informing all buyers, you are also notifying buyers who were following the seller’s initial instructions. These changes to the seller’s instructions must also be documented on the local listing service to inform all salespersons with buyers. It is in the seller’s interest for you to do so.

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Lesson 3 | Page 16 of 20

Salesperson Morgan listed a property on Wednesday with the seller’s written instructions to delay the offer presentation until Monday at 7 p.m., but wants to be made aware of pre-emptive offers. Buyers who are interested in submitting an offer are asked to notify the listing brokerage office by Monday at 5 p.m. On Friday at 10 a.m., Morgan receives a pre-emptive offer with an irrevocable date of 9 p.m. the same day. Morgan contacts the seller immediately to inform them that they have received a pre-emptive offer. The seller wishes to see the pre-emptive offer, so Morgan amends the instructions to read: “Notification of all offers must be made to the listing brokerage by 6 p.m. on Friday and presentation of offers will begin at 7 p.m. on Friday.” How must Morgan properly handle these instructions from the seller? There are five options. There are multiple correct answers. 1

Inform all those who have already viewed the property about the seller’s new instructions

2

Inform interested buyers who have scheduled appointments about the seller’s new instructions

3

Inform the salesperson who submitted the pre-emptive offer of the seller’s updated instruction

4

Update all local listing service members with an auto-email of the new date of the offer presentation

5

Update the listing on the local listing service with the new date of the offer presentation

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Lesson 3 | Page 17 of 20

You will now review how to disclose financial benefits in the activities in respect of a trade. In accordance with the Code, you must disclose any direct or indirect financial benefit that you may receive from another person in connection with services provided. Brokerages may establish their own additional policies and rules for their employees regarding the receipt of referral fees, and the handling of other financial benefit throughout the course of a trade.

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Lesson 3 | Page 18 of 20

Examples of Disclosing Financial Benefits You are obligated to disclose details of financial benefit to your sellers and buyers at the earliest practicable opportunity. The following three sections contain examples of financial benefit disclosures.

Finder’s fees and incentives A finder’s fee can be a reward for a salesperson or a broker directing their seller or their buyer to a third party. Third parties can include lenders, contractors, movers, and lawyers. If you are going to, or are likely to, receive compensation for directing someone to a third party, you must provide full disclosure to either one or both of the parties to the real estate transaction. Disclosure must be in writing and clearly set out, not only that compensation may or will be paid, but the amount, and any other relevant details. Examples of finder’s fees can include cash, ballots for contests, and points to be redeemed for merchandise.

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Indirect benefits You are obligated to disclose any indirect financial benefit as a result of referring someone to a third-party for their services. Example: You have a seller that requires the services of a lawyer to review prepared documentation. You provide your seller with a list of options for lawyers. One of the lawyers on the list is your brother, so you must indicate this relationship to your seller. Should they choose to employ the services from your brother, it would be considered an indirect financial benefit, even though your brother will not compensate you.

Two remuneration payments for the same transaction If you are offered payment from two sources involving the same transaction, you must disclose the details to both seller and buyer. Example: A buyer client offers you a bonus for helping them purchase a property by a certain date. The property that they want to purchase is exclusively listed by your brokerage. You disclose, in writing, to both clients at the earliest practicable opportunity, the remuneration offered by the seller, plus the bonus amount offered by the buyer. This way the seller and the buyer can make informed decisions about how to proceed with the transaction and remuneration considerations.

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Lesson 3 | Page 19 of 20

Maureen is a salesperson with XYZ Realty Ltd. Her uncle is moving to AnyCity, so she refers him to Jim, a salesperson in the area who works for ABC Realty Ltd. Jim has agreed to work with the uncle and provide Maureen with a referral fee. What action is Maureen required to take? There are four options. There is only one correct answer. 1

Prepare a trade record for referral from ABC Realty Ltd.

2

Email Jim with her uncle’s contact information

3

Email Jim’s contact information to the uncle

4

Prepare a referral document to disclose the referral

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Lesson 3 | Page 20 of 20

Congratulations, you have completed the lesson! Completion of this lesson, has enabled you to: • Demonstrate knowledge of a salesperson’s obligations regarding disclosures to clients and customers through the use of examples There are four sections on this page with a summary of the key topics that were discussed in this lesson.

Disclosing material facts

Material facts can influence a seller’s decision to sell and a buyer’s decision to buy. You are obligated to take reasonable steps to discover material facts for a client, and to disclose what you know or ought to know for a customer. Material facts must be addressed at the earliest practicable opportunity to clients and customers. If your seller has completed a written statement about their property, such as the SPIS, you must disclose the existence of this statement to all buyers and provide it upon request, unless the seller has given you specific instructions to the contrary.

Handling remuneration reductions and inducements

If you are working with a seller and are aware of a remuneration reduction, you are required to disclose the details of those terms to any person who makes a written offer to buy. This must be done at the earliest practicable opportunity and before an offer is accepted. Should you induce a party into an offer that was different from what they originally wanted, you must put the promise in writing, sign it, deliver a copy to the person you made the promise to, and ask them to sign the brokerage copy. This must be completed prior to them signing an offer.

When you are working with a seller and receive competing offers, you are required to Disclosures in competing offers and disclose the number of offers, but not the substance of each competing offer, to the buyers who have made offers. When working with the seller and a pre-emptive offer, or pre-emptive offer other circumstances, influence them to change their written instruction for offer

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handling

handling, you are required to notify all buyers who have expressed an interest in the property of the seller’s new instructions. These obligations ensure that all buyers are treated fairly and give the seller the best chance of optimizing the number of offers.

Financial disclosures

You must disclose any direct or indirect financial benefit that you may receive from another person in connection with services provided. If you are expecting to receive remuneration twice in the same transaction (one from the buyer and one from the seller) you must disclose this to both parties.

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Lesson 4 | Page 1 of 12

Lesson 4: A Salesperson’s Role in the Offer Handling Process This lesson will review your knowledge of your role in the offer handling process. Using document walkthroughs and real-life examples, you will review how to properly handle documentation in the offer handling process for sellers and buyers.

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Lesson 4 | Page 2 of 12

This lesson is a review of the offer process from both a seller’s and a buyer’s perspective. The negotiation of an offer requires due diligence, attention to detail, and effective time management. This lesson will delve into examples of how things can go wrong in the handling of offers and how to prevent or correct them. Completion of this lesson, will enable you to: • Demonstrate knowledge of a salesperson’s responsibilities regarding the handling of an offer and subsequent documentation for clients and customers Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 4 | Page 3 of 12

When working through the offer process with a seller or a buyer, you will assist them with reviewing offers, completing amendments, and communicating with brokerages to ensure a transaction goes through without incident. You will now review your obligations when working with sellers and buyers as clients and customers.

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Lesson 4 | Page 4 of 12

Responsibilities to the Client and Customer During the Handling of Offers You have specific obligations to your sellers or your buyers during the offer process. The following four sections contain information on the obligations.

Documentation You must adhere to the following documentation requirements when working with clients or customers: • All agreements that deal with the conveyance of an interest in real estate must be in writing and legible. • The presentation of offers is subject to any written directions. • Any changes to instructions for the presentation or handling of offers must be documented and made available to buyers or their representatives.

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Timelines You are obligated to discuss and explain timelines when working with sellers or buyers, regardless of whether they are a client or a customer. Your conversations must include an explanation of the following: • The offer’s irrevocable period and what it means if the party intends to accept the offer. The party who makes the offer is allowing the other party a specific time to accept an offer. • How the completion date affects both parties: o If the property is tenant occupied, will the buyer be assuming the tenant? o If the buyer wants vacant possession and the property is tenant occupied, can they ensure that possession can be provided? o Is there sufficient time to give proper notice to the tenant to vacate the premises? o Would the premises be vacant by the completion date? • Any conditions and clauses and how they may affect both parties (for example, are the dates and requests reasonable?)

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Communication Adhere to the following communication requirements when working with all parties: • Communicate arrangements of the offer presentation (for example, will it be in person or electronic? If in person, what is the time and location?) • Communicate the outcome of the offer presentation (for example, if the offer is accepted, countered, or rejected) • Follow up on any matter addressed in the agreement of purchase and sale (for example, deposit(s), conditions, notifications, etc.) • Obtain the name of the lawyer and forward salerelated documents acting on behalf of the party

Code obligations You are obligated to meet the following Code requirements when working with a seller or a buyer, regardless of whether they are a client or a customer: • Convey or present offers and subsequent documents (such as amendments, notice of fulfillment, waiver, release, etc.) at the earliest practicable opportunity • Ensure that another salesperson or broker will be available, should you be unavailable to attend the presentation of offers or to manage subsequent documents

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• Convey or present all offers and subsequent documents regardless of who makes the offer, its contents, or remuneration arrangements • Provide a copy of the agreement to the party you are working with upon acceptance of the agreement of purchase and sale • Deliver the deposit and documents in accordance with the agreement of purchase and sale

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Lesson 4 | Page 5 of 12

Salesperson Christie has just finished presenting two offers at her seller’s home. One of the offers is from Christie’s own buyer, the other is from a co-operating brokerage. Just as she finishes presenting one of the two offers, she receives an email notification from Daniel, a salesperson who showed the seller’s property two days ago. The email has an attached offer. However, this offer is received after the deadline indicated in the seller’s written instruction included in the listing, which stated, “All offers to be submitted to the listing brokerage by 5 p.m. on May 25th, Presentation to the seller at 7 p.m.” How should Christie address the receipt of the new offer? There are four options. There are multiple correct answers. 1

Present the new offer as soon as possible

2

Inform Daniel that the offer cannot be presented beyond the deadline

3

Notify the seller that a third offer has been submitted and that they must amend their instructions before they view it

4

Notify all buyers that there are now three competing offers

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Lesson 4 | Page 6 of 12

Preventing Problems in Offer Handling As with any part of a transaction, there may be several challenges that could pose a problem for even an experienced salesperson during the offer handling process. The following four sections contain information on how to prevent or correct any issues that may arise throughout the process.

Pre-emptive offers Before you receive any written direction on delaying offer presentation from your seller, you must explain the following: • The pros and cons of delaying the offer presentation to a specific time and date • The options for handling any pre-emptive offers (commonly referred to as bully offers) that you receive or if there is a deadline to deliver them, how to deal with offers received after the deadline It is just as important to explain pre-emptive offers to a buyer, so that they understand if the process changes quickly or if the buyer wishes to make a pre-emptive offer, and the pros and cons to make an informed decision. Example: A buyer’s salesperson tells their client about a new listing that meets their exact criteria. The seller’s instructions state that they will be accepting offers until Monday at 6 p.m., at which time they will consider all © 2021 Real Estate Council of Ontario

offers. The buyers are very excited about the property, but are out of town for the weekend, so they plan on making their offer on Monday afternoon. When they arrive back in town on Monday morning, they are surprised to find out that the property has already been sold. The seller had received a pre-emptive offer. The buyers are confused and upset because they did not realize this was something that could happen. The buyer’s salesperson had failed to explain that delayed offer instructions could be changed at any time if the seller wishes to consider a pre-emptive offer presented or for other reasons that might arise.

Documentation The following are just a few examples of issues that can stem from not handling documentation correctly: • Missing documentation: All offers must be in writing. You cannot state that you have an offer unless it is in writing. Also, acting on oral instructions can create misunderstanding or risk problems during the process. Written direction is a crucial part of tracking instructions and verbal authorization for offers or counteroffers. Having written evidence will help you avoid misunderstandings and support informed decision making. • Incomplete or unclear wording: In documentation, such as clauses or terms in agreements, poor wording can create problems in the offer handling

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process. Take time to proofread documentation for errors prior to signing. • Failure to deliver: For example: o You did not forward an accepted agreement of purchase and sale to the buyer’s lawyer, as the buyer had requested. The requisition date has expired in the title search clause. The consequences could hurt the buyer if there are title issues. You could call the brokerage or the lawyer’s office to confirm receipt of the agreement of purchase and sale. • Delayed delivery of documentation: You have an obligation to ensure that all parties to an agreement receive copies with subsequent documents, at the earliest practicable opportunity. Upon delivery, ask for acknowledgment of receipt on the brokerage copy. Also maintain copies of electronic correspondence, including those where documents have been delivered.

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Unrealistic timelines Insufficient timelines can create problems in the offer process. Below are just a few issues that can result from unrealistic timelines, and how to prevent them: • Irrevocability: This can occur if a party receiving an offer or counteroffer is not available for the offer presentation. If the salespersons better communicated with each other or their respective parties, all parties involved in the trade could have been available and prepared to consider offers. • Conditions: If the condition time period is not realistic, the party affected by the condition will not be able to fulfill it. You should take reasonable steps to discover the necessary time needed to fulfill a condition that affects your party. For example: o A conditional offer allows for limited time for a seller to sever their property. The listing salesperson should know how long this process will take and where the seller is with the process.

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Poor communication Poor communication between parties involved in a trade is the source of many problems in the offer handling process. Communication issues can range from missed appointments to the loss of a client or a customer. Examples of issues include: • Lack of communication. For example: o A buyer has a full day of viewing appointments set up. They submit an offer via email and continue with viewing appointments. The buyer does not realize the email did not go through and did not give the listing brokerage a follow-up call to ensure the receipt of the offer. The listing brokerage, therefore, does not even know that this buyer made an offer in the first place. • Keeping parties informed. For example: o An offer is received but is expiring on the same day at 8 p.m. The buyer representative follows up with the listing brokerage. The listing salesperson received the message but is unable to contact their seller about this offer until later that afternoon. The seller was working until 7 p.m. that day. The seller is not interested in dealing with the offer this evening, unless it is a good one, but the listing salesperson must still present it. The listing salesperson should go back to the buyer and communicate the circumstances © 2021 Real Estate Council of Ontario

and that they will not be able to present it until 7:30 p.m. If the seller intends to counteroffer, the listing salesperson should remain in touch with the buyer’s representative to ensure realistic irrevocability timelines are provided. Every action is time sensitive in the real estate industry.

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Lesson 4 | Page 7 of 12

Helen is a listing salesperson with ABC Realty Ltd. She receives an offer at 7:30 a.m. via email from Albert, a salesperson with XYZ Realty Ltd. at 10 a.m., Albert sends a text message to Helen to see if she had received the offer, which expires at 8 p.m. the same day. Helen replies that she has received the offer but is having trouble printing it and will have to get help from the office receptionist. At 3:30 p.m., Albert sends Helen another text message inquiring about the age of the roof shingles on the seller’s home and asks if she has had a chance to speak to the sellers about the offer he had submitted earlier in the day. Helen replies that she was not available to contact the sellers. Later, Helen informs Albert that she will not be available to reach the sellers until 6 p.m. and promises that she will reach the sellers, and not to worry. At 7:20 p.m., Albert sends a text message to Helen asking for updates on the offer presentation to the sellers. Helen does not respond. At approximately 10:15 p.m., Albert receives a message from Helen saying that the seller accepted another offer and the property was sold firm. Albert is shocked, as he was not aware of any competing offers. He later learns that the second offer was sent to the listing brokerage at 4:30 p.m. What preventative actions should Helen have taken? There are five options. There are multiple correct answers. 1

Presented offers to the seller at the earliest practicable opportunity

2

Informed Albert that remuneration to co-operating brokerage is 2.5 per cent of sale price

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3

Arranged with another salesperson from the brokerage to receive and present the offers if she was unavailable

4

Disclosed the number of competing offers to each buyer as soon as practicable

5

Omitted the fact that she was working at her other place of employment when talking to Albert

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Lesson 4 | Page 8 of 12

At various points throughout a trade, you may find that you have to use certain sale-related forms. While many transactions proceed smoothly from acceptance to completion date, depending on the structure of a condition (whether precedent or subsequent), and the party to which the conditions apply, you must know the appropriate forms to use in the specific circumstances and be able to explain it correctly to your seller or your buyer. You will now review when and how to use sale-related forms.

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Lesson 4 | Page 9 of 12

Sale-Related Documents Proceeding a Signed Agreement, I Once an offer has been accepted, there may be circumstances that will require you to prepare subsequent salerelated documents for a transaction. You should know which form is appropriate for a given circumstance and be able to explain its purpose to your seller or buyer. You must be familiar with the forms your brokerage uses for trading. The following four sections contain information on sale-related documents involved after the acceptance of an offer.

Amendment to an agreement of purchase and sale An amendment to an agreement of purchase and sale is used when terms to an accepted agreement of purchase and sale need to be amended. The party initiating the amendment inserts the necessary changes and includes an irrevocable time and date. Upon acceptance, each person that is a party to the transaction receives their own copy of the amendment. A leading practice is to ask for acknowledgement of receipt on the brokerage copy. The amendment is performed through a form. For example, OREA Form 120, i.e., Amendment to Agreement of Purchase and Sale may be used. The image is a partial view of an example of an amendment form.

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Notice of fulfillment of conditions This document is used when a condition in an accepted agreement of purchase and sale is written in conditionprecedent style and has been fulfilled. A notice of fulfillment of condition must then be signed by the party obligated to fulfill the condition and provided to the other party within the conditional time period. The notice of fulfillment of conditions can be performed through the OREA Form 124, i.e., Notice of Fulfillment of Condition. The image is a partial view of an example of the form.

Waiver This document is used when a condition in an accepted agreement of purchase and sale is written in conditionprecedent style, but has not been fulfilled. If the party to whom the condition applies wants to continue with the transaction by waiving the condition, a waiver must then be provided to the other party within the conditional time period. The waiver confirms that the seller or the buyer is giving up (waiving) their protection as written in the condition and proceeding with the transaction regardless. The waiver can be performed through the OREA Form 123, i.e., Waiver. The image is a partial view of an example of the form.

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Release This document serves as written evidence between seller and buyer acknowledging the termination of their agreement of purchase and sale and releasing each other. Some forms might also release the brokerage, but the seller and the buyer are not obligated to release the brokerages. This document directs the deposit holder to disburse the deposit and indicates to whom it must be paid. The party initiating the release inserts an irrevocable time and date. The last party to sign the mutual release is required to complete confirmation of acceptance. Some documents might have a provision for the brokerage(s) to also be released and releasing all parties to any claim for remuneration. Should the broker of record or manager choose not to sign, deposit funds are still returned, and the brokerage can pursue payment of remuneration owing to them. Seller and buyers are not required to release the brokerages. The mutual release can be performed through OREA Form 122, i.e., Mutual Release. The image is a partial view of an example of the form.

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Lesson 4 | Page 10 of 12

Sale-Related Documents Proceeding a Signed Agreement, II The following three sections contain information on additional sale-related documents involved after the acceptance of an offer.

Termination of agreement by buyer This document is used when a condition in an accepted agreement of purchase and sale is written in conditionsubsequent style but has not been fulfilled. The termination of agreement serves as written notice, advising the seller that the buyer was unable to fulfill their condition, effectively terminating the agreement. This document must be provided to the seller within the conditional time period. The buyer would also sign and typically deliver a release with this document. The termination can be performed through OREA Form 125, i.e., Termination of Agreement by Buyer. The image is a partial view of an example of the form.

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Termination of agreement by seller This document is used when a condition in an accepted agreement of purchase and sale is written in conditionsubsequent style, but has not been fulfilled. The termination of agreement serves as written notice advising the buyer that the seller was unable to fulfill their condition, effectively terminating the agreement. This document must be provided to the buyer within the conditional time period. The seller would also sign and typically deliver a release with this document. The termination can be performed through OREA Form 126, i.e., Termination of Agreement by Seller. The image is a partial view of an example of the form.

Notice to remove condition(s) This document is used when an agreement of purchase and sale includes a condition for the sale of the buyer’s real property and an escape clause for the seller. It serves as written notice advising the buyer that the seller has received another offer to purchase their property. The notice states that the buyer has until a specific time and date (stated in the escape clause) to remove their condition(s), should they choose to proceed with the purchase of the seller’s property. If not, their agreement of purchase and sale will become null and void and the seller will be at liberty to proceed with the other offer.

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The document is signed and dated by the seller and then given to the buyer or the brokerage representing them. The termination can be performed through OREA Form 121, i.e., Notice to Remove Condition. The image is a partial view of an example of the form.

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Lesson 4 | Page 11 of 12

Salesperson Robert has an accepted agreement of purchase and sale on September 15 for Elizabeth, his buyer client. The accepted agreement contains a home inspection condition. Robert provides Elizabeth with a list of home inspectors, but Elizabeth says: “I have been thinking. The home is only five years old and I have had a really good look through the property. I have decided that I do not need to hire a home inspector and I am good to remove this condition.” Robert, once again, identifies the benefits of a home inspection, but Elizabeth insists that she does not want to hire a home inspector. The inspection condition in the accepted agreement of purchase and sale reads: “This offer is conditional upon the inspection of the subject property by a home inspector at the buyer’s own expense, and the obtaining of a report satisfactory to the buyer in the buyer’s sole and absolute discretion. Unless the buyer gives notice in writing delivered to the seller personally or in accordance with any other provisions for the delivery of notice in this agreement of purchase and sale or any schedule thereto not later than 6:00 p.m. on the 20th day of September that this condition is fulfilled, this offer shall be null and void and the deposit shall be returned to the buyer in full without deduction. The seller agrees to co-operate in providing access to the property for the purpose of this inspection. This condition is included for the benefit of the buyer and may be waived at the buyer’s sole option by notice in writing to the seller as aforesaid within the time period stated herein.” How should Robert proceed to meet Elizabeth’s request to remove this condition? There are six options. There is only one correct answer.

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1

Prepare an amendment to an agreement of purchase and sale

2

Prepare a mutual release

3

Prepare a notice of fulfillment of condition(s)

4

Prepare a termination of agreement by buyer

5

Prepare a waiver

6

Prepare a notice to remove condition(s)

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Lesson 4 | Page 12 of 12

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Demonstrate knowledge of a salesperson’s responsibilities regarding the handling of an offer and subsequent documentation for clients and customers There are two sections on this page with a summary of the key topics that were discussed in this lesson.

A salesperson’s responsibilities in handling offers with clients and customers

Your responsibilities and obligations to clients and customers extend well into the offer handling process from preparation of an offer to the removal of conditions or termination and negotiation. You should be prepared to anticipate how things could go wrong and what preventative and corrective actions to take.

How and when to use subsequent documentation for an accepted agreement of purchase and sale

It is important that you demonstrate your knowledge and skill in providing services to clients and customers. You should know which subsequent form to use, when to use it, and how to explain it to your clients and customers. Using the wrong documents or not explaining them correctly could put clients and customers at risk.

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Lesson 5 | Page 1 of 7

Lesson 5: A Salesperson's Personal Safety During Trading Activities This lesson is an in-depth breakdown of possible safety risks you can encounter during trading activities. It also explores the importance of following brokerage guidelines on personal safety during a trade.

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Lesson 5 | Page 2 of 7

You may encounter safety risks on the job. In this lesson, you will learn about both environmental and interpersonal risks while trading. Upon completion of this lesson, you will be able to: • Identify possible risks • Establish individual safety procedures • Practice any possible brokerage guidelines Throughout this lesson, you will participate in decision points to test your knowledge.

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Lesson 5 | Page 3 of 7

Being prepared in all aspects of your trading activities can help to ensure not just the success of a transaction, but also your personal safety. With common sense and a due amount of caution, most risks you may encounter can be mitigated. It is not advisable to take risks with your safety in pursuit of a sale. RECO takes the safety of all salespersons very seriously. The recommendations you will review in this lesson are for the express purpose of educating you on ways to protect yourself alongside sellers and buyers; however, this list is not exhaustive. This lesson will help you to identify risks and take preventative action to protect the interests of all parties involved in the trade.

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Lesson 5 | Page 4 of 7

Possible Environmental Risks There are two types of risks that you are likely to encounter during trading: environmental and interpersonal. Environmental risks have to do with the state and condition of the property. It is important to keep a record of these conditions, as they pose a potential risk to you, as well as the seller or the buyer. If you notice potentially harmful conditions at a property, keep a detailed record and report it to the seller and/or the listing salesperson. If you are the salesperson with the listing brokerage and are aware of potentially dangerous conditions at a property, you have an obligation to disclose this to buyers and other salespersons showing the property. The following three sections contain information on the types of environmental risks that you may encounter while trading.

Old or damaged property Not all properties are in perfect condition at the time of a trade. It is important to note conditions such as the smell of gas, holes in the flooring, missing railings or barriers, uncovered electrical panels, or mould.

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Pets It is important to keep in mind that not all animals are friendly, regardless of their size or apparent demeanor. Animals could pose a safety concern because they could attack and injure a person entering the property. As the listing salesperson, make arrangements with the seller to remove the pets from the home or to lock them securely. As the buyer’s salesperson, if you notice an animal you are not expecting on the property or an animal that is not secured, take steps to protect yourself and your buyer. If necessary, contact the seller’s representative to confirm arrangements for the animal.

Construction and renovation Construction and renovation projects both on the property and nearby can cause risk. Be sure to wear proper protective safety gear and receive any necessary training before entry, if required by the builder. New home sites usually restrict access, depending on the building phase.

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Lesson 5 | Page 5 of 7

Possible Interpersonal Risks Interpersonal risks have to do with the people you encounter throughout your various business activities. You will meet a variety of strangers and will be alone with them on a frequent basis. While incidents do not happen often, it is important to be aware of them so you can take proactive measures to stay safe. There are several things that can be done to lower the risk. Before a showing, you should: • Get to know your prospects right at the start: names, addresses, and telephone numbers. If necessary, get verification by means of credentials, licences, etc. You should meet them first at the brokerage office or a public place.

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• No matter how you met a potential buyer (open house, appointment request, etc.), you must verify if they are working with a salesperson or a broker. Using the RECO App, you can verify their representative’s credentials, if such a relationship exists, and that of their employing brokerage. If they are not represented and do not wish to enter into a representation agreement, you should be cautious, as your words and deeds may unwittingly create an agency relationship. • Let someone know, before leaving the office, where you will be and how you can be contacted. If the circumstances merit, call the office upon arrival and arrange for call backs on an agreed time interval. During a showing, you should: • Not leave handbags or other valuables unattended. A good place for such valuables is the trunk of your car. • Always drive your own car and ensure it is locked during showings. Always keep the keys with you. • Develop a buddy system with another salesperson or broker if you are uncomfortable going to an unfamiliar location. If you choose to attend a showing or an open house with an unlicensed colleague or assistant for security only, they must not perform any trading activities or engage with other attendees. • Be alert to the people around you. Be cautious of unusual circumstances, odd suggestions, and illogical requests from a seller or a buyer. • Carry a whistle or download an alarm app on your smartphone (Silent Beacon, Red Panic Button, etc.). • Never turn your back on a prospective seller or buyer and try to keep space or a piece of furniture between you and the individual at all times. While these risks are never pleasant to think about, they are important to consider. It is better taking more caution than not taking enough. Your safety should always be the top priority. Those individuals with a true interest in doing business with you will understand the need for safety precautions.

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Lesson 5 | Page 6 of 7

Brokerage Guidelines Many brokerages have guidelines in place for salesperson and broker safety. If you have not already read the safety procedures and guidelines from your brokerage, you can request them from your broker of record or your manager. Take the time to go through the guidelines and familiarize yourself with them. Guidelines vary from brokerage to brokerage, so make sure to educate yourself if you transfer between brokerages or if you have read the guidelines at a previous brokerage but not your current one. Your safety and the safety of your sellers and buyers is incredibly important. It is vital to minimize the risks that you may encounter as much as possible.

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Lesson 5 | Page 7 of 7

Congratulations, you have completed this lesson! Completion of the lesson has enabled you to: • Outline personal safety measures to be followed during the course of a trade There are two sections on this page with a summary of the key topics that were discussed in this lesson.

Possible environmental risks

It is not advisable to take risks with your safety in pursuit of a sale. RECO takes the safety of all salespersons very seriously. Be sure to know your brokerage’s specific safety policies and incorporate your own strategies on the job. One of the possible environmental risks you might face pertain to the property being old and damaged. It is important you are alert to issues like uncovered electrical panels or mould when accompanying a buyer to see a property. The other risk could involve pets. If the seller has pets, you must confirm with the listing salesperson that require arrangement towards their care has been made and that there is no risk to the buyer and you. You must also consider if any renovation or construction work is being carried out on the property. If so, you must ensure you are wearing proper protective gear and ensuring your own and the buyer’s safety.

Interpersonal safety risks

Take the following precautions against interpersonal safety risks, including: • Notify others of where you are going • Use the buddy system • Lock personal belongings in your car

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Lesson 6 | Page 1 of 6

Lesson 6: Summary Practice Activities This lesson provides a series of activities that will test your knowledge on the entire module.

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Lesson 6 | Page 2 of 6

This lesson contains summary decision points that will test your knowledge regarding the topics covered in this module on compliance during the course of a trade.

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Lesson 6 | Page 3 of 6

At an open house, Agatha, a listing salesperson with ABC Realty Ltd., meets a buyer, Darius, who would like to submit an offer on a property. Agatha tells Darius, “I have an agreement with my seller for a remuneration reduction of one per cent if the buyer submits an offer through my brokerage. If you submit your offer through me, you will benefit.” After Agatha explains the service options, Darius decides to enter into a customer service agreement and submits his offer through Agatha. The offer is accepted, and prior to the completion date, ABC Realty Ltd. issues an invoice to the seller’s lawyer for the payment of remuneration for three per cent (four per cent, less the remuneration reduction of one per cent) of the purchase price. When the sale closes, Darius contacts Agatha and asks for his one per cent remuneration rebate. What would have been the best way for Agatha to prevent this miscommunication? There are three options. There is only one correct answer.

1

Agatha should have provided a photocopy of the seller representation agreement to Darius, which detailed the remuneration reduction.

2

Agatha should have documented the remuneration reduction agreement and corresponding rebate to Darius prior to presenting his offer.

3

Agatha should have verbally communicated the remuneration reduction agreement more clearly to Darius and asked him if he had any questions.

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Lesson 6 | Page 4 of 6

Salesperson Kerr, with ABC Realty Ltd., submits a listing for his seller client on a local listing service stating: “Offer Presentation is scheduled for April 9, at 7:00 p.m. Please notify listing brokerage by 4:00 p.m. on April 9. Seller reserves the right to accept any pre-emptive offer without any notice.” On April 1, salesperson Santos, with XYZ Realty Ltd., views the property with her buyer client. Santos writes an offer on behalf of her buyer that same day and is waiting to submit it until April 9. On April 2, Kerr shows the property to another interested buyer, who wants his offer presented today. How should Kerr proceed? There are five options. There are multiple correct answers. 1

Kerr should contact the seller and make arrangements for the presentation today.

2

Kerr should contact all the salespersons who have already shown the property and let them know that there is now a pre-emptive offer that will be presented to the seller today.

3

Kerr should cancel all future scheduled showing appointments as soon as possible.

4

Kerr should call all the salespersons who have scheduled appointments for future dates and let them know there is now a pre-emptive offer and see if they are able to reschedule their buyers to view the property today, if possible.

5

Kerr must update the listing with new seller instructions, stating that all offers are being presented. It could also state that the seller is now considering offers at 7 p.m. on April 2.

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Lesson 6 | Page 5 of 6

Josie, a salesperson, receives a call from a buyer whom she has never met. The buyer would like to schedule an appointment for 7 p.m. at Josie’s listing, which is a vacant house in a new subdivision. What are the appropriate steps Josie can take for her personal safety? There are five options. There are multiple correct answers. 1

Ask another salesperson to join her for the appointment.

2

Have her brother wait in the car.

3

Keep her purse locked in the trunk of her car.

4

Let her brokerage know where she is going and who she is expecting to meet, and arrange for them to call her cell to check in at specific times.

5

Decline the appointment.

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Lesson 6 | Page 6 of 6

Congratulations, you have completed the lesson!

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Module Summary | Page 1 of 3

Module Summary This lesson contains a summary of the entire module.

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Module Summary | Page 2 of 3

Congratulations, you have completed this module! This lesson will present a summary of Learning Objectives.

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Module Summary | Page 3 of 3

There are five sections on this page with a summary of the key topics that were discussed in this module.

Obligations and Responsibilities to Sellers

Clarity on the terms of a client relationship between you and a seller can prevent most of the problems that could occur later in the listing process. Staying in touch with your seller is also important to ensure that they are informed about upcoming expiry dates, incoming offers, appointments, and any obligations they may have to you or the buyer. You must remember to update any written instructions that your seller provides you regarding appointments, offer presentation, and the handling of the deposit. Whether you are working with a client or a customer, providing conscientious and competent service to all parties in a trade will help you navigate the many problems that could occur in the listing process. Completion of this lesson has enabled you to: • Demonstrate knowledge of a salesperson’s roles and responsibilities when dealing with a seller client and a seller customer

Obligations and Responsibilities to Buyers

While it is your core responsibility to find your buyer a property that meets their criteria, your role does not end there. A successful transaction depends on how well you can work together with your buyer to find properties of interest, schedule appointments, draft an offer, and negotiate the offer in the buying process. Each of these steps will require some form of written documentation, which you should understand well enough to explain to your buyer. This is true for customers as well, who you must treat with honesty and integrity to help them find their desired property. Completion of this lesson has enabled you to: • Demonstrate knowledge of a salesperson’s responsibilities regarding documentation when dealing with a buyer client and a buyer customer

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Disclosing Information to Clients and Customers

Providing disclosures will prevent issues and misunderstandings in a transaction and ensure that all parties are treated fairly in the offer presentation. If you are representing a client, you have additional responsibilities to take steps in discovering facts about a property, maintaining seller instructions concerning competing offers, and disclosing any changes to those instructions. You must know how, when, and to whom the following disclosures must be made: • Latent defects and material facts • Remuneration reductions and inducements • Competing offers and the risk of pre-emptive offers • Disclosures of financial interests Completion of this lesson has enabled you to: • Demonstrate knowledge of a salesperson’s obligations regarding disclosures to clients and customers through the use of examples

Obligations in the Offer Handling Process

After an agreement of purchase and sale is accepted, you must continue to keep your responsibilities in mind, as circumstances can still prevent a transaction from going smoothly to completion. You must know under what circumstance the following sale-related documents must be prepared: • Amendment to an agreement of purchase and sale • Notice of fulfillment • Waiver • Mutual release • Termination of agreement (by seller or buyer) • Notice to remove condition(s) Completion of this lesson has enabled you to:

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• Demonstrate knowledge of a salesperson’s responsibilities regarding the handling of an offer and subsequent documentation for clients and customers

Personal Safety During Trading Activities

Staying safe during trading activities is another important part of your job. With common sense and a due amount of caution, you can mitigate environmental and interpersonal risks you may encounter. While incidents do not happen often, it is important to be aware that they can happen and know how to protect yourself and report any safety issues to your brokerage. Completion of this lesson has enabled you to: • Demonstrate knowledge of personal safety measures to be followed during the course of trading activities

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Module 4: Reviewing Compliance when Completing Activities in Respect of a Trade Disclaimer: This is a reference document which contains pages from the Accessible eLearning module. You should complete the eLearning module to proceed to the next step. Please note that the accessible module on the LMS only contains the interactive pages and you need to go through the content of this document thoroughly to attempt the interactive activities in the module. Please use Adobe Acrobat Reader (Recommended version 9 or above) to navigate through this PDF. Real Estate Salesperson Program ©2021 Real Estate Council of Ontario. All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or in any means – by electronic, mechanical, photocopying, recording or otherwise without prior written permission, except for the personal use of the Real Estate Salesperson Program learner.

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Module 4: Reviewing Compliance when Completing Activities in Respect of a Trade Your obligations toward your sellers and buyers do not end just because an offer has been accepted. In previous modules, you reviewed your duties throughout the transaction. This module will focus on leading practices for the time period from the acceptance of the offer until closing, and your role during this process. No matter how ready a seller or a buyer is to complete the transaction, issues may arise that require the knowledge and expertise of others. You should be alert to these possibilities and help resolve issues or refer the seller or the buyer to an appropriate third party. Lack of due diligence in completing tasks on time can result in many problems, including the offer becoming null and void. To check your understanding of this module, you must complete all the activities in the online module. While navigating through the online module, click the Legislation button to view laws and regulations related to this module. The contents of the thumbnails Accessible PDF.

and References from the module are added to support your learning throughout this

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Menu: Reviewing Compliance when Completing Activities in Respect of a Trade Number of Lessons

Lesson Number

9 Lessons

Lesson Name

Lesson 1

Compliance and Record Keeping Obligations of a Salesperson During the Completion of a Trade

Lesson 2

Compliance Obligations of a Salesperson after the Completion of a Trade

Lesson 3

Leading Practices of a Salesperson Related to the Completion of a Trade and after

Lesson 4

Steps to Advertise Sold Properties by the Listing Brokerage

Lesson 5

Steps to Advertise Sold Properties by the Co-operating Brokerage

Lesson 6

Common Mistakes to Avoid During the Completion of a Trade and after

Lesson 7

Consequences of Not Managing the Completion of a Trade Appropriately

Lesson 8

Summary Practice Activities Module Summary

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Lesson 1 | Page 1 of 12

Lesson 1: Compliance and Record Keeping Obligations of a Salesperson During the Completion of a Trade This lesson outlines the requirements you are expected to complete during the completion of a trade, such as managing timelines, submitting required documents in a timely manner, following up on deposits and conditions of the trade, and amending the agreement, if necessary.

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Lesson 1 | Page 2 of 12

The time immediately following the acceptance of an offer is critical for you, especially if that offer has unique conditions and terms. It is your responsibility during this period to stay organized and manage your time well to support the success of the transaction. The offer period must be carefully monitored to fulfill all conditions and terms of the agreement, as an unfulfilled condition or term could result in the offer becoming null and void. From visiting the property and co-ordinating inspections to resolving issues related to the transaction, you and the other salespersons involved in the transaction will have obligations to fulfill. © 2021 Real Estate Council of Ontario

Upon completion of this lesson, you will be able to: • Demonstrate knowledge of the compliance and record keeping obligations of a salesperson related to a trade Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 1 | Page 3 of 12

You will now review the importance of keeping detailed records and submitting documents on time, as well as your priorities during the completion of a trade. You must follow up with all parties of the trade to ensure documents were received in a timely manner and conditions of the agreement of purchase and sale are understood by your seller or buyer.

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Lesson 1 | Page 4 of 12

Managing Timelines and Delivery of Documents Your diligence during the completion of a trade can increase the likelihood of a successful transaction. At this point, your priority should be to manage timelines, deliver documents and deposits in accordance with agreement instructions, and distribute copies of necessary paperwork to the lawyer(s). The following three sections contain information about the steps that you can take to manage the completion of a trade.

Track critical dates with a checklist Use a checklist for each transaction to help you keep track of significant dates during the completion process. Tailor each checklist to the terms of the agreement and its particular situation. Track critical dates using planning tools to make to-do lists, prioritize tasks, and set automated reminders. If you are unavailable to complete a task, arrange for another salesperson from your brokerage to take over or assist you. Having a checklist prepared will make it easier for them to continue where you left off.

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Deliver all required documents in a timely manner All documentation needs to be turned into the brokerage at the earliest possible opportunity. In addition to delivering documents to the brokerage, a salesperson must be aware that if the property is posted on a local listing service, they are required to report listings and any changes to listings within a specified period. If there is an accepted agreement of purchase and sale, the brokerage has an obligation to forward a copy of it to the lawyer acting on behalf of that party. Any delay on the part of the salesperson in forwarding the document could jeopardize the time the lawyer has to search title on behalf of the buyer. These documents may include: • Listing agreement and amendments • Buyer agreement • Seller agreement • Accepted agreement of purchase and sale • Amendments to the Agreement of Purchase and Sale • Other related trade documents

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Distribute documents and send copies to the lawyer Once there is an accepted offer, each party to the agreement must receive a copy of the Agreement of Purchase and Sale as soon as possible. The Agreement of Purchase and Sale contains an acknowledgement section where the seller’s or the buyer’s salesperson has the seller or the buyer write their contact information, their signature, and their lawyer’s contact information. It acts as written evidence of compliance with the Code of Ethics (Code). For example, if the buyer claims they did not receive the Agreement of Purchase and Sale from their salesperson, their salesperson has the acknowledgement as evidence that the buyer was given a copy of the accepted agreement.

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Lesson 1 | Page 5 of 12

Listing salesperson Nariko has just received an email of an accepted agreement of purchase and sale from the co-operating brokerage ABC Real Estate Inc. Nariko calls her office to report the sale and ask them to change the status of the listing from “For Sale” to “Conditionally Sold,” but the call goes directly to voicemail. She is unable to return to the office for a few hours because of back-to-back appointments for the rest of the day. Which of the following actions should Nariko take? There are four options. There are multiple correct answers.

1

Forward the email to her brokerage.

2

Check back with her brokerage before the end of the day.

3

Leave a voicemail for her brokerage.

4

Call her next appointment to say that she will be late and go back to her brokerage right away.

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Lesson 1 | Page 6 of 12

Following Up on Deposits You must follow up with all parties involved in the trade to ensure that deposits are valid and have been delivered in a timely manner. A buyer might have multiple deposits due on specific dates. These deposits are held in trust and credited toward the purchase price on completion of the transaction; they are normally held by the listing brokerage in their real estate trust account, but can be held by whomever the parties agree will hold the money. Any delay or failure to deliver deposits as specified in the agreement can risk the outcome of the transaction. These types of delays or errors can constitute a breach of the Code.

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When representing the buyer, you should follow up with them about any supplemental deposits they may be responsible for. This could involve calling them the day before the deposits are due to remind them or calling them on the due date to make sure they have submitted them. You are responsible for: • Providing a receipt to the buyer when the deposit has been obtained • Completing FINTRAC requirements, such as Receipt of Funds and identification verification for each deposit • Obtaining a receipt from the deposit holder identifying when the deposit was provided • Ensuring the deposit is forwarded to the deposit holder, in accordance with the requirements of the Agreement of Purchase and Sale As the buyer’s salesperson: • If a buyer is late with a deposit, you will need to find out why and then notify the seller’s salesperson • If the seller and the buyer want to maintain the transaction, an amendment to the Agreement of Purchase and Sale should be prepared with a new deposit due date and signed by the parties • If the buyer is unable or unwilling to proceed with providing a deposit for a firm transaction, legal advice should be obtained prior to signing release documents • If the seller and the buyer do not want to proceed with the transaction, release documents should be prepared for the parties to sign As the seller’s salesperson: • If a buyer is late with a deposit, you will need to find out why and then notify your seller immediately • You should direct the seller to obtain legal advice • If the seller and the buyer want to maintain the transaction, an amendment to the Agreement of Purchase and Sale should be prepared with a new deposit due date and signed by the parties • If the seller and the buyer do not want to proceed with the transaction, release documents should be prepared for the parties to sign

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Lesson 1 | Page 7 of 12

Following Up on Conditions and Terms of an Agreement with the Seller Your job does not stop when a sale becomes final. When representing the seller, you must follow up with them about conditions and terms of the contract throughout the transaction. You need to ensure that the seller has fulfilled any condition they may have promised on their end, such as: • Providing documents (for example, surveys, building plans, warranties, etc.) • Repairs or replacements • Following up on a condition requiring approval from seller’s lawyer

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You are also responsible for keeping your seller notified regarding any required actions addressed by the buyer. For example, you may need to: • Co-ordinate appointments with the buyer’s home inspector, appraiser, or insurer and the buyer’s right to reinspect • Report fulfilled conditions from the buyer (notice of fulfillment, waiver, amendment, etc.) or mutual release

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Lesson 1 | Page 8 of 12

Following Up on Conditions and Terms of an Agreement with a Buyer You might have to refer other professionals to the buyer to assist them in fulfilling conditions of the agreement. These third-party professionals could include one or more of the following, among others: • Appraiser • Contractor • Home inspector • Insurance broker • Mortgage broker or another lender • Lawyer

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To fulfill your obligations to the buyer, you may need to: • Co-ordinate with the seller’s salesperson or brokerage for professionals to attend the property. • Be present during inspections or visits by third-party service providers. • Discuss the results of inspections with the buyer, and determining next steps based on those results. • Prepare amendments to the Agreement of Purchase and Sale. • Prepare documents for the buyer to move forward with the transaction. If any conditions are written as conditions precedent (for example, notice of fulfillment of condition or waiver). Failure to follow up on these conditions and their expiry dates could result in the transaction to become null and void. If a condition is written as a condition subsequent, no further action is required unless the buyer has a concern about the condition that needs to be addressed before the expiration date.

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Lesson 1 | Page 9 of 12

Adhering to the Agreement of Purchase and Sale An accepted agreement of purchase and sale may include a clause stating the right for the buyer to re-visit the property prior to closing. This clause would typically state how many times the buyer can re-visit the property and may also stipulate for what purpose. While two to three visits are typical, the buyer might want more, depending on the extent of work they want done to the property when they take possession and may require quotes from the contractors or supply companies to proceed with an order for needed materials. Be sure to adhere to the inspection schedule laid out in the Agreement of Purchase and Sale. Failure to do so can result in the buyer discovering damage to the property that could have been dealt with prior to the completion date and resolved by their lawyer.

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Lesson 1 | Page 10 of 12

First-time buyers Paschal and Olivia are told by their salesperson, Jamie, that their offer has been accepted by the seller. A deposit of $25,000 is due within two business days starting from the day the offer is accepted. Jamie clearly explains the due date of the deposit and the importance of submitting it on time. What else should Jamie do to ensure the deposit is submitted on time? There are three options. There is only one correct answer.

1

Ensure Paschal and Olivia have a paper copy of the Agreement of Purchase and Sale, which outlines the due dates of the deposits.

2

Continue to follow up with Paschal and Olivia until they submit the deposit.

3

Email Paschal and Olivia a few days before the deposit is due.

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Lesson 1 | Page 11 of 12

An accepted agreement of purchase and sale includes a clause for a home inspection since the property is 30 years old. The home inspection reveals worn-down roof shingles, which will need to be replaced. Since Joan, the seller, is eager to move into her new house, the buyer, Sachi, agreed to a completion date that is just three weeks away. Joan does not want to spend time and money fixing the roof. Sachi still wants to proceed with the purchase but is concerned about how much the repairs will cost. What should Sachi’s salesperson do? There are four options. There are multiple correct answers.

1

Have Sachi’s lawyer assist with amending the agreement.

2

Provide a list of roofing companies to Sachi to get repair quotes from.

3

Renegotiate the price of the property.

4

Negotiate with Joan’s salesperson to have the roof fixed before completion date.

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Lesson 1 | Page 12 of 12

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Demonstrate knowledge of the compliance and record keeping obligations of a salesperson related to a trade There are two sections on this page with a summary of the key topics that were discussed in this lesson. Managing timelines and filing documents

You must be diligent about accurate record-keeping and time management. Failing to keep track of due dates of required documents can cause unnecessary stress for both you and your clients or customers. Any delays or missteps during the closing phase can jeopardize the transaction. Continuously communicate with your client or customer to ensure the transaction meets their expectations.

Follow-up action during a trade During the closing of a trade, you will need to not only document necessary steps but also follow up to ensure all tasks are completed in a timely manner. Falling behind on just one task, such as providing copies of documents or delivering deposits, could cause the entire transaction to fall apart. If conditions of the trade or terms of the contract are not upheld, it is your responsibility to act in your client or customer’s best interests and rectify the situation.

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Lesson 2 | Page 1 of 6

Lesson 2: Compliance Obligations of a Salesperson after the Completion of a Trade This lesson reviews the requirements you are expected to complete after the completion of a trade. Follow-up with the seller, the buyer, and their lawyers is imperative at this point.

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Lesson 2 | Page 2 of 6

Having a firm understanding of your compliance obligations after the completion of a trade will enable you to provide competent service to both sellers and buyers. This lesson will focus on how your compliance obligations relate to following up with the seller, the buyer, and their lawyers to help you facilitate a successful closing process for all parties. Upon completion of this lesson, you will be able to: • Demonstrate knowledge of the compliance obligations of a registrant after the completion of a trade Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 2 | Page 3 of 6

You will now explore what competent service means for a salesperson after the completion of a trade. The following screens will outline proactive measures you can take to ensure compliance during this stage of the transaction.

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Lesson 2 | Page 4 of 6

Follow-Up Action after a Trade After the completion of the trade, you need to follow up with the parties of the trade that you are involved with. It is important to stay involved should any problems arise or if your client or customer requires additional assistance from you. The following three sections contain information about your duties in following up with each party involved in the trade after completion.

Seller Providing a follow-up visit to your seller after the completion date allows for the opportunity to address any of their remaining needs. Doing so lets them know that you are not just concerned about the transaction, but also about a lifelong professional relationship. Sometimes, you may be required to follow up with your seller due to an issue (for example, a seller removes a fixture that should have remained, a seller forgets to leave garage door remote for buyers, etc.). It is your responsibility to make sure the seller understands the terms in the Agreement of Purchase and Sale.

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Buyer As the buyer’s salesperson, you should anticipate potential issues with a transaction and take necessary actions to avoid misunderstandings in the offer and the entire process. You must provide the buyer with conscientious and competent service. After the transaction has completed, you should follow up with the buyer to ensure that the property has been left in the same condition as it was at the time of purchase or in the agreed upon condition, and that any included chattels are accounted for.

Lawyer Not all aspects of a trade can be completed by a salesperson. Consult a lawyer if conditions in the Agreement of Purchase and Sale were not met, or if the property does not meet the standards your buyer expected it to be left in. In case of unfulfilled terms of contract or damage to the property, direct your client or customer to contact their lawyer. If for any reason the transaction fails to complete, your obligation to your client continues. If the other party breaches the agreement, you must advise your client to obtain legal advice and be of any further assistance to them.

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Lesson 2 | Page 5 of 6

It is move in day for buyers Max and Mira, so they pick up their keys from the lawyer’s office just before it closes for the weekend. Upon arriving at the property, they see furniture and boxes left behind inside the garage. They cannot fit their vehicle inside the garage because of the items, so Max and Mira call their salesperson, Rafael, to complain. What should Rafael do? There are four options. There are multiple correct answers.

1

Call the seller’s salesperson and ask them to have their seller remove the furniture and boxes as soon as possible.

2

Contact Max and Mira’s lawyer.

3

Hire a disposal company to get rid of the items that day.

4

Ask Max and Mira to take pictures of the furniture and boxes as is.

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Lesson 2 | Page 6 of 6

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Demonstrate knowledge of the compliance obligations of a registrant after the completion of a trade In this lesson, you learned about the importance of staying involved with the trade once it has completed by following up with all parties. Sellers might still have tasks they must complete or need additional guidance on in general, while buyers will look to their salesperson for advice if their expectations were not met. In that case, followup with a lawyer will be necessary and you need to help facilitate that to ensure your client or your customer can move forward in a manner that best suits them. Follow-up action is essential at this point in the trading process to ensure both the seller and the buyer are satisfied with the transaction. It is your responsibility to keep lines of communication open with everyone involved. Doing so will better ensure your clients and your customers know that you see them as more than just a transaction, leaving them likely to feel appreciative about how involved you remained.

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Lesson 3 | Page 1 of 8

Lesson 3: Leading Practices of a Salesperson Related to the Completion of a Trade and after This lesson describes the leading practices that you should incorporate during the completion of a trade and after. This includes tracking and confirming document submission, being present during all third-party visits, and continued communication with the seller or the buyer.

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Lesson 3 | Page 2 of 8

Having a firm understanding of the leading practices when completing a trade will help to ensure you remain compliant during and after the closing of a transaction. This lesson will focus on your compliance and recordkeeping obligations to both sellers and buyers. Upon completion of this lesson, you will be able to: • Describe the leading practices of a salesperson related to the completion of a trade and after Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 3 | Page 3 of 8

You will be reintroduced to the key activities you need to be mindful of during and after a transaction is completed.

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Lesson 3 | Page 4 of 8

Leading Practices During the Completion of a Trade While a transaction is in the process of closing, there are required steps you need to take for either the seller or the buyer and numerous ways to approach these steps. Following are the leading practices you should adopt during each step of the closing process. The following four sections contain information about these leading practices.

Submitting trade documents at earliest practical opportunity You will have continued involvement with a trade, which may result in several completed trade documents and receipts (multiple deposits at different times) in your possession. These documents will need to be submitted to the brokerage at the earliest opportunity. All the work you do is done on behalf of the brokerage that employs you. Documents that you prepare and are involved with must be submitted to your brokerage at the earliest opportunity. A few examples of these documents are: • Accepted agreement of purchase and sale • Amendments to the Agreement of Purchase and Sale • Waivers • Notices of fulfillment of conditions • Mutual releases in the event of the failure of the transaction

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Submitting these documents satisfies the obligations of the brokerage to maintain all trade related documents, and will assist with monitoring the progress of the transaction. Often, a direction from the seller or the buyer to the brokerage to deliver copies of trade related documents to their respective lawyers is contained in the Agreement of Purchase and Sale. Occasionally, individual brokers and salespersons will deliver these documents on behalf of the brokerage.

Keeping a record of due dates and making note of progress for each task It is essential to keep track of all documents and appointments you are responsible for. That way, you can be sure of what tasks you have done and what remains to be completed. If your client or customer asks you the status of a task, you can confidently update and report to them. Examples of record keeping include: • Appointments • Condition due dates • Document submission • Deposit due dates • Re-visits • Final walk-through, etc. You must be organized and conduct yourself in a professional manner. Many organizational tools are available to help you in both paper-based and electronic formats.

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Keeping a list of when deposits and documents need to be submitted will help ensure adherence to the Code. If there is any doubt about whether you submitted documents in a timely manner, you can refer to your physical or digital records as proof.

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Attending all appointments and notifying parties to the transaction if rescheduling is necessary It is imperative that you be present during all inspection appointments. Property damage, theft, and even injury have occurred because third parties were given access to a property without a salesperson present. It is in the interest of the seller and the buyer that the salesperson be present during third-party visits. This position is supported by decisions of RECO’s Discipline Committee, which has made it clear that it is unprofessional for home inspections to occur without a salesperson present without the express written consent from the seller. Furthermore, many real estate boards have a rule that requires the buyer’s salesperson to attend showings of the property visits or inspections. It is best to speak to your brokerage about local policies that apply to you concerning inspection appointments. In the case of a third-party attendance, the expectation is that both the seller’s and the buyer’s salesperson attend the inspection. It is typical that only the buyer’s representative attend. However, that may be done only if the seller makes an informed choice to allow the buyer’s salesperson to be responsible for their home without the seller’s salesperson being present. Without the seller’s informed consent, the seller’s salesperson is also to be present for the third-party visit. It is in the interest of all parties that written informed consent be maintained for future reference.

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Delivering documents to the lawyer A copy of the Agreement of Purchase and Sale, as well as related documents, must be provided to the brokerage so that the agreement and other related documents can be sent to the buyer’s lawyer. The buyer’s lawyer has limited time to search title to the property and prepare a requisition letter for the seller’s lawyer. Therefore, it is imperative that the documents be delivered as soon as possible by the brokerage or, in some cases, the broker or the salesperson. Your task does not end with document delivery, as you must also follow up with the lawyer to ensure they received the documents. Be sure to make note of the lawyer’s confirmation for your records. This is part of your due diligence responsibilities to clients and customers.

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Lesson 3 | Page 5 of 8

Marco, a salesperson, has three buyers, all of whom have completion dates scheduled within the same week. Of the three buyers, two buyers have some needs to be taken care of before the completion. One buyer has informed Marco that they will not be able to pick up their keys before the lawyer’s office closes and asks if Marco can do it for them. The other buyer has a clause in the Agreement of Purchase and Sale stating the seller was to replace the garage door opener no later than two weeks prior to the completion date. All three buyers have final walk-throughs that week. How can Marco ensure all the buyers’ needs are looked after in preparation for the scheduled completion dates? There are four options. There are multiple correct answers.

1

Co-ordinate final walk-throughs with the sellers, their salespersons, and the buyers at least one week before they are to be scheduled.

2

Keep track of all appointments in a calendar.

3

Ask another salesperson from the brokerage to attend appointments that Marco is unable to be present for.

4

Advise the buyers to take pictures during the final walk-through and bring a family member for a more thorough inspection.

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Lesson 3 | Page 6 of 8

Continued Communication Communication with your seller or buyer is a vital part of your due diligence responsibilities to them, throughout the transaction as well as after it closes. This is especially important for first-time sellers and buyers, who have never been through the process before and rely on your direction. When representing the seller, you should remind the seller about the terms listed in the Agreement of Purchase and Sale before the completion date (for example, fixtures that must remain on the property, requirement to repair or replace something). You can also create a checklist for your sellers to prepare them for their move. Remember to reassure them that you are still available in case they have any questions. When representing the buyer, you may need to answer questions or provide information (for example, how to set up accounts for cable or a phone line). You can also create a checklist for your buyers to prepare them for their move. Any recommendations you can provide about preparing for home ownership will make the process less overwhelming for them. © 2021 Real Estate Council of Ontario

Lesson 3 | Page 7 of 8

It is move-in day for buyers Arianna and Tom and they have just picked up the keys to their new home from their lawyer’s office. Upon arriving at the house and walking through it, they notice that the kitchen bar stools, which had been listed as chattels in the Agreement of Purchase and Sale, are missing. Arianna and Tom search the property, but the bar stools are nowhere to be found. They call their salesperson, Ivan, to explain the situation and request his help in getting them returned. What is the best way for Ivan to rectify this situation? There are three options. There is only one correct answer.

1

Tell Arianna and Tom to contact the seller directly

2

Purchase another set of kitchen bar stools for Arianna and Tom

3

Contact the seller’s salesperson

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Lesson 3 | Page 8 of 8

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Describe the leading practices of a salesperson related to the completion of a trade and after In this lesson, you learned about the leading practices of completing a trade and after. Having satisfied clients and customers while a transaction closes involves: • Timely document submission and meticulous record-keeping • Document delivery to the lawyer and confirmation of their receipt • Being present for all inspection appointments and pre-closing visits • Continued communication with the seller or the buyer to resolve any remaining questions and remind them of any remaining obligations that they need to meet

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Lesson 4 | Page 1 of 8

Lesson 4: Steps to Advertise Sold Properties by the Listing Brokerage

This lesson details the requirements of advertising sold properties by the listing brokerage. Requiring additional consent will depend on if you are identifying a party to the transaction, including details from the Agreement of Purchase and Sale, and whether the advertisement will appear before or after completion date.

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Lesson 4 | Page 2 of 8

Advertising requirements and restrictions apply to your services or properties that are currently listed for sale, and to advertising sold properties. Advertising sold properties can benefit you in securing additional listings. This lesson will review the proper steps you need to take to ensure your advertising is in compliance with the Code. Upon completion of this lesson, you will be able to: • Demonstrate knowledge of the required steps when advertising sold properties by listing brokerage Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 4 | Page 3 of 8

Before advertising a sold property, you need to understand what information is considered personal and private. If your advertisement features this information, you need to obtain consent. You will review the necessary compliance steps when advertising sold properties under certain circumstances.

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Lesson 4 | Page 4 of 8

Obtaining Consent to Advertise as the Listing Salesperson When advertising sold properties listed by your brokerage, you will need to determine if any information in your advertisement requires additional consent beyond what the listing agreement provides. Whose consent you obtain will depend on what you include in the advertisement, and whether you plan to advertise the sold property before or after the completion date. It is a leading practice to have a separate written consent document for the advertisement of the sold property. The document should include the following in bold print: • A reasonable start and end date for the informed consent • A clear description of other important details, such as the sale price, details of accepted agreement of purchase and sale, identity of involved parties, etc. The purpose of the document is to draw attention of the involved parties and avoid any misrepresentation. For more information on advertising sold properties, review Advertising Sold Properties from RECO’s website. The following five sections contain information about the steps you need to take in obtaining consent to advertise sold properties.

Advertising a sold property before completion date The listing brokerage can advertise a sold property (with or without an image of the property) until completion date, to the extent permitted by the listing agreement.

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Advertising a sold property before completion date and including price information or other terms of the transaction If the listing brokerage wants to advertise a sold property (with or without an image of the property) and to include price information or other terms of the Agreement of Purchase and Sale, then both the seller and the buyer must provide written consent. The listing brokerage must obtain written consent from the buyer through the buyer’s brokerage, unless written consent has been obtained to contact the buyer directly.

Advertising a sold property after completion date If the listing brokerage wants to advertise that the property is sold (with or without an image of the property), then the buyer’s written consent is required. The listing brokerage must obtain written consent from the buyer through the co-operating brokerage unless written consent has been obtained to contact the buyer directly.

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Advertising a sold property after completion date and including price information or other terms of the transaction If the listing brokerage wants to advertise that the property is sold (with or without an image of the property) and to include price information or other terms of the Agreement of Purchase and Sale, then both the seller and the buyer must provide their written consent. The listing brokerage must obtain written consent from the buyer through the co-operating brokerage unless written consent has been obtained to contact the buyer directly.

Identifying a party to the transaction in an advertisement Regardless of when you publish an advertisement (before or after completion date), identifying a party to the transaction requires consent in writing.

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Lesson 4 | Page 5 of 8

Sellers Maya and Tian are pleased to learn that a buyer has agreed to purchase their house for 10 per cent more than their asking price after being on the market for just two weeks. Their salesperson, Ellen, wants to post an image on her brokerage’s social media platforms featuring the property. She wants to use a picture of the sellers standing in front of the property while holding a sign that says, “Sold for 110% of list price.” The post will be published before completion date with a caption that includes the address of the property. What consent must Ellen obtain before publishing this social media post? There are four options. There are multiple correct answers.

1

Consent from Maya and Tian to use a photo of them in the post.

2

Consent from Maya and Tian to use a photo of the property and the address in the post.

3

Consent from Maya and Tian to include details from the Agreement of Purchase and Sale in the post.

4

Consent from the buyer to include details from the Agreement of Purchase and Sale in the post.

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Lesson 4 | Page 6 of 8

Kristen is a listing salesperson who wants to hand out real estate postcards with an image of herself along with the exterior of three houses that sold recently. The advertisement also includes the addresses of the properties and text across the top of the postcard that says, “Sold! Sold! Sold!” The completion date for one of the houses is in May, and the other two are in July. Kristen plans to distribute the postcards in June. Whose consent does Kristen need to obtain for this advertising to be compliant? There are four options. There is only one correct answer.

1

Only the buyers of the property that closed in May.

2

Only the buyers of the properties that are closing in July.

3

All three property buyers.

4

No additional consent is required.

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Lesson 4 | Page 7 of 8

Caleb, a salesperson with listing brokerage XYZ Realty Inc., is marketing a property. On July 26, a buyer, Kasam, enters into an agreement of purchase and sale with a completion date of September 30. The agreement contains a clause permitting XYZ Realty Ltd. to advertise the sale of the property after the completion date. On August 23, this clause was removed from the agreement by way of an amendment signed by Kasam and the seller. Despite withdrawing his permission, Kasam noticed an advertisement in December saying his property was “sold in 7 days,” and another advertisement in January that said, “sold 110% of asking.” Would consent be necessary if Caleb’s advertisement stated, “sold in 7 days” and only appeared until September 30? There are four options. There is only one correct answer.

1

Yes, because the advertisement still contains details about the property.

2

Yes, because the advertisement is from the listing brokerage not the co-operating brokerage.

3

No, because the listing brokerage can advertise the sale of the property until completion date.

4

No, because the advertisement does not include details from the Agreement of Purchase and Sale.

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Lesson 4 | Page 8 of 8

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Demonstrate knowledge of the required steps when advertising sold properties by listing brokerage There are three sections on this page with a summary of the key topics that were discussed in this lesson. Identifying a party to the transaction when advertising a sold property by the listing brokerage

Written consent must be obtained before you can identify any party to the transaction, regardless of when the advertisement will be distributed.

Advertising a sold property by the listing brokerage prior to the completion date

The listing brokerage has consent to advertise a seller’s sold property through the listing agreement.

Advertising a sold property by the listing brokerage after the completion date

After the completion date, you will need to obtain written consent from the buyer to advertise the sold property. Consent required from the buyer must be obtained through the co-operating brokerage. You can obtain consent directly from them. The written consent from both the seller and the buyer will need to be obtained if the advertisement also includes contents of the Agreement of Purchase and Sale.

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Lesson 5 | Page 1 of 7

Lesson 5: Steps to Advertise Sold Properties by the Co-operating Brokerage

This lesson features the requirements of advertising sold properties by the co-operating brokerage. As with advertising sold properties by the listing brokerage, obtaining consent for marketing sold properties will depend on if you are identifying a party to the transaction, including details from the Agreement of Purchase and Sale, and whether the advertisement will appear before or after completion date.

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Lesson 5 | Page 2 of 7

Advertising sold properties as the salesperson with the co-operating brokerage will also require your due diligence to ensure that you are compliant with the Code. This lesson will address your requirements for obtaining consent to advertise sold properties under various circumstances. Upon completion of this lesson, you will be able to: • Demonstrate knowledge of the required steps when advertising sold properties by the co-operating brokerage Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 5 | Page 3 of 7

You will now review which information in an advertisement, as the salesperson of the co-operating brokerage, requires consent and from whom. This will also depend on when the advertisement will be distributed.

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Lesson 5 | Page 4 of 7

Obtaining Consent to Advertise with the Co-operating Brokerage Unlike the listing agreement, the buyer representation agreement typically does not enable the co-operating brokerage to advertise any details about sold properties without consent. When advertising sold properties as a cooperating brokerage, whose consent you need to obtain will be dependent on what you include in the advertisement, and whether you plan to advertise the sold property before or after the completion date. As discussed in the previous lesson, it is a leading practice for the salesperson to have a separate written consent document for the advertisement of the sold property, including a reasonable start and end for the informed consent and other details of the transaction. For more information on advertising sold properties, review Advertising Sold Properties from RECO’s website. The following five sections contain information about the steps you need to take in obtaining consent to advertise sold properties.

Advertising a sold property before completion date If the co-operating brokerage wants to advertise a sold property (with or without an image of the property), then the seller’s written consent is required. The buyer’s brokerage must obtain written consent from the listing brokerage to contact the seller directly.

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Advertising a sold property before completion date and including price information or other terms of the Agreement of Purchase and Sale If the buyer’s brokerage wants to advertise a sold property (with or without an image of the property) and includes price information or other terms of the Agreement of Purchase and Sale, then both the seller and the buyer must provide written consent. The buyer’s brokerage must obtain written consent from the seller through the listing brokerage, unless written consent has been obtained to contact the seller directly.

Advertising a sold property after completion date If the buyer’s brokerage wants to advertise a sold property (with or without an image of the property), then the buyer’s written consent is required.

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Advertising a sold property after completion date and including price information or other terms of the Agreement of Purchase and Sale If the co-operating brokerage wants to advertise that the property is sold (with or without an image of the property) and to include price information or other terms of the Agreement of Purchase and Sale, then both the seller and the buyer must provide written consent. The buyer’s brokerage must obtain written consent from the seller through the listing brokerage, unless written consent has been obtained to contact the seller directly.

Identifying a party to the transaction Irrespective of whether you are a salesperson with the listing or a buyer’s brokerage, you must obtain consent from any party to the transaction if you want to identify them in an advertisement. This applies to advertisements published before or after the completion date. However, as the salesperson with the buyer’s brokerage, you can obtain consent to identify the buyer directly from them. To identify the seller, you must obtain their consent through the listing brokerage and not from the seller, unless consent has been obtained to contact the seller directly.

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Lesson 5 | Page 5 of 7

Antonio, a buyer, has purchased a property where a home inspection revealed considerable water damage to the basement. His salesperson, Vincent, was able to successfully negotiate reducing the purchase price by $50,000, even though the home inspector’s damage estimate was less than that. Vincent wants to advertise his successful negotiating skills on a flyer that will be distributed to a known move-up area of town, some time after completion date. It will have a picture of him standing with Antonio along with text that reads, “I purchased this property for 81% of list price! Call Vincent for your next purchase!” What consent must Vincent obtain before distributing this advertisement? There are four options. There are multiple correct answers.

1

Consent from the seller regarding details of the sale price.

2

Consent from Antonio regarding details of the sale price.

3

Consent from the seller regarding identifying parties to the transaction.

4

Consent from Antonio regarding identifying parties to the transaction.

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Lesson 5 | Page 6 of 7

Bindhu is a salesperson with QRS Realty Ltd, a brokerage that works exclusively with buyers. Bindhu wants to advertise all the properties she sold this past year in the January issue of a local home magazine. She plans on purchasing advertising space for one full page to include exterior pictures and accompanying addresses of all 20 properties. The completion date for most of the properties will have passed by the time the magazine is published, but the completion date for four of the properties will not be until February. Whose consent does Bindhu need to obtain prior to publishing this advertisement? There are four options. There are multiple correct answers.

1

The buyers, when the advertisement is published after the completion date.

2

The buyers, when the advertisement is published before the completion date.

3

The sellers, when the advertisement is published after the completion date.

4

The sellers, when the advertisement is published before the completion date.

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Lesson 5 | Page 7 of 7

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Demonstrate knowledge of the required steps when advertising sold properties by co-operating brokerage There are three sections on this page with a summary of the key topics that were discussed in this lesson Identifying a party to the transaction when advertising a sold property by the cooperating brokerage

As a salesperson with the buyer’s brokerage, you must also obtain written consent before identifying any party to the transaction, regardless of when the advertisement will be displayed. Understanding this will ensure you protect the personal information and privacy of the parties involved with the trade.

Advertising a sold property by the co-operating brokerage prior to the completion date

Prior to the completion date, you will need to obtain written consent from the seller to advertise a sold property through the listing brokerage. The written consent of both the seller and the buyer will need to be obtained if the advertisement also includes contents of the Agreement of Purchase and Sale. This knowledge will assist you in obtaining the necessary consent.

Advertising a sold property by the co-operating brokerage after the completion date

After the completion date, you will need to obtain written consent from the buyer to advertise the sold property. The written consent of both the seller and the buyer will need to be obtained if the advertisement also includes contents of the Agreement of Purchase and Sale. Consent required from the seller must be obtained through their salesperson, while consent from the buyer can be obtained directly from them. This knowledge will assist you in obtaining the necessary consent.

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Lesson 6 | Page 1 of 6

Lesson 6: Common Mistakes to Avoid During the Completion of a Trade and after This lesson outlines the most likely ways the completion of a trade could be jeopardized.

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Lesson 6 | Page 2 of 6

Throughout this lesson, you will learn how to anticipate potential issues during the completion of a trade and after. Often, common mistakes during these stages of the trade can be avoided through careful time management and communication. Providing conscientious and competent service and using reasonable judgment will also help you demonstrate due diligence towards clients and customers. Upon completion of this lesson, you will be able to: • Identify common mistakes that a salesperson should avoid during the completion of a trade and after Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 6 | Page 3 of 6

Managing the completion of a trade is just as important as earlier stages of the transaction, if not more. You are an important member of the team, including lawyers, mortgage lenders, and others, that support the successful completion of the transaction. Therefore, you should be aware of the common mistakes that may arise during or after the closing of a trade.

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Lesson 6 | Page 4 of 6

Common Mistakes During the Completion of a Trade and after The following are situations that can arise if you do not diligently manage the completion of the transaction and any required follow-up action. You should anticipate these circumstances and develop a plan to successfully avoid them. The following four sections contain information how to avoid these common mistakes. Taking on more work than manageable Failure to keep track of dates, tasks, clients, or thirdparty assistance can cause transactions to fail. If you find yourself overwhelmed with work toward the end of a transaction, consider: • Asking another salesperson from your brokerage to help you • Asking your broker of record or your manager for assistance • Making a checklist to prioritize tasks

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Failure to submit documentation on each transaction in a timely manner There may be circumstances toward the end of a transaction that will require an immediate amendment to the Agreement of Purchase and Sale (for example, in the case of an emergency affecting the property, or a change in the completion date). It is critical that you submit these amendments and any related documentation to the brokerage and the respective party’s lawyer as soon as possible, as it may have a direct impact on the completion of the trade. Due to the time-sensitive nature of these documents, you should follow-up with the lawyer as soon as they are made and confirm receipt with the lawyer when they are sent. Failure to fulfill client expectations and failure to stay involved Failure to communicate in a timely manner (or at all) can prevent you from fulfilling all of your seller or buyer client’s expectations and obligations (for example, following up on deposits, conditions, and terms of the agreement). To prevent this, be sure to keep detailed notes about what you have done on your client’s behalf throughout the transaction and communicate these things to them.

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Dishonesty and carelessness Honesty must be an integral part of everything you do. Follow these leading practices to ensure honesty in your work: • Only make promises that you can keep. If you make a promise to a client or a customer, be sure that you can fulfill it. • Be upfront with your seller or buyer. There will be times throughout your career that you will be faced with a difficult conversation. In these instances, it is best to be straightforward, as holding anything back would be considered dishonest. Even if the news is bad, they will appreciate your forward communication. Carelessness can also cause serious issues in a transaction. Even as a transaction closes, you must continue to do your due diligence for clients and customers. Here are some ways to minimize negligence: • Stop and think. Take a moment to assess your rationale for approaching a task in a certain way. Ask yourself whether you have a strong basis for the action you are considering or have taken. Determine whether it is consistent with what you have been taught in your training. • Ask for guidance. If you have any doubts about the service you are providing, discuss it with a colleague whose opinion you value, such as a broker, your broker of record, or another © 2021 Real Estate Council of Ontario

experienced salesperson. They have likely faced similar situations and can help you navigate it. • Research discipline decisions on the RECO website. Learning from the mistakes of others is much easier than going through them yourself. The search feature on RECO’s website makes it easy to search for decisions by topic. It is an excellent way to review the Code and how to govern your actions accordingly.

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Lesson 6 | Page 5 of 6

Edward, a salesperson, is representing the Lees, who are scheduled to close on the purchase of a property in two days. The Lees travel a lot for work, so it has been difficult for Edward to find time to meet with them. Edward has also been very busy with his other clients. The Lees had a clause in their agreement of purchase and sale addressing some repair work to the basement that needed to be completed by the seller, and receipts to be provided. A few weeks ago, Edward had received an email from the listing salesperson regarding confirmation of the seller’s completion of the repairs, but no receipts were attached. Edward made a mental note to address the email later, but because he was so busy, he completely forgot about it. He has also neglected to arrange a right to re-visit the property provision for the Lees, as part of the agreement. After speaking with their lawyer, the Lees learn that there has been no word on the state or quality of the repairs. The Lees are now extremely concerned about moving forward with the transaction, without this assurance. How could Edward have avoided these mistakes? There are five options. There are multiple correct answers.

1

Edward could have created daily reminders in his calendar or even on his phone.

2

Edward could have checked in with the buyers.

3

Edward could have asked a colleague from the brokerage to help him manage some of his tasks.

4

Edward could have asked the seller to do a video walkthrough of the right to re-inspect and send it.

5

Edward could have asked the listing salesperson to forward information to the buyer’s lawyer.

© 2021 Real Estate Council of Ontario

Lesson 6 | Page 6 of 6

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Identify common mistakes that a salesperson should avoid during the completion of a trade and after In this lesson, you learned about common mistakes that can occur during the completion stages of a trade and after, and strategies to avoid them. Taking on more work than manageable can unintentionally result in work that is incorrect or incomplete. You must also be aware of any sale related documentation that you need to submit toward the end of a transaction, along with any necessary follow-up items or visits to the property. These small mistakes during the closing of a transaction can have severe consequences, such as the transaction becoming null and void. If you find yourself overwhelmed by the amount of work you are responsible for:

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• Use organizational strategies like keeping a planner or a calendar and creating reminders on your phone • Reach out to other salespersons from your brokerage or your broker of record for support Throughout the completion of a trade, and even after the transaction closes, you must continue to perform your due diligence by staying involved and clearly communicating with your seller or your buyer so that they understand and prepare for their final obligations. Be honest and upfront with your clients and customers, even if it means delivering bad news or having a difficult conversation. Carelessness and dishonesty can result in a failed transaction and irreparably damage your reputation.

© 2021 Real Estate Council of Ontario

Lesson 7 | Page 1 of 8

Lesson 7: Consequences of Not Managing the Completion of a Trade Appropriately This lesson identifies the ways mismanaging a trade can affect your brokerage, and your client or customer.

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Lesson 7 | Page 2 of 8

Throughout this lesson, you will review the consequences of mishandling the completion of a trade. Mistakes made towards the end of the transaction can not only cost your seller or buyer time and money, but can also result in long-lasting damage to your career and possibly damage the brokerage’s reputation as well. Complaints, legal action, and disciplinary action are just a few ramifications you could face if you do not properly manage the completion of a trade. Upon completion of this lesson, you will be able to: • Identify the consequences of not managing the completion of a trade appropriately Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

© 2021 Real Estate Council of Ontario

Lesson 7 | Page 3 of 8

It is important for you to fulfill all of your obligations during the completion of a trade to maintain future business and to strengthen your reputation.

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Lesson 7 | Page 4 of 8

Losses that Result from Mismanaging a Trade The following are some of the potential losses you could suffer if you do not carefully manage the completion of a transaction. You need to be aware of these consequences to understand how they can affect you and be detrimental for your clients, customers, and brokerage. The following three pages contain information about how to avoid making these common mistakes. Loss of repeat business If you fail to stay involved with your seller or buyer towards the end of a transaction and afterwards, they will be less likely to employ your services for any future business. Be sure to reach out to the seller or the buyer after the completion date to see if there is anything else you can do for them. You should continue to nurture these professional relationships to maintain them as long as possible.

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Loss of potential positive referrals Referrals from previous and current sellers and buyers are a great way to obtain future business. If you fail to stay involved with them towards the end of a transaction and afterwards, they will be less likely to refer your services to friends and family.

Loss of respect among peer networks Failing to adequately address issues that arise during the completion of a trade may not only cost you your relationship with your client or your customer, but it can also factor into your reputation. This can be damaging for both you and your brokerage. Remember that professionalism is not just about following regulations; it is a personal attribute that is practiced and demonstrated daily through your attitude, behaviour, and demeanor, while complying with the law. Unprofessional behaviour can lead to loss of respect from peers, and in turn affect your future business. Throughout your career, you will face stressful situations that will require you to remain professional under pressure, but you must always conduct yourself with integrity.

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Lesson 7 | Page 5 of 8

Disciplinary and Legal Consequences Mismanaging the completion of a trade can sometimes lead to even more serious consequences than business losses. Sellers and buyers who are not satisfied with their salesperson can file a complaint with RECO for Code breaches, which can lead to consequences such as warnings and course requirements or a referral to the Discipline Committee. If the situation is severe enough, they may even choose to take legal action and pursue a lawsuit. Negligent behaviour during the selling process can lead to dismissal or termination by a salesperson’s brokerage. An unprofessional salesperson reflects badly on the brokerage and can smear the reputations of the other salespersons and brokers at the brokerage. Consequences of unprofessional conduct will be further discussed in a later module.

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Lesson 7 | Page 6 of 8

Enrique, a salesperson with GHI Realty Ltd., has sold a property to their buyer client Alicia. Shortly after closing, Alicia, finds that she has water in her basement as a result of a sewer backup. Alicia is upset and, believing that the issue must have existed in the past, suspects Enrique knew about it but failed to disclose it to her. She calls Enrique to complain, and he says there is nothing he can do. He tells her that he had no knowledge of a sewer problem but will speak to his broker of record and recommends she contact her insurance company. In the meantime, Alicia writes a bad review on GHI Realty Ltd.’s website and on their social media pages. Later that day, Alicia finds out from her neighbour that there are other homes on her street experiencing basement flooding due to an unusually heavy rainstorm that compromised the sewer system. Which of the following outcomes could likely result from this situation? There are three options. There is only one correct answer.

1

Damage to the GHI Realty Ltd.’s reputation

2

Legal action against Enrique

3

Disciplinary action by the brokerage or RECO

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Lesson 7 | Page 7 of 8

Enrique, a salesperson with GHI Realty Ltd., has sold a property to their buyer client Alicia. Shortly after closing, Alicia, finds that she has water in her basement as a result of a sewer backup. Alicia is upset and, believing that the issue must have existed in the past, suspects Enrique knew about it but failed to disclose it to her. She calls Enrique to complain, and he says there is nothing he can do. He tells her that he had no knowledge of a sewer problem but will speak to his broker of record and recommends she contact her insurance company. In the meantime, Alicia writes a bad review on GHI Realty Ltd.’s website and on their social media pages. Later that day, Alicia finds out from her neighbour that there are other homes on her street experiencing basement flooding due to an unusually heavy rainstorm that compromised the sewer system. Which of the following outcomes could likely result from this situation? There are three options. There are multiple correct answers.

1

Loss of repeat business

2

Loss of potential positive referrals

3

Loss of respect from Enrique’s peers

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Lesson 7 | Page 8 of 8

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Identify the consequences of not managing the completion of a trade appropriately In this lesson, you reviewed the consequences of not managing a trade adequately. Being unprofessional or negligent can leave your clients and your customers feeling slighted by your actions. That can lead to the loss of repeat business, potential referrals, and respect among your peer network. A negative reputation is difficult to get rid of and can follow you around for years to come. Missteps made during the completion of a trade and after can also have immediate effects, such as legal action or even dismissal by your brokerage. Remember, your actions reflect on your brokerage. Being diligent and relying on your broker of record or trusted mentors for direction and support can help you maintain professionalism and cultivate a fulfilling career as a real estate salesperson.

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Lesson 8 | Page 1 of 6

Lesson 8: Summary Practice Activities

This lesson provides a series of activities that will test your knowledge on the entire module.

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Lesson 8 | Page 2 of 6

This lesson contains summary decision points that will test your knowledge regarding the topics covered in this module on reviewing compliance when completing activities in respect of a trade.

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Lesson 8 | Page 3 of 6

Isaac agrees to purchase a property for the full listing price, but wants the fence repaired before completion date. A recent storm caused one side of the fence in the backyard to lean forward. His salesperson, Judy, includes a clause in the Agreement of Purchase and Sale stating that Sandra, the seller, must repair or replace the fence along the garagefacing side of the backyard before the completion date. Failing to do so would result in the buyer obtaining a holdback of $2,000 from the closing proceeds. What follow-up action should Judy take? There are four options. There is only one correct answer.

1

Deliver the deposit once the fence has been repaired or replaced

2

Follow up with Sandra’s salesperson regarding the status of the fence repair or replacement prior to the completion date

3

Provide quotes from fencing contractors to Sandra

4

Show up at the property a few days before the completion date to see if the fence has been replaced

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Lesson 8 | Page 4 of 6

Lochlin and Siobhan discover on move in day that the carpets in their new home have been damaged sometime between their last pre-closing visit and the day they took possession, which resulted in significant unexpected costs. There is extensive staining in several rooms throughout the property that requires professional cleaning in some areas and replacement in others. Their salesperson, Ben, attempted to resolve the issue with the seller’s salesperson to no avail, so Lochlin and Siobhan have decided to take the legal action against the seller. How should Ben proceed? There are three options. There is only one correct answer.

1

Speak to the seller’s lawyer and let them know that the property was not in this condition during the preclosing visit.

2

Speak to Lochlin and Siobhan’s lawyer, and let them know that the property was not in this condition during the pre-closing visit.

3

Let Lochlin and Siobhan know that should they decide to take legal action against the seller, he cannot be involved in the proceedings because he has already been paid remuneration.

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Lesson 8 | Page 5 of 6

Sophia, a salesperson, listed a property and sold the property to an unrepresented buyer. The Agreement of Purchase and Sale contained clauses addressing: • The buyer’s intention to bring potential tenants to the property prior to the completion date • The buyer’s opportunity for a pre-closing visit Sophia calls her seller client, Farah, to schedule appointments for the buyer and the potential tenants to visit the property, as well arrange for the pre-closing visit. Farah suggests that Sophia provide the buyer with Farah’s phone number and have the buyer call Farah directly for any appointments. Farah also suggests that Sophia need not attend all appointments and offers to show the property to the buyer. How should Sophia proceed? There are four options. There are multiple correct answers.

1

Attend all appointments where the buyer wants to introduce the property to potential tenants.

2

Attend the pre-closing visit with the buyer.

3

Provide the seller’s contact details to the buyer, allowing the buyer to attend the appointments for the purpose of introducing tenants to the property without Sophia being present.

4

Provide the seller’s contact details to the buyer and not attend the pre-closing visit.

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Lesson 8 | Page 6 of 6

Congratulations, you have completed the lesson!

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Module Summary | Page 1 of 4

Module Summary

This lesson contains a summary of the entire module.

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Module Summary | Page 2 of 4

Congratulations, you have completed this module! This lesson will present a summary of Learning Objectives.

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Module Summary | Page 3 of 4

There are four sections on this page with a summary of the key topics that were discussed in this module. Compliance and Record Keeping Obligations of a Salesperson During the Completion of a Trade in Real Estate

During the completion of a trade, be sure to comply with record-keeping obligations, which can benefit both you and your brokerage. It is the key to managing multiple transactions and ensuring all trades are handled professionally and in accordance with the Real Estate and Business Brokers Act (REBBA) and the Code. Failure to track the completion of tasks could jeopardize the transaction, while missing appointments can result in missed opportunities to protect your client or your customer. Completion of this lesson has enabled you to: • Demonstrate knowledge of the compliance and record keeping obligations of a salesperson related to a trade in real estate

Compliance Obligations of a Salesperson after the Completion of a Trade

After the completion date, there are still compliance obligations you must follow, especially if the transaction did not close successfully. Your client or your customer will rely on your guidance and expertise should they need to take additional steps at this point. Completion of this lesson has enabled you to: • Demonstrate knowledge of the compliance obligations of a registrant after the completion of a trade in real estate

Leading Practices of a Salesperson Related to a Trade in Real Estate and after the Transaction Closes

While there are numerous ways to manage the successful completion of a transaction, each transaction is unique and will pose varying challenges. You will apply the most effective approaches to the situations you are involved with. Completion of this lesson has enabled you to:

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• Describe the leading practices of a salesperson related to the completion of a trade and after Steps to Advertise Sold Properties by the Listing Brokerage

When advertising sold properties on behalf of the listing brokerage, you should be aware of how it can impact the parties to the transaction to ensure adherence to the Code. Compliant advertising enables the listing brokerage to attract more sellers and future listings, while also protecting those involved in the trade. Completion of this lesson has enabled you to: • Demonstrate knowledge of the required steps when advertising sold properties by the listing brokerage

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Module Summary | Page 4 of 4

There are three sections on this page with a summary of the key topics that were discussed in this module. Steps to Advertise Sold Properties by the Co-operating Brokerage

When advertising sold properties on behalf of the co-operating brokerage, you should be aware of when you can publish it and obtaining the necessary consent to ensure adherence to the Code. Compliant advertising enables the cooperating brokerage to garner future business while also protecting those involved in the trade. Completion of this lesson has enabled you to: • Demonstrate knowledge of the required steps when advertising sold properties by the co-operating brokerage

Common Mistakes to Avoid During the Completion of a Transaction and after it Closes

When advising on transactions during the completion of a trade and after the completion date, you should be aware of various due diligence obligations to avoid making common mistakes at this stage. Anticipating hardships and developing a plan beforehand can help you mitigate minor problems before they become major ones. Completion of this lesson has enabled you to: • Identify common mistakes that a salesperson should avoid during the completion of a trade in real estate and after

Consequences of Not Managing Mistakes made as a result of missteps during the completion of a trade can have the Completion of a Trade lasting consequences. You should be aware of these consequences and how they can impact parties to the trade, your career as a real estate salesperson, Appropriately and the profession. Completion of this lesson has enabled you to:

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• Identify the consequences of not managing the completion of a trade appropriately

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V7.1

Module 5: Addressing Non-Compliance and Complaints Disclaimer: This is a reference document which contains pages from the Accessible eLearning module. You should complete the eLearning module to proceed to the next step. Please note that the accessible module on the LMS only contains the interactive pages and you need to go through the content of this document thoroughly to attempt the interactive activities in the module. Please use Adobe Acrobat Reader (Recommended version 9 or above) to navigate through this PDF. Real Estate Salesperson Program ©2021 Real Estate Council of Ontario. All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or in any means – by electronic, mechanical, photocopying, recording or otherwise without prior written permission, except for the personal use of the Real Estate Salesperson Program learner.

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Module 5: Addressing Non-Compliance and Complaints While previous modules in this course have reviewed the importance of compliance with Real Estate and Business Brokers Act (REBBA) and other legislation, this module will review the process of filing and addressing complaints, as well as some of the leading practices on addressing non-compliance. You will also review the Professional Liability Insurance Program administered by RECO. This module will address program coverages and claims, as well as losses you could incur. Once you have completed this module, you should be able to file and address a complaint in a proper and effective manner and should be well-versed with the Professional Liability Insurance Program. To check your understanding of this module, you must complete all the activities in the online module. While navigating through the online module, click the Legislation button to view laws and regulations related to this module. The contents of the thumbnails Accessible PDF.

and References from the module are added to support your learning throughout this

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Menu: Addressing Non-Compliance and Complaints

Number of Lessons

Lesson Number

6 Lessons

Lesson Name

Lesson 1

Filing and Addressing Complaints

Lesson 2

Disciplinary Processes and Procedures

Lesson 3

Professional Liability Insurance Program

Lesson 4

Claims and Losses

Lesson 5

Summary Practice Activities Module Summary

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Lesson 1 | Page 1 of 11

Lesson 1: Filing and Addressing Complaints This lesson reviews the steps required to file or respond to a complaint against a salesperson or a broker and key statistics on the trends in complaints received by RECO.

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Lesson 1 | Page 2 of 11

In this lesson, you will review the complaints process, including how to file and address a complaint to RECO. This lesson will also highlight various trends regarding types of complaints, so that you will understand how best to avoid being the subject of a complaint yourself. Upon completion of this lesson, you will be able to: • Review the process to file a complaint against a registrant under REBBA • Review RECO’s disciplinary processes and procedures Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 1 | Page 3 of 11

First, you will review the process for filing and, more importantly, addressing complaints in the most effective and appropriate manner.

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Lesson 1 | Page 4 of 11

Filing a Complaint RECO addresses queries, concerns, and complaints about the conduct of registrants and takes the appropriate course of action to protect the interest of the public. Following the law when conducting business helps build the public’s trust in the way you do business and in Ontario’s real estate profession as a whole. RECO takes a progressive approach to discipline that also considers the nature of a complaint. This includes determining if a complaint is trivial, outside its jurisdiction, and/or can be resolved informally.

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Before proceeding with a complaint, it is important to first try and resolve the issue informally between the parties. Regulators should be introduced only when a satisfactory resolution cannot be reached. In the unfortunate circumstance that you need to file a complaint against a registrant under RECO, this is the information you will need to provide: • All relevant information pertaining to you, the person filing the complaint • The name and contact information of the person and/or organization you wish to place a complaint against • A detailed and thorough written description of your complaint • Any supporting documents, such as listings, representation agreements, agreement of purchase and sale, waivers, amendments, photographs, recordings, and any relevant correspondence It is necessary that your complaint be specific, but detailed and thorough for RECO to process it. Vague and incomplete complaint forms will be rejected or make it more difficult to investigate and address specific concerns. While completing the form, you will be asked to acknowledge your co-operation with RECO in its review and processing of the complaint and confirm that the submitted information may be shared with all parties to the complaint.

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Lesson 1 | Page 5 of 11

Understanding Complaints The graph on the left depicts the most common types of non-compliant behaviours that resulted in breach of the Code. The graph on the right compares the number of complaints filed by consumers versus those filed by registrants. Interpreting this information can help you reflect on your own actions and ensure that you understand how to avoid similar situations, especially when working with consumers. These details, combined with the knowledge of how to file and address a complaint, can help you improve your practice.

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Lesson 1 | Page 6 of 11

Addressing a Complaint Being the subject of a complaint can be stressful. While all complaints should be taken seriously, it is important to remember that a complaint is only an allegation of misconduct and that an investigation into the allegation will take place. The allegation has yet to be proven and RECO will consider your version of events before making a determination about the validity of the complaint. Under no circumstances should you address a complaint without proper preparation, support, and counsel from your broker of record.

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If RECO notifies you of a complaint, your first action should be to reach out for support from your broker of record and then collect all necessary documentation that can help your case. Should you choose, you have the right to seek legal counsel. Following such protocol will help you to build a thorough response to be provided to RECO.

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Lesson 1 | Page 7 of 11

How to Address a Complaint The following questions and answers will help you determine what your rights are and what actions you will need to take if you are ever the subject of a complaint, as well as what happens after you have sent in all necessary information. The following four sections contain information about each question and response.

How will I know I am the subject of a complaint? You and your broker of record will be notified in writing about the complaint from RECO. You will be provided with the details or nature of the complaint. You will be requested to respond to the allegations made in the complaint and provide your own supporting information and documents. There is an online response form available to help guide you with the submission process.

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What are my rights in the complaints process? The complaints process is designed to give the registrant an opportunity to explain their perspective and to submit any evidence supporting their position. If you are the subject of a complaint, you have the right to: • Be notified of the complaint and the opportunity to respond to the allegations. • Have the complaint dealt with in a timely and unbiased manner. • Seek legal advice and to be represented by counsel if you so choose (at your expense). • Receive the complaint decision in writing, including the action taken by RECO. (Note: a copy of the decision will also be sent to your broker of record and the complainant.)

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What will I need to do? The manner in which you respond to RECO with regards to a complaint reflects on you and your practice. Here are the actions you need to follow when addressing a complaint: • Carefully review the information provided to you and consider discussing the matter with your broker of record and/or a legal advisor. • Using the online response form portal, respond to the complaint by the specified deadline. It is important to provide a full response, including copies of all supporting information and documents. If in doubt, provide any information that supports your version of the events. • Provide the names and contact information of anyone who may have information or may have witnessed the events that led to the complaint.

What happens after I submit all my information? RECO will investigate the complaint and will assess all of the information and documents gathered, including your response, and issue a decision in the matter. You will receive the decision in writing.

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Lesson 1 | Page 8 of 11

Leading Practices for Responding to a Complaint While there are no officially sanctioned practices, here are a few of the leading practices to follow when addressing a complaint: • Make sure you have thoroughly read and understood the complaint made against you. • Stick to facts and eliminate unnecessary details or emotional responses but be fulsome in your response to the complaint.

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• Supplement your response with the input of your broker of record, subject matter experts, legal counsel, and other peers in your practice who may have evidence to offer. • Provide all documentation, communications, and any other supporting evidence that could be used to build a solid case against the complaint. • Do not contact the individual who filed the complaint against you. Follow the advice of your broker of record and claims adjuster (ClaimsPro LP). • Adhere to all timelines mentioned in RECO’s notice of the complaint.

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Lesson 1 | Page 9 of 11

Kathy, a salesperson, sold a property to her buyer client Sara. The accepted agreement of purchase and sale included a clause allowing Sara to revisit the property two more times prior to the completion date. Sara contacted Kathy and asked her to arrange her final visit to the property the day before the scheduled closing date. Kathy said she was busy with other property showings on Sara’s preferred viewing date and would be unable to accommodate her request. Sara is frustrated that she would not be able to see the property one final time before closing and files a complaint against Kathy, stating that her salesperson did not protect her best interests by not accommodating her request for the final visit. Kathy has just received notification from RECO about the complaint filed against her. What steps should Kathy take to prepare a response to RECO? There are four options. There are multiple correct answers. 1

Kathy should begin drafting a response immediately to end the matter as quickly as possible.

2

Kathy should reach out to Sara directly and try to resolve the matter between themselves.

3

Kathy should speak with her broker of record and may also obtain legal counsel to assist with her response.

4

Kathy should provide RECO with a copy of the agreement of purchase and sale, in which she has included the clause allowing Sara two visits to the property.

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Lesson 1 | Page 10 of 11

Jacob, a home builder, hires Keith from ABC Realty to list his property for sale. When listing the property, Jacob tells Keith that he has architectural drawings and shows him a few. Keith lists the property without any further investigation and includes the following comment in the listing remarks, “A fantastic opportunity to build a beautiful new home, complete with architectural plans and building permits”. Thomas is a buyer interested in purchasing the property and is represented by Subbu, a salesperson from XYX Realty. Subbu prepares an agreement of purchase and sale on behalf of Thomas and includes a condition allowing Thomas to review and approve the architectural drawings and confirm that a building permit has been issued by the local municipality. The agreement is accepted by the seller and the drawings are given to Subbu for Thomas’ review and approval. When Thomas receives the drawings, it is clear that they are not complete and a telephone call to the local building department confirms that a building permit had not been issued. Thomas files a complaint with RECO. Which of the following actions should Keith have taken to prevent the complaint? There are four options. There are multiple correct answers. 1

Keith should have asked Jacob more questions about the architectural drawings.

2

Keith should have included more details about the property in his listing, stating the correct status of the architectural drawings and building permits.

3

Keith should have left the architectural drawings out of the sale of the transaction.

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4

Keith should have introduced Jacob and Thomas to each other so that Jacob could help Thomas with the development of his building plans.

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Lesson 1 | Page 11 of 11

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Review the process to file a complaint against a registrant under RECO • Review your appropriate course of action, in case of a complaint being filed against you There are three sections on this page with a summary of the key topics that were discussed in this lesson.

How to file a complaint

You now know how to file a complaint with RECO. In addition to gathering all necessary documentation, it is also crucial that you get the support and input of your broker of record. However, it is in the best interest of all parties involved that you try to resolve any complaints personally before involving RECO.

Interpreting complaint statistics

These statistics gave you an in-depth look into the behaviours that lead to breaches of the Code. These statistics should be used as a learning opportunity, to examine your actions and to avoid making the same errors in your practice.

Addressing complaints

Should you be the subject of a complaint, RECO will notify you and request your response. When preparing your response: • Include all necessary documentation and relevant information • Seek support from your broker of record • Be honest and fulsome in your response and do not hesitate to seek guidance throughout your proceedings

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Lesson 2 | Page 1 of 10

Lesson 2: Disciplinary Processes and Procedures This lesson reviews RECO’s various disciplinary paths, breeches of the Code of Ethics, REBBA, and serious misconduct, as well as outcomes and the right to appeal a decision.

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Lesson 2 | Page 2 of 10

The previous lesson focused on common complaints and what to do if a complaint is filed against you. This lesson will focus on discipline paths, should a complaint be identified as a breach of the Code and be referred to the Discipline Committee, or a more serious form of misconduct, and the potential outcomes of that misconduct. Disciplinary action can range from a warning to the revocation of registration or even jail time, depending on the circumstances. This lesson will also discuss what a salesperson or broker of record can do if they disagree with the action taken by the Registrar.

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Upon completion of this lesson, you will be able to: • Understand RECO’s disciplinary processes and procedures Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 2 | Page 3 of 10

You will now delve into RECO’s disciplinary processes and outcomes. The following screens will take you through the various disciplinary actions issued by RECO to salespersons, brokers, and brokerages when they breach REBBA and the Code.

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Lesson 2 | Page 4 of 10

An Overview of RECO’s Discipline Paths and Outcomes When a complaint is received by RECO, there is a process that provides a uniform method of addressing it, while having sufficient flexibility to acknowledge unique characteristics of any complaint. Most complaints do not involve serious misconduct and do not require sanctions or formal legal proceedings. The possible outcomes presented here identify all options available to the Registrar. The following five sections contain information to review these outcomes.

No action If the allegations contained in the complaint are not supported by the evidence obtained by RECO, no action will be taken. This can also happen if the complaint falls outside of RECO’s legal jurisdiction; that is, RECO does not have the authority to address the allegation.

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Administrative action – Resolution Where appropriate, RECO may attempt to resolve a complaint by facilitating dialogue between the complainant and the salesperson to address issues that may have come from miscommunication or a misunderstanding. Through the RECO dispute resolution process, the complainant and the salesperson or brokerage may agree on an appropriate solution. This approach is not considered for matters that warrant a referral to the Discipline Committee.

Administrative action – Courses If there is evidence suggesting a lack of knowledge in the salesperson’s understanding of real estate in Ontario and the conduct is not serious, they may be required to take educational courses at their own expense to address the knowledge gap.

Administrative action – Warning The salesperson may be issued a written warning that will remain permanently on their record and will be taken into consideration if future complaints are received.

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Administrative action – Corrective requirement action The salesperson may be required to take corrective action (for example, edit advertising that does not comply with REBBA requirements or to amend processes or policies).

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Lesson 2 | Page 5 of 10

Serious Misconduct You will now review the outcomes of more serious misconduct, such as breaches of the Code, breaches of REBBA other than the Code, or serious registrant misconduct. The following four sections contain information to review these outcomes.

Discipline or court action – Discipline hearing The complaint may be referred to the RECO Discipline Committee for a hearing. If it is determined that a registrant failed to comply with the Code, they may be ordered to take educational courses, pay a fine between $50,000 for individuals and $100,000 for brokerages, and/or pay costs to RECO.

Discipline or court action – Provincial court prosecution If a person breaches sections of REBBA (other than the Code) they may be prosecuted in the Ontario Court of Justice system. If convicted of offences in court, they will be subject to fines of up to $50,000 and/or prison terms of up to two years. Corporations are subject to fines of up to $250,000.

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Proposal to suspend or revoke registration RECO can issue a proposal to suspend, revoke, refuse to renew, or apply mandatory conditions to a salesperson’s registration. This is the most severe action RECO takes with respect to registrants and is reserved for the most serious circumstances. The salesperson will have 15 days after they receive a notice of proposal, from the date the proposal is served, to file a notice of appeal with the Licence Appeal Tribunal for a hearing. If no appeal is filed, the proposal can be carried out.

Suspension or revocation of registration If a proposal to revoke has been issued, RECO may also suspend a registration if it is believed to be in the public interest. If suspended, a salesperson must immediately stop trading in real estate. Immediate suspensions are also ordered without a proposal or a hearing for nonpayment of an insurance premium.

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Lesson 2 | Page 6 of 10

Discipline Paths and Outcomes of Breaches of Code of Ethics More serious breaches of the Code are referred to the Discipline Committee. The committee decides the outcome. A notice of hearing is given to the registrant. Following the hearing, the Discipline Committee prepares a decision, including reasons for their decision. If the Discipline Committee decides that a registrant has failed to comply with the Code, it may order: • The salesperson or the broker to take further educational courses. • The brokerage to fund the educational courses for salespersons and brokers employed by the brokerage. • An individual to pay a fine up to $50,000 and a brokerage up to $100,000. • The registrant to pay the costs of the hearing, which are fixed and imposed by the Discipline Committee. The Discipline Committee is required to publish a copy of its decision on the complaint, including reasons, on RECO’s website for a period of at least 60 months (five years).

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Lesson 2 | Page 7 of 10

Discipline Paths and Outcomes of Breaches of REBBA other than Code Significant breaches of REBBA, outside of the Code, involving registrants and non-registrants may be taken to the Ontario Court of Justice, with RECO as the prosecutor. Potential penalties: • An individual who is convicted of an offence under the Act is liable to a fine of not more than $50,000 or to imprisonment for a term of not more than two years less a day, or both. A corporation that is convicted of an offence under the Act is liable to a fine of not more than $250,000. © 2021 Real Estate Council of Ontario

• If a person is convicted of an offence under the Act, the court making the conviction may, in addition to any other penalty, order the person convicted to pay compensation or make restitution. RECO is required to provide information about the charges laid and convictions. All relevant details are included on the RECO website.

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Lesson 2 | Page 8 of 10

Refusal, Revocation, Suspension, and the Licence Appeal Tribunal Certain actions by salespersons or brokerages may result in the refusal, suspension, or revocation of registration. The Registrar may propose to revoke, refuse to renew, suspend, or attach mandatory conditions to a salesperson, a broker, or a brokerage’s registration. In such situations, the Registrar issues a proposal and notifies the registrant of that proposal. The registrant has 15 days from notice of the proposal being served to file an appeal to the Licence Appeal Tribunal. If a salesperson does

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not appeal the decision, the Registrar may carry out its proposal. However, if they do appeal to the Licence Appeal Tribunal, then the tribunal will decide on the outcome and appropriate penalties. An appeal of a Tribunal decision can be made to the divisional court. If the Registrar proposes to suspend or revoke a salesperson’s registration, the Registrar may also issue an immediate suspension order if the Registrar considers it to be in the public interest. In that case, the registration is suspended immediately for a specified time and the registrant is not permitted to trade during that period. Information about proposals that have been disposed of are included on the RECO website.

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Lesson 2 | Page 9 of 10

Janet, a salesperson working for ABC Realty, and her sister are co-owners of a property. Janet and her sister decide to sell the property and Janet completes the listing agreement on behalf of her brokerage. She includes a remuneration payment requirement of 9.5 per cent of the sale price with 2.5 per cent to be paid to any cooperating brokerage. Janet signs the listing on behalf of the brokerage and her sister. An offer was presented by a co-operating brokerage and was accepted by Janet and her sister. Upon learning of the unusual remuneration requirements, Janet’s sister files a complaint with RECO alleging that Janet failed to disclose the financial benefits she would receive from the sale. If the Discipline Committee determines that Janet has failed to comply with the Code, what can they order? There are four options. There are multiple correct answers. 1

Janet may be ordered to take educational courses.

2

Janet may be ordered to pay a fine up to $250,000.

3

Janet may receive a prison sentence of up to two years, less a day.

4

Janet may be ordered to pay a fine up to $50,000.

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Lesson 2 | Page 10 of 10

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Understand RECO’s disciplinary processes and procedures There are four sections on this page with a summary of the key topics that were discussed in this lesson.

RECO’s disciplinary paths

You should understand RECO’s discipline paths and their outcomes, should you ever be the subject of a complaint. The process provides a uniform method for addressing complaints received by RECO. The Registrar can determine which of several possible outcomes is appropriate for the specific complaint. Ranging from administrative actions to court actions, and even suspensions and revocation of registration, you should know that each discipline path has different levels of severity.

Breaches of REBBA and Code

If a registrant has failed to comply with the Code, the Discipline Committee may order the registrant to any of the following: • Take further educational courses • The brokerage to fund educational courses for their salespersons and brokers • Pay a fine of up to $50,000 for an individual and up to $100,000 for a brokerage If a registrant has been found in violation of REBBA other than the Code: • An individual could be fined up to $50,000 and a prison term of up to two years less a day • Corporations can be fined up to $250,000 • An individual may be ordered to pay compensation and make restitution

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• These decisions and convictions are included on the Complaints & Enforcement section of RECO’s website.

Cases of serious misconduct

Be aware that the Registrar has the authority to take more severe action for serious misconduct. The Registrar has the authority to refuse, revoke, suspend, refuse to renew, or apply mandatory conditions to a registrant. In such situations, the Registrar prepares a proposal and notifies the registrant. The registrant would have 15 days from delivery of notice to appeal the proposal.

Licence Appeal Tribunal

Should a registrant file an appeal to the Registrar’s proposal, the Licence Appeal Tribunal will hold a hearing, allow both sides (the registrant and RECO) to be heard, and make a decision. An appeal of a Tribunal decision can be made to the divisional court. The decisions from the Tribunal are published on the Complaints & Enforcement section of RECO’s website.

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Lesson 3 | Page 1 of 11

Lesson 3: Professional Liability Insurance Program

This lesson provides an overview of the insurance program, why participation is obligatory, what it covers, and the types of coverages, as well as considerations, before admitting liability.

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Lesson 3 | Page 2 of 11

In this lesson, you will review the Professional Liability Insurance Program administered by RECO and its various coverages. You will also review what is not covered, and the requirements for reporting a claim. An important section of the lesson also discusses what to consider before admitting any liabilities to a claim. Upon completion of this lesson, you will be able to: • Describe the appropriate course of action a salesperson should follow in the event that a situation may lead to a claim or the possibility of a claim being made against them Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 3 | Page 3 of 11

In this lesson, you will be reintroduced to the required Professional Liability Insurance Program for salespersons, brokers. You will then review the types of coverage offered in the program and how they provide protection to both consumers and yourself.

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Lesson 3 | Page 4 of 11

Professional Liability Insurance Program Administered by RECO All real estate salespersons and brokers registered in Ontario must participate in the Professional Liability Insurance Program administered by RECO. RECO’s insurance program provides essential protection for you and your clients and customers through its Errors and Omissions, Consumer Deposit, and Commission Protection insurance coverage. The Errors and Omissions policy will, under most circumstances, provide you with a defence and, if necessary, make a payment on your behalf for matters involving your professional negligence. This insurance coverage for salespersons and brokers renews once each year, with payment due in mid-August. Payment may be completed through the MyWeb portal online. You should make it a practice to review the policy each year so you can familiarize yourself with the terms, and your obligations to the insurer. You will review the three types of coverage offered by the insurance program in detail: Errors and Omissions, Commission Protection, and Consumer Deposit. © 2021 Real Estate Council of Ontario

Lesson 3 | Page 5 of 11

Types of Coverage The Professional Liability Insurance Program offers three areas of coverage. The following three sections contain information about reviewing each type of coverage.

Errors and Omissions This coverage protects you from the consequences should you make an error, fail to do something that is required, or be accused of professional negligence during the course of a trade. The coverage itself is subject to the terms of the insurance policy.

Commission Protection This coverage protects you from loss of commission caused by real estate broker fraud, insolvency, theft, misappropriation, or wrongful conversion. Ontario is the only province in Canada to have this kind of coverage, as well as Social Engineering Fraud coverage (subject to prescribed limits per claim). Note: Social engineering can be defined as a misrepresentation of fact or an intentional, malicious, wilful, or fraudulent act undertaken by a third party that misleads you and directly results in a loss.

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Consumer Deposit This coverage protects consumers from loss of a deposit held by a registrant (for example, a brokerage). Coverage is subject to the same limits per claim and in the aggregate as commission protection. It also includes Social Engineering Fraud coverage (subject to prescribed limits per claim).

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Lesson 3 | Page 6 of 11

Key Details on Errors and Omissions Coverage This coverage protects you, should you make an error or omit information during the course of a trade. The policy may cover your defense, damages, and settlements in excess of your deductibles, if the error results in a claim. The policy covers mistakes, such as: • Forgetting an important clause in the agreement of purchase and sale, such as due diligence conditions • Entering the wrong property tax information in the listing agreement • Using an incorrect form • Under or over stating the value of a property

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Error or omissions when providing professional services. Another important aspect of the policy includes coverage for bodily injury and property damage in the event the consumer suffers a loss or injury as a result of a salesperson’s actions or lack thereof. There are exclusions from this policy. Some examples of situations where the policy does not provide coverage to the salesperson: • Acts, errors, and omissions that are fraudulent, dishonest, criminal, or malicious • Providing an opinion of value for financing or tax purposes • Providing services as a mortgage broker • Property management services, when greater than 35 per cent of either your gross revenue or that of your brokerage is derived from property management The limit of liability of a single claim and the annual limit is as per prescribed limits. A deductible will be levied for each claim that results in a payment for settlement or judgment, plus, if applicable, a further prescribed amount for each additional claim against the same insured member reported within the current and prior three policy periods that results in a payment for settlement or judgment under this or a prior policy. If you were to leave the real estate business for any reason (other than for disciplinary reasons) or if you choose to retire, your errors and omissions insurance policy continues to cover you, at no extra cost, starting with the date you left the business, for claims resulting from activities while you were registered (subject to the terms of the insurance policy).The current specific limits can be sourced at www.reco-claims.ca.

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Lesson 3 | Page 7 of 11

Key Details on Commission Protection Coverage This coverage protects you, should you experience loss of commission caused by real estate broker fraud, theft, misappropriation of funds, or insolvency. The policy also covers social engineering (subject to a prescribed sub-limit per claim), which can be defined as a misrepresentation of fact or an intentional, malicious, wilful, or fraudulent act undertaken by a third party that misleads you and directly results in a loss. Note that commission disputes are excluded from coverage under the policy.

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This program does not apply to claims while you are acting in the capacity of executor, trustee, guardian, conservator, etc., other than as a salesperson, a brokerage, or a broker of record. The current specific limits can be sourced at www.reco-claims.ca.

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Lesson 3 | Page 8 of 11

Key Details on Consumer Deposit Coverage This coverage provides protection to the consumer for loss of deposits caused by real estate broker fraud, theft, misappropriation of funds, or insolvency. It also includes social engineering (subject to a prescribed sub-limit per claim). This program does not apply to claims while acting in any capacity, for example, as executor, trustee, guardian, conservator, etc., other than as a salesperson, a broker, a brokerage, or a broker of record. The current specific limits can be sourced at www.reco-claims.ca.

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Lesson 3 | Page 9 of 11

What to Remember Before Admitting Liability It is an understandable and normal reaction to try to make amends when you think you have done something wrong. However, doing so when faced with a claim may compromise your insurance coverage, which could ultimately be worse for you and those you are working for.

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If you admit that you have made a mistake or offer to pay out of your own pocket for someone’s loss, you run the risk of jeopardizing your insurance coverage. The policy contains a clause that states that a salesperson shall not “voluntarily make any payment, assume any obligation, make any admission to any claimant, or incur any expense without the consent of the Insurer”. The first plan of action should be to seek the counsel of your broker of record and contact the claims adjuster (ClaimsPro LP) to discuss the details of your specific situation. For additional training on the Professional Liability Insurance Program administered by RECO, consider completing the RECO’s Insurance Program: A Partner in Protection course as part of your Mandatory Continuing Education program requirements in your next registration cycle.

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Lesson 3 | Page 10 of 11

Bill, an unrepresented buyer, purchases a property from homeowner James, who is also a salesperson. An agreement is prepared by James, which includes a home inspection condition. However, Bill chooses not to carry out the inspection and waives conditional protection. Following the closing, James receives a phone call from Bill, who is very upset. A roofing contractor has just inspected Bill’s new home and has identified several leaks in the roof. Bill calls James demanding to know why he was not informed of the condition of the roof prior to the purchase of the property. Bill threatens to sue and insists that James respond immediately. How should James respond to Bill? There are three options. There is only one correct answer.

1

James should tell Bill that he feels bad about the roof leaks and suggest that Bill file a claim under his homeowner’s policy. James should offer to pay the deductible portion of the claim amount.

2

James should tell Bill that he will discuss the matter with his broker of record. Bill should also speak to his lawyer about this matter to proceed further.

3

James should inform Bill that he included a home inspection condition in the agreement of purchase and sale and that Bill decided not to hire the home inspector and waived his condition and proceeded with the sale.

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Lesson 3 | Page 11 of 11

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Describe the appropriate course of action a salesperson should follow in the event that a situation may lead to a claim or the possibility of a claim being made against them There are four sections on this page with a summary of the key topics that were discussed in this lesson.

An obligation for all salespersons and brokers

It is required for all salespersons and brokers to participate in the Professional Liability Insurance Program administered by RECO to fulfill registration requirements. Failure to participate will result in not obtaining registration or suspension of registration.

An overview of the Professional Liability Insurance Program

The insurance program offers the most comprehensive insurance protection of its kind in Canada. It provides three types of coverage: Errors and Omissions, Commission Protection, and Consumer Deposit.

Key details about each type Professional Liability Insurance Program: of coverage • Errors and Omissions: This provides you with protection for errors and omissions committed in the course of your professional services. • Commission Protection: This provides protection for you from loss of commission caused by real estate broker fraud, misappropriation of funds, or insolvency. • Consumer Deposit: This is protection to the client or customer for loss of deposits caused by real estate broker fraud, misappropriation of funds, or insolvency.

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Admitting liability

You must never admit liability when faced with a claim, as this may compromise your insurance coverage. The policy requires you to report all claims and/or circumstances as soon as possible to the claims adjuster.

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Lesson 4 | Page 1 of 8

Lesson 4: Claims and Losses This lesson covers top causes of loss in rural, urban, and commercial sectors, the distribution of claims between types and values, and leading practices to avoid errors in the future.

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Lesson 4 | Page 2 of 8

This lesson will review some of the top claims that resulted in losses from the Professional Liability Insurance Program administered by RECO that have occurred in urban, rural, residential, and commercial sectors of Ontario’s real estate industry. The information in this lesson should give you an idea of how to conduct business in a manner that can help prevent incurring such losses and claims. Upon completion of this lesson, you will be able to: • Identify top causes of loss and ways in which a salesperson can improve their practice to prevent such errors Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented. © 2021 Real Estate Council of Ontario

Lesson 4 | Page 3 of 8

To introduce the claims that most commonly lead to losses, you will first review some statistics available from RECO in its Annual Report. This information can be used as an opportunity to help you reflect on your own practice, avoid losses, and mitigate any risks appropriately.

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Lesson 4 | Page 4 of 8

Key Statistics on Claims and Losses in all Sectors of the Industry The following statistics describe types of claims across various sectors of the industry that resulted in settlements made by the insurer to consumers. The following six sections contain examples of each graphic.

Urban

Rural

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Residential

Commercial

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Claims by transaction type

Claims by value of transaction

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Lesson 4 | Page 5 of 8

Leading Practices to Avoid and Prevent an Insurance Claim, I The following leading practices can help you avoid making common mistakes that can result in an insurance claim. Reviewing these practices will help you reflect on areas in your own practice which could be improved. The following four sections contain information about the leading practices on risk reduction.

Preparing specific clauses Prepare clauses specific to certain issues that can be inserted into your agreement of purchase and sale. Ensure that the wording is specific enough to address the issue and protect the client’s best interests.

Consulting with broker of record Consult your broker of record frequently to ensure that you are addressing all matters appropriately.

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Consulting with professionals Some transactions will be beyond your knowledge and expertise. In such cases, you should not hesitate to refer to third- party professionals who are able to provide the appropriate information and services.

Making checklists Create a checklist to help organize, prioritize, and ensure that you are on track and addressing all aspects of the listing and/or selling procedure of the transaction.

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Lesson 4 | Page 6 of 8

Leading Practices to Avoid and Prevent an Insurance Claim, II The following three sections contain additional information about the leading practices on risk reduction.

Using technology and other resources Some software programs and applications can help your practice and prevent you from making errors and missing information and critical dates. Examples include: • Electronic lockboxes • Virtual calendars reminders • GPS • Mobile printers • Electronic signatures

Continuing education A well-informed and educated salesperson is far more likely to avoid losses to their practice. Pay attention to areas of your practice that you believe you could improve upon. RECO has created many continuing education courses and they are a great source of information. Additionally, there are other educational resources available to you associated with: • The Real Estate Institute of Canada • Real estate boards and/or associations

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• Canada Mortgage and Housing Corporation • Specific contractors (for example: electricians, home inspectors, well-installers, lawyers, engineers, building inspectors, etc.)

Referrals Although you are registered to trade in the province of Ontario, there are times that a seller or a buyer may request your services for a specific geographic area, transaction, or type of property that is outside your realm of knowledge and experience. In these cases, it is best to decline the work and refer them to someone who does have the appropriate expertise.

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Lesson 4 | Page 7 of 8

Mark, a salesperson, listed a property for sale on the local listing service. The property was purchased by Anne, a broker, and she acted on her own behalf. Five months after the transaction was completed, Anne filed a complaint with RECO, stating that upon taking possession, her neighbour asked her to stop parking on their property and that she was parked illegally. Anne’s complaint letter included a copy of the listing and an advertising brochure stating, “Parking spaces: 3” and “The location of this south-facing rear yard provides unique three car parking”. Also included were two images of zoning maps for the property, which showed an arrow pointing to the subject parking spaces. Mark provided a response to RECO, stating that when his sellers purchased the property, the listing stated that it had three parking spaces. During their 10 years of ownership, the neighbours did not raise any objection or concerns with respect to parking on the right of way leading to the property’s garage. The circumstances led to a complaint to RECO and a claim that resulted in a settlement to Anne. How could Mark have prevented this error? There are three options. There is only one correct answer.

1

Mark should have spoken with the previous owners, including the neighbours, to get a thorough understanding of the property.

2

Mark should have investigated all aspects of the property and only include verified information in the listing and advertising brochure.

3

Mark should have advised Anne to further investigate the property herself rather than rely on the listing and advertising brochure.

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Lesson 4 | Page 8 of 8

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Identify top causes of loss and ways in which a salesperson can improve their practice to prevent such errors There are two sections on this page with a summary of the key topics that were discussed in this lesson.

Key statistics on claims and The statistics you reviewed on claims and losses can be used as a learning opportunity to educate yourself on various aspects of the industry. The losses in all sectors of the information can help you reflect on your own practice and work on areas you feel industry could be improved upon, so that you can avoid losses and mitigate any risks appropriately.

Leading practices to avoid errors

To continue building a successful real estate career, it is important to invest time and energy in your career development. Leading practices to continue your development and help you to avoid insurance claims and losses include the following: • Preparing specific clauses • Consulting with broker of record • Consulting with professionals • Making checklists • Using technology and other resources • Continuing education • Referrals

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Lesson 5 | Page 1 of 6

Lesson 5: Summary Practice Activities

This lesson provides a series of activities that will test your knowledge on the entire module.

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Lesson 5 | Page 2 of 6

The lesson contains summary decision points that will test your knowledge regarding the topics covered in this module on addressing non-compliance and complaints.

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Lesson 5 | Page 3 of 6

What are a salesperson’s rights if a complaint has been filed against them? There are four options. There are multiple correct answers. 1

The right to a brief and immediate response.

2

The right to seek legal advice and to be represented by counsel if necessary.

3

The right to privacy so that you will be the first and only person to know, giving you the option to include others.

4

The right to know the nature of the complaint to be able to respond to the allegations.

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Lesson 5 | Page 4 of 6

Raj, a salesperson, had listed a home for sale for his client Larry. Larry told Raj he did not want any appointments to be scheduled when his children were home alone after school. Raj wrote out these instructions and asked Larry to sign them. The instructions stated restrictions for weekdays limiting showings to 9 a.m. to 2 p.m. and 7 p.m. to 9 p.m. Rita, a salesperson working with a buyer client, had requested an appointment to show Larry’s property for Tuesday at 3:30 p.m. Raj replied to her request, stating that the property could not be shown at that time, but would be available 7 p.m. to 9 p.m. Rita made a second request to show the property on Thursday at 5 p.m. Again, Raj declined the request and asked if Rita would instead be able to show the property at 7 p.m. Raj did not receive a response from Rita. On Friday, Raj presented an offer to Larry which resulted in a sale of Larry’s property. Rita made a third request on Saturday morning, only to learn that the property had already been sold Friday evening. Rita and her buyer were very annoyed with the situation and believed that they were treated unfairly by Raj. She filed a complaint with RECO against Raj. RECO then notified Raj of the complaint. How should Raj proceed with his response to this complaint? There are four options. There are multiple correct answers.

1

Raj should assemble a record of text messages, emails, and phone calls that were made to communicate with Rita about appointment requests declined and alternate times that would be available.

2

Raj should call Rita and her buyer and apologize for not being able to schedule an appointment to view Larry’s property before it sold. He should suggest similar properties that are currently available.

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3

Raj should consult with his broker of record for support.

4

Raj should include a copy of the written instructions received from Larry regarding when the property could be shown.

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Lesson 5 | Page 5 of 6

Rashida, a salesperson, is showing various properties to her buyer clients, the Mendozas. Ultimately, the Mendozas decide to make an offer on one of the houses. They tell Rashida that the deciding factor was the large backyard, where they intend to install a pool. Rashida is not sure whether this would be allowed, but is worried that if the Mendozas do not make an offer soon, they may lose the property. How should Rashida proceed? There are four options. There are multiple correct answers.

1

Rashida should include a condition in the Mendozas’ offer, allowing them an opportunity to verify if a pool can be installed in the backyard.

2

Rashida should ask the current owners if they think a pool could be installed in the backyard and pass the information to the Mendozas.

3

Rashida should research similar homes in the area to check if they have pools and advise the Mendozas on what she discovers.

4

Rashida should take the Mendozas to the local Building Department – Municipal Office and allow them to make enquiries to learn whether or not a pool could be installed in the backyard prior to making an offer.

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Lesson 5 | Page 6 of 6

Congratulations, you have completed the lesson!

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Module Summary | Page 1 of 3

Module Summary

This lesson contains a summary of the entire module.

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Module Summary | Page 2 of 3

Congratulations, you have completed this module! This lesson will present a summary of Learning Objectives.

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Module Summary | Page 3 of 3

There are four sections on this page with a summary of the key topics that were discussed in this module.

Filing and Addressing Complaints

Whenever a complaint is filed with RECO, it will decide on the outcome. It may choose not to validate a complaint if there is insufficient information or it is not within RECO’s jurisdiction. Key statistics from RECO have given you an insight into the most common kinds of complaints received. You can use this knowledge to improve upon your practice by understanding how to avoid certain types of complaints. You should attempt to address any problems personally with those involved and only file a complaint with RECO if this is not possible or appropriate. If RECO notifies you that a complaint has been filed against you, you are responsible for responding to RECO to address it. Your response should be fulsome and include all relevant documentation and information regarding the issue. Completion of this lesson has enabled you to: • Understand the process to file a complaint against a registrant under RECO • Understand the appropriate course of action a salesperson should follow in case a complaint has been filed against them

Disciplinary Processes and Procedures

Having knowledge of RECO's possible disciplinary outcomes in respect to specific actions can help you understand (and avoid) the severity of certain practices. Disciplinary outcomes may include: • Receiving a warning • Taking educational courses • Paying a fine • Serving a prison sentence • Suspension or revocation of registration

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In the case that a salesperson has been given a proposal for suspension or revocation, they will have up to 15 days to bring the matter to the Licence Appeal Tribunal if they would like to dispute the matter. Completion of this lesson has enabled you to: • Understand RECO’s disciplinary processes and procedures

Professional Liability Insurance Program Administered by RECO

This comprehensive insurance program is a requirement for all salespersons, brokers, and brokerages. It offers three types of coverage: • Errors and Omission • Consumer Deposit • Commission Protection Understanding what the Professional Liability Insurance Program does and does not cover will help you to be more aware of your actions and avoid being the subject of a claim. If you are notified of a claim, you should not admit to liability until you have contacted the claims adjuster and spoken with your broker of record. Doing so ensures that you do not jeopardize your coverage. Completion of this lesson has enabled you to: • Describe the appropriate course of action a salesperson should follow in the event that a situation may lead to a claim or the possibility of a claim being made against them

Claims and Losses

Understanding the statistics on claims that resulted in loss from the Professional Liability Insurance Program can encourage you to reflect on and improve upon your own practice. Additionally, this lesson has provided you with several leading practices that you can use to avoid some of the most common types of claims that result in loss. Educating yourself will not only improve your practice but will also be an investment into the development of your career. Always rely on your broker of record for any additional support.

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Completion of this lesson has enabled you to: • Identify top causes of loss and ways in which a salesperson can improve their practice to prevent such errors

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V7.1

Module 6: Maintaining Registration Disclaimer: This is a reference document which contains pages from the Accessible eLearning module. You should complete the eLearning module to proceed to the next step. Please note that the accessible module on the LMS only contains the interactive pages and you need to go through the content of this document thoroughly to attempt the interactive activities in the module. Please use Adobe Acrobat Reader (Recommended version 9 or above) to navigate through this PDF. Real Estate Salesperson Program © 2021 Real Estate Council of Ontario. All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or in any means – by electronic, mechanical, photocopying, recording or otherwise without prior written permission, except for the personal use of the Real Estate Salesperson Program learner.

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Module 6: Maintaining Registration This module will review the guidelines and requirements set forth by RECO for salespersons and brokers to maintain and renew their registration. You will be given the opportunity to go through step-by-step explanations of various applications, as well as test your knowledge with different fictional scenarios meant to illustrate the importance of the topics discussed. Upon completion of this module, you will be prepared for the maintenance and renewal of your registration. After finishing this module, you must complete an assessment module to complete the course successfully. To check your understanding of this module, you must complete all the activities in the online module. While navigating through the online module, click the Legislation button to view laws and regulations related to this module. The contents of the thumbnails Accessible PDF.

and References from the module are added to support your learning throughout this

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Menu: Maintaining Registration

Number of Lessons

Lesson Number

9 Lessons

Lesson Name

Lesson 1

Maintaining Registration

Lesson 2

Registration Renewal

Lesson 3

Common Mistakes and Best Practices

Lesson 4

Registration Transfer

Lesson 5

Registration Termination

Lesson 6

Registration Reinstatement

Lesson 7

Broker Registration

Lesson 8

Summary Practice Activities Module Summary

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Lesson 1 | Page 1 of 8

Lesson 1: Maintaining Registration

This lesson describes the requirements needed for you to maintain your registration with RECO. This includes continuing education courses and information about the group insurance program administered by RECO. This lesson also explains what to do in the case of a change in information after obtaining registration.

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Lesson 1 | Page 2 of 8

Training as a real estate salesperson or broker does not end when registration is achieved. To ensure that all salespersons and brokers remain up to date in their knowledge, RECO requires registrants to complete continuing education to be eligible to renew their registration every two years. This lesson discusses what must be done during each two-year span to maintain registration. You will review the mandatory continuing education courses, the timeline for their completion, information about the Professional Liability Insurance Program administered by RECO, and what to do about a change in personal information. Maintaining a registration is vital to remain permitted to practice real estate in Ontario. Failure to complete the steps required or to file the renewal application correctly and on time could result in the loss of your registration. This lesson will ensure that you have the knowledge required to fulfill your obligations for the renewal process. Upon completion of this lesson, you will be able to: • Describe the requirements and procedures for a salesperson to maintain their registration • Describe the requirements and procedures for a broker to maintain their registration Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 1 | Page 3 of 8

Maintaining your registration with RECO requires the following: • Maintaining enrolment in the Professional Liability Insurance Program administered by RECO • Completing the registration courses phase for a salesperson in your first two years of registration, or completing the mandatory continuing education courses prior to subsequent registration renewals • Notifying RECO of changes to any information that was included in your application • Submitting a renewal application before the deadline

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Lesson 1 | Page 4 of 8

Insurance Requirements Whether a salesperson is in their first two-year registration cycle or beyond, they are required to participate in the Professional Liability Insurance Program administered by RECO in order to maintain their registration. This insurance program is provided by RECO and is the most comprehensive protection of its type in Canada. As you learned earlier in the course, this program provides insurance protection to salespersons in three major areas: 1. Errors and Omissions 2. Commission Protection 3. Consumer Deposit The Professional Liability Insurance Program works on a 12-month cycle, meaning it must be renewed every year prior to the due date established by RECO for the annual policy period, typically commencing September 1. If this deadline is missed, your registration will be suspended, and you will be prevented from trading until payment is made and registration is revived. Payment for participation in the insurance program must be done online and made prior to the mid-August due date.

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For more information on the Professional Liability Insurance Program coverage, review About the Professional Liability Insurance Program administered by RECO.

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Lesson 1 | Page 5 of 8

Education Requirements During the first two years of your initial registration, there are specific educational requirements that you are required to complete. Subsequent registration cycles have specific continuing education requirements. Brokers are also obligated to complete mandatory continuing education courses every two years. The following two sections contain information about the mandatory continuing education requirements for salespersons and brokers. Provisional registration Within your first two years of registration, you are required to complete this Post-Registration Compliance course, as well as two of the following elective courses: • Working in Real Estate: Rural, Recreational, Waterfront Properties • Working in Real Estate: Ownership Alternatives and Complexities • Real Estate as an Investment Strategy: Residential Properties • Real Estate as an Investment Strategy: Commercial Properties – Fundamentals • Real Estate as an Investment Strategy: Commercial Properties – Advanced Note: Real Estate as an Investment Strategy: Commercial Properties –Fundamentals is a pre-requisite for taking Real Estate as an Investment Strategy: Commercial Properties – Advanced. Courses may change from time to time.

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Permanent registration After your first renewal, and during every registration cycle, you are required to complete Mandatory Continuing Education (MCE) Program courses. There are both regulatory update (required) and elective courses to choose from. Presently the update courses are specific to either the residential or the commercial real estate sectors and are designed to keep you educated on legislation and regulation changes. RECO will transition from launching one update course every two years to releasing shorter update courses annually every January. The two annual update courses will come into effect when the new MCE program is introduced on January 1, 2023. The first group of salespersons and brokers who will need to complete two annual update courses will be those who have a registration cycle that starts after January 1, 2023, and expires after January 1, 2025. For example, if your registration cycle starts on May 10, 2023, and expires on May 10, 2025, you will need to complete two annual update courses. The first annual update course will be available on January 1, 2023, and the second annual update course will be available on January 1, 2024. The new annual update course will contain content of interest to all salespersons and brokers. RECO will continue to develop MCE electives that focus on either residential or commercial topics.

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All elective courses are designed to expand your knowledge and understanding on a variety of subjects. Course details can be found on MyWeb using your individual login information. Courses you can select from include: • Advertising Compliance • Business Analysis for Real Estate Professionals • The Guide to Brokerage Inspections • Business Planning • Introduction to Commercial Leasing • Environmental Site Assessments • FINTRAC Compliance • Home Inspections • RECO Insurance Program: A Partner in Protection • Mortgage Financing: Guiding Client Conversations • Multi-Residential Investment Properties • Residential Condominiums • Strategic Planning • Waterfront Properties You are required to complete a minimum number of courses. However, you may complete more courses than the minimum requirements. There is a fee to be paid for each two-year cycle. When registration is renewed for the current cycle, you can pay this fee and start taking courses for the next cycle. You may complete your MCE requirements at any time within your two-year registration cycle, but are

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encouraged to start early, and not leave them to the last minute. Failure to complete all required education courses by your renewal date will result in the inability to renew your registration.

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Lesson 1 | Page 6 of 8

Changes in Information When a salesperson or a broker has a change in the information that was included on their registration application, they are required to notify the Registrar within five days of the change. Failure to do so is in violation of REBBA and could lead to disciplinary measures. Changes that necessitate notifying the Registrar include:

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• A salesperson taking on a second form of income or being named a shareholder in a company after listing that they had no interest holdings in other businesses • A move of primary residence • A name change due to marriage or other reasons • Disclosure responses on the application (for example, bankruptcy, criminal charges) You should notify the Registrar through the MyWeb online portal if any of your contact information changes. Having correct contact information ensures receipt of notifications from RECO. This information can be changed online or by completing the Notice of Address Change form and submitting it to RECO. Other changes to registration information must be reported in writing. Various forms for use can be found on RECO’s website, such as the Notice of Change – Disclosure Amendment Form and the Notice of Name Change Form. In addition to changes in registration information, all brokerages must notify the Registrar in the event of a salesperson’s or a broker’s termination. The required forms and processes for these notifications can also be found on MyWeb.

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Lesson 1 | Page 7 of 8

Not every change in life requires that RECO be notified, only those that effect a salesperson or a broker when trading in real estate. Which of the following changes to a salesperson’s situation requires notifying RECO? There are five options. There are multiple correct answers.

1

A change in address

2

Purchasing a vacation property

3

Being named a shareholder in a spouse’s business when the registration stated no involvement with other businesses

4

Taking on a second job

5

Getting married and taking the spouse’s surname

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Lesson 1 | Page 8 of 8

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Describe the requirements and procedures for a salesperson to maintain their registration • Describe the requirements and procedures for a broker to maintain their registration There are two sections on this page with a summary of the key topics that were discussed in this lesson.

Salesperson requirements to maintain registration

There is an education requirement for new salespersons to complete required education courses. The courses must be completed within a two-year span of registration for the registration to be renewed. Additionally, latter cycles require the completion of RECO mandatory continuing education.

Salesperson and broker requirements to maintain registration

To maintain their registration, all salespersons and brokers must: • Maintain their participation in the Professional Liability Insurance Program administered by RECO • Pay all fees before the deadline • Complete mandatory continuing education courses • Report any changes to their information that is included in their registration to the Registrar within five days of the change

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Lesson 2 | Page 1 of 8

Lesson 2: Registration Renewal

This lesson describes the requirements needed for you to renew your registration with RECO. This lesson details the process a salesperson or a broker must go through for both the registration and the insurance program.

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Lesson 2 | Page 2 of 8

Your registration must be renewed every two years. This lesson will review what is needed for registration renewal. Any delays or incomplete actions can result in a denial of the renewal and prevent you from trading while you go through the reinstatement process. The best way to avoid this is to understand the requirements for renewal and to complete the process before the deadline. Upon completion of this lesson, you will be able to: • Describe the requirements and procedures for a salesperson or a broker to renew their registration Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 2 | Page 3 of 8

In addition to completing your Mandatory Continuing Education (MCE) courses, renewing a salesperson or a broker registration with RECO requires: • Completion of the renewal application and payment of the renewal fee via the MyWeb online portal • Enrolment in the Professional Liability Insurance Program administered by RECO You will review each of these items. A valid registration with RECO is required to trade in real estate, so it is important to make sure your registration does not lapse. Completing your renewal process before the deadline ensures that your ability to trade will not be interrupted.

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Lesson 2 | Page 4 of 8

The Renewal Application and Fee The renewal application process must be completed through MyWeb. It is important to make sure that each piece of the application is filled out correctly, as it will be reviewed and verified by your broker of record and RECO staff

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before being approved. You must also pay the applicable fee for the application to move forward. Once the application is approved, the certificate will be mailed to your brokerage and will be available on the MyRECO Certificate app. REBBA requires that the application for renewal be submitted before the deadline, but you may continue trading even if you have not received your registration certificate yet. As per the legislation, you need to provide proof of registration if asked, and should use the MyRECO certificate app, which provides current information to those inquiring.

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Lesson 2 | Page 5 of 8

Renewing via MyWeb In the registration renewal process, you must have everything completed and submitted before your registration expiry date. It is your responsibility to complete all requirements of the renewal process on time, but, as a courtesy, RECO sends out regular renewal reminder emails. It is important to note that there is no paper renewal process and all renewals must be done through the MyWeb portal. MyWeb will automatically log completion of education courses and participation in the insurance program, so there is no need to submit that information elsewhere.

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Lesson 2 | Page 6 of 8

Professional Liability Insurance Program The Professional Liability Insurance Program runs on a 12-month cycle that renews each year, typically coverage runs from September 1 until August 31 of the following year. All payments must be up-to-date and can be made via the MyWeb online portal. Please check permitted payment methods, as they may change from time to time. Failure to make the payment by the deadline will result in a suspension of coverage and an inability to trade in real estate until your registration is revived. In the event of a suspension, you must make a payment of the outstanding annual insurance premium and any applicable administration fee, after which point the suspension can be lifted for the remainder of the insurance cycle. You will receive an email from RECO confirming that the suspension has been lifted and your registration has been revived.

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Lesson 2 | Page 7 of 8

Pamela is a broker who changed email addresses this year and forgot to update the information on her profile on MyWeb. Unfortunately, that meant she missed her reminder emails from RECO about her registration renewal. She updates her email in MyWeb just prior to her renewal application. What should Pamela do to renew her registration on time? There are four options. There is only one correct answer.

1

Fill out her application for renewal on MyWeb and print it to mail it to RECO with a cheque for the application payment

2

Visit the RECO office with the completed application and payment

3

Submit her renewal via MyWeb and pay online

4

Wait for the renewal deadline to pass and then file a new registration application

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Lesson 2 | Page 8 of 8

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Describe requirements and procedures for a salesperson or a broker to renew their registration Here is a summary of the key topics that were discussed in this lesson: • There is an application fee accompanying the renewal process • All renewal applications must be completed through the MyWeb online portal • Insurance payment requirements must be met prior to the insurance renewal deadline • The 12-month Professional Liability Insurance Program cycle does not coordinate with the two-year registration cycle

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Lesson 3 | Page 1 of 6

Lesson 3: Common Mistakes and Best Practices

This lesson details leading practices you should follow to avoid and correct common mistakes. This lesson will help you make successful choices throughout your career.

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Lesson 3 | Page 2 of 6

This lesson describes the common mistakes related to registration and the leading practices to avoid and correct them. By emulating the behaviours of industry leaders, you can better ensure your own success. Upon completion of this lesson, you will be able to: • Identify the frequent misunderstandings and mistakes related to the renewal process • Implement leading practices related to maintaining registration • Implement leading practices related to renewal process Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 3 | Page 3 of 6

One of the best resources you have at your disposal is the experience of those who came before you. This allows you to learn from their mistakes and emulate their leading practices. You will now examine this concept in greater detail.

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Lesson 3 | Page 4 of 6

Common Misunderstandings and Mistakes Many of the common misunderstandings and mistakes related to the renewal process that you may encounter are avoidable by an understanding of the concepts covered in this compliance course. Here are a few common mistakes that you should avoid: • Failing to understand the exact two-year period of the registration cycle and its expiry date • Not paying attention to upcoming deadlines, which could lead to not having enough time to complete mandatory continuing education courses or missing your renewal deadline • Failing to pay attention to the email reminders • Not understanding how to complete the online renewal process or assuming that there is a paper renewal process • Failing to submit the annual insurance payment by the due date • Assuming the insurance cycle lines up with registration renewal

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Lesson 3 | Page 5 of 6

Leading Practices for Registration Maintenance and Renewal Following are some leading practices that can help make it easier for you to maintain and renew your registration. The following five sections contain information about leading practices for maintaining and renewing registration. Up-to-date planner or calendar Using a planner or calendar, whether paper or electronic, can help remind you of important dates. However, a calendar only works if it is kept current and checked regularly.

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Course scheduling Decide on desired courses at the beginning of each registration cycle and schedule when to complete them to avoid trying to schedule them near the end of your registration cycle.

MyWeb Become familiar with the MyWeb online portal, as many forms and payments must be done through this platform. Ensure your email address is current in the portfolio of MyWeb.

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RECO notifications You must notify RECO of changes to your information within five days.

RECO reminder emails Be attentive to email notifications from RECO for renewal of registration. Be attentive that the email could arrive in your spam folder.

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Lesson 3 | Page 6 of 6

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Identify common mistakes and leading practices for a salesperson or a broker related to the renewal process and maintaining registration There are two sections on this page with a summary of the key topics that were discussed in this lesson. Common misunderstandings and mistakes related to the renewal process include: Frequent misunderstandings • Failing to understand the exact two-year period of the registration cycle and its expiry date and mistakes related to the • Missing upcoming deadlines, which could lead to not having enough time to complete mandatory continuing education courses or missing their renewal deadline renewal process • Failing to pay attention to the email reminders • Assuming that there is a paper renewal process or not completing the online renewal process • Failing to make insurance payments by the due date • Assuming that the insurance cycle lines up with registration renewal You must be sure to employ leading practices to avoid these mistakes.

Leading practices related to maintaining and renewing registration

Leading practices related to maintaining and renewing registration include: • Creating a plan and maintaining a calendar for deadlines and mandatory continuing education courses • Remaining in compliance with REBBA and practicing professional behaviour • Ensuring all insurance payments are made in full and on time • Meeting the mandatory education requirements before the renewal deadline

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• Paying attention to the RECO reminder emails

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Lesson 4 | Page 1 of 8

Lesson 4: Registration Transfer

This lesson describes the process of transferring to another brokerage. It details the information required to send to the Registrar and the timeline within which the transfer must take place.

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Lesson 4 | Page 2 of 8

Transferring between brokerages is a common practice in the real estate industry. Situations change and sometimes that means you need to leave one brokerage and move to another. Perhaps you have moved to a new city or you simply find another brokerage that better suits your needs. This lesson describes the requirements for completing a transfer successfully. Upon completion of this lesson, you will be able to: • Describe the requirements and procedures for transfer of registration • Understand the application and fees involved in the transfer process Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 4 | Page 3 of 8

Transferring between brokerages involves the following steps: • Terminating your registration with your current brokerage • Notifying RECO • Completing the transfer process with your new brokerage You will now learn about the termination and transfer process in detail.

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Lesson 4 | Page 4 of 8

Termination of Existing Registration Before Transfer Before your transfer process can be completed, you must terminate your registration with your current brokerage. The following four sections contain information about the termination of an existing registration before transfer. A salesperson can only be employed by one brokerage at a time The first step in the transfer process is to terminate your employment with your current brokerage. You must notify your brokerage with an effective termination date.

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A salesperson must notify RECO of a transfer Your broker of record or your branch manager must submit notice of your transfer to RECO through the MyWeb portal.

The online termination process is not the same as the online transfer process An online termination can be completed by the outgoing broker of record or the branch manager, or in combination with the transfer process by the receiving broker of record or the branch manager. The information needed to complete the process is: • Full name and registration number of the employee being terminated • Written notice of termination issued either by the terminated employee or the brokerage, depending on who initiated the termination • Date the written notice of termination was submitted, either by the terminated employee or the brokerage • Effective date of termination, as indicated in the written notice of termination

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Transactions and agreements do not transfer between brokerages Remember that any trading activity is in the name of the brokerage. This includes listing agreements, buyer representation agreements, agreements of purchase and sale, and all other documentation up to and including the termination date. They do not transfer with you unless it is stated in the employment agreement and the seller or the buyer agrees to the transfer of the trade.

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Lesson 4 | Page 5 of 8

Nikolas is transferring to another brokerage in his city, but still has several open transactions at his current brokerage. He knows that he cannot bring all of his agreements and documents with him when he transfers because of the details of his employment agreement. He needs to know which documents he can take and which he should pass on to a trusted colleague before his termination date. Which of the following documents can Nikolas transfer to the new brokerage without consent from another party? There are four options. There is only one correct answer.

1

Seller representation agreements

2

Written notice of termination

3

Written notice of transfer

4

Buyer representation agreements

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Lesson 4 | Page 6 of 8

Transfer Basics A salesperson’s transfer between brokerages can be completed by any broker of record or branch manager through an online process. You do not have access to this process. However, you can expedite the process by gathering all the information needed for the transfer and having it ready for the broker of record or the branch manager. Transfers can only occur within 60 days from the effective date of termination from the previous brokerage to the start date of the brokerage you are transferring to. If you fail to meet this requirement, you must file an application for reinstatement. You will not be allowed to trade until the reinstatement process is complete.

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Lesson 4 | Page 7 of 8

Transfer Application and Fee You must adhere to the 60-day period within which you need to arrange completion of the transfer via MyWeb, with your new brokerage. The following six sections contain information about the transfer application and associated fee. Full name and registration number You can find your registration number on the “My Profile” page of MyWeb.

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Copy of the written notice of termination The written notice of termination should be submitted to your current brokerage, but a copy must also be provided to your new brokerage.

Effective date of termination This information is important because it marks the start of the 60 days you have to complete the transfer process.

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Start date for the registration transfer This information should be agreed upon with your new brokerage.

Transfer fee There is a fee associated with the transfer process, which may be paid to RECO either by you or your new brokerage.

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Knowledge of any restrictions or conditions This information should be provided to your new brokerage and includes voluntary restrictions or conditions entered into with the registration, such as outstanding debts and pending criminal charges.

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Lesson 4 | Page 8 of 8

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Describe the requirements and procedures for transfer and termination of registration Here is a summary of the key topics that were discussed in this lesson: • The transfer process requires steps to be taken by the employee, the previous brokerage, and the new brokerage • A broker of record or a branch manager can complete the transfer process through the MyWeb online portal • No client contracts or agreements transfer with the employee to the new brokerage unless otherwise stated in the employment agreement • All transfers must be completed within 60 days • A fee is associated with the transfer process

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Lesson 5 | Page 1 of 7

Lesson 5: Registration Termination

This lesson details the process you must complete to terminate a registration. This lesson also describes the termination application and the process of notifying the Registrar when leaving the industry or region.

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Lesson 5 | Page 2 of 7

Termination can have a negative connotation, often associated with an employee being fired. However, that is not the usage of the term at RECO. While termination can still refer to that, it also refers to a salesperson or a broker terminating their employment with one brokerage to move to another or for the purpose of leaving the industry. On the brokerage’s side, a salesperson’s or a broker’s registration could be terminated because the brokerage is closing. Upon completion of this lesson, you will be able to: • Understand the details of termination of existing registration and the requirement to submit a written notice of the termination to the Registrar • Understand what is required for the termination application • Provide an overview of the Professional Liability Insurance Program when leaving the profession Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 5 | Page 3 of 7

Terminating your registration does not have to be a complicated process. You will review the following: • Terminations initiated by the salesperson or the broker • Terminations initiated by the brokerage • Insurance coverage options after termination or leaving the industry

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Lesson 5 | Page 4 of 7

Notice of Termination The responsibility of who must provide the written notice of termination lies with whomever is initiating the termination. If you are leaving the industry or moving to another brokerage, you must provide the notice to your current brokerage. However, if a brokerage is terminating a salesperson or a broker, the brokerage is responsible. Only a broker of record or a branch manager may complete the online application for termination. The following two sections contain information about termination notices. Salesperson or broker A salesperson or a broker must provide written notice of termination to the brokerage through which they are employed. This notice must include an effective termination date and must be completed online within five days of the date listed within.

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Brokerage A brokerage must provide written notice of termination to their salesperson or broker. This notice must include an effective termination date and must be completed online within five days of the date listed within.

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Lesson 5 | Page 5 of 7

Insurance Coverage upon Leaving the Profession When leaving the profession, the Professional Liability Insurance Program administered by RECO will continue to cover you through the end of the current cycle. For example, if you leave the profession in April, you would still be covered through the end of August when your coverage would have to be renewed if you were still trading. In addition, your Professional Liability Insurance Policy continues to cover you, at no extra cost, starting the date you leave the business for claims resulting from activities while you were registered, subject to the terms of the insurance policy.

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Lesson 5 | Page 6 of 7

Salesperson Nagamo decides to terminate his registration and become a stay-at-home parent when he and his wife have a second child. What is Nagamo required to do in order to terminate his registration? There are four options. There are multiple correct answers.

1

Provide written notice of termination to his brokerage, including a termination effective date.

2

Provide a copy of his termination notice to RECO online within five days of his termination effective date.

3

Provide a copy of his termination notice to RECO online before his termination effective date.

4

Provide written notice of termination to the Professional Liability Insurance Program provider.

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Lesson 5 | Page 7 of 7

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Describe the requirements and procedures for transfer and termination of registration There are two sections on this page with a summary of the key topics that were discussed in this lesson.

Termination initiated by a salesperson or a broker

A salesperson or a broker terminating their employment for any reason should submit a written notice of termination to the brokerage, which includes an effective termination date. A copy of the notice must be provided to the Registrar online within five days of the enclosed date.

Termination initiated by a brokerage

A brokerage terminating a salesperson’s or a broker’s registration for any reason should submit a written notice of termination to the employee, which includes an effective termination date. A copy of the notice must be provided to the Registrar online within five days of the effective date.

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Lesson 6 | Page 1 of 6

Lesson 6: Registration Reinstatement

This lesson describes what happens during the reinstatement process if you were to take a break from the industry. This lesson also explains what is required by the Registrar and the application, as well as the insurance cycle to ensure coverage.

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Lesson 6 | Page 2 of 6

Any break in your registration lasting longer than 60 days requires reinstatement. This lesson describes what happens if you need more time to transfer between brokerages or if you wish to take a break from registration, as well as details of the reinstatement process. Upon completion of this lesson, you will be able to: • Understand the duration of registration and the requirement to renew the registration at the end of the cycle • Navigate the application for reinstatement and fees • Understand the insurance premium payment requirements Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 6 | Page 3 of 6

You will now review the reinstatement process, which will help you understand how to be reinstated after a break from registration.

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Lesson 6 | Page 4 of 6

A Break in Registration At some point during your career, you may need to take a break from trading for an extended period of time and surrender your registration. Common examples of why you might take an extended break include: • Taking time off to help a family member with a newborn or a medical problem • Accompanying a spouse on a temporary job placement outside of Ontario • Taking a medical leave • Taking a sabbatical In the event of a break lasting longer than 60 days, or if you permit your registration to lapse by not completing the renewal process, RECO requires that you go through the reinstatement process before being allowed to trade again. The following six sections contain information about the reinstatement process after breaks lasting longer than 60 days or a lapse in registration. Reinstatement application An individual taking a break in registration lasting beyond the 60-day limit, or whose registration has lapsed for failure to renew, must submit a full application in order to be reinstated.

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Criminal record check As in the initial registration application, a criminal record check is required of any applicant whose registration has been terminated or lapsed more than 60 days.

Mandatory continuing education As with the renewal process, the reinstatement process requires that all applicants complete all required education courses prior to filing the application.

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Reinstatement fee Along with the completed application, both the application fee and the filing fee must be paid.

Professional Liability Insurance Program All salespersons and brokers must participate in the Professional Liability Insurance Program administered by RECO. When RECO reviews the application for reinstatement and is ready to accept, they will issue an insurance invoice (if applicable) that must be paid prior to registration being granted. The insurance policy period is September 1 – August 31. If the insurance premium had previously been paid and the individual is now applying for reinstatement in the same policy period, no additional payment is required as insurance participation is in place.

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Trading Those applying for reinstatement may not trade until notification from RECO confirming that the individual has registration reinstated.

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Lesson 6 | Page 5 of 6

When submitting the application for reinstatement, which items are required? There are five options. There are multiple correct answers.

1

Canadian Criminal Record and Judiciary Matters Check

2

Notification to RECO

3

Completion of education courses

4

Payment of application filing fee

5

Payment of the application review fee

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Lesson 6 | Page 6 of 6

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Describe the requirements and procedures for reinstatement of registration Here is a summary of the key topics that were discussed in this lesson: • The requirements of a maximum 24-month break in registration • The application for reinstatement and fees • The insurance premium payment requirements

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Lesson 7 | Page 1 of 7

Lesson 7: Broker Registration

This lesson describes the optional broker registration, including requirements and conditions. The lesson details who this option is best suited for and why you may want to pursue it. The registration application will also be discussed to provide full preparedness.

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Lesson 7 | Page 2 of 7

Changing your career path from a salesperson to a broker is a big decision. This lesson explains why you might want to make that choice and the factors involved in how to get there. Upon completion of this lesson, you will be able to: • Understand the requirements that must be met to become a broker • Easily navigate the application process • Identify the conditions of registration as a broker Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

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Lesson 7 | Page 3 of 7

Becoming a broker does not have to be intimidating. This lesson will review the process and provide you with the tools you need to succeed. If you meet all the requirements and want to move forward in your career, becoming a broker may be a preferred choice for you.

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Lesson 7 | Page 4 of 7

Broker Requirements Becoming a broker allows a salesperson to open their own brokerage and be the broker of record, as well as having the ability to hire employees.

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To become a broker, there are a few requirements that you must meet. You must: • Be at least 18 years of age • Be a resident of Canada • Have been a salesperson for at least 24 of the 36 months immediately preceding the application, or have experience that, in the opinion of the Registrar, is equivalent • Participate in the Professional Liability Insurance Program administered by RECO • Have paid all fees associated with the broker application process • Successfully complete all education courses as designated by the Registrar • Possess a good financial and personal conduct background • Complete the application process

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Lesson 7 | Page 5 of 7

Registration Application and Fees As with any RECO application process, the broker registration process follows a standard formula that includes submitting the application, paying the fee, and submitting a criminal background check. The following three sections contain information about the broker application process. Application The broker application form can be found on the MyWeb online portal. Refer to the MyWeb for submission requirements.

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Fee The broker application fee should be included in the application package. This includes the registration renewal fee if the application is processed at the time of renewal. If processed at any other time during a registration cycle, only the application renew fee is required. The payment must be included with the application package and not paid online.

Canadian Criminal Record and Judicial Matters Check A Canadian Criminal Record and Judicial Matters Check is required for the shift from salesperson to broker, just as when a salesperson submits a reinstatement application after taking a break from the industry that exceeds the 60-day window. Checks can take a while to process.

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Lesson 7 | Page 6 of 7

Franziska has been a salesperson for nine years and has been given the opportunity to become the manager for a branch office of the brokerage she currently works for, on the condition that she becomes a broker. What should Franziska do next? There are six options. There are multiple correct answers.

1

Complete and submit her broker application

2

Pay the renewal fee

3

Pay the review fee

4

Complete her mandatory continuing education courses

5

Complete education course designated by RECO

6

Complete her Canadian Criminal Record and Judicial Matters Check

© 2021 Real Estate Council of Ontario

Lesson 7 | Page 7 of 7

Congratulations, you have completed the lesson! Completion of this lesson has enabled you to: • Describe the process steps and requirements for a salesperson to pursue the optional broker registration Here is a summary of the key topics that were discussed in this lesson: All salespersons who wish to pursue broker status must: • Complete the application process and pay the associated review fee • Pass the Canadian Criminal Record and Judicial Matters Check • Meet the following requirements: o Be at least 18 years of age o Be a resident of Canada © 2021 Real Estate Council of Ontario

o Have been a salesperson for at least 24 of the 36 months immediately preceding the application, or have experience that, in the opinion of the Registrar, is equivalent o Participate in the Professional Liability Insurance Program through RECO o Have paid all fees associated with the broker application process o Successfully complete all education courses as designated by the Registrar o Possess a good financial and personal conduct background o Complete the application process

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Lesson 8 | Page 1 of 5

Lesson 8: Summary Practice Activities

This lesson provides a series of activities that will test your knowledge on the entire module.

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Lesson 8 | Page 2 of 5

The lesson contains summary decision points that will test your knowledge regarding the topics covered in this module on compliant practises of a salesperson during the initial stages of the trade.

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Lesson 8 | Page 3 of 5

Two salespersons, Miranda and Carlos, go for dinner together after work. Miranda has been Carlos’s mentor since he first registered as a salesperson. They toast to Carlos’s recent registration renewal. During their conversation, Miranda mentions that Carlos’s registration requirements will change now that he is through his first renewal. Which of the following is the correct mandatory continuing education requirement for Carlos now that he has completed his first two years of registration? There are four options. There is only one correct answer.

1

Complete two update courses and one elective by the current cycle’s deadline

2

Complete one update course and three elective courses by the current cycle’s deadline

3

Complete one update course and two elective courses by the current cycle’s deadline

4

Complete all six mandatory continuing education courses by the current cycle’s deadline

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Lesson 8 | Page 4 of 5

Rumiko has worked as a salesperson for the same brokerage for several years, but is moving to a different city a few hours away and has decided to transfer to a brokerage there. She submits her written notice of termination to her current brokerage with an effective date of September 12. Because of the move, she decides to take some time off to get settled before starting her new position. How many days does Rumiko have to finalize her transfer from September 12? There are three options. There is only one correct answer.

1

60

2

55

3

30

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Lesson 8 | Page 5 of 5

Congratulations, you have completed the lesson!

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Module Summary | Page 1 of 3

Module Summary

This lesson contains a summary of the entire module.

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Module Summary | Page 2 of 3

Congratulations, you have completed this module! This lesson will present a summary of Learning Objectives.

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Module Summary | Page 3 of 3

There are seven sections on this page with a summary of the key topics that were discussed in this module.

Maintaining Registration

There are several things you must do within each two-year registration cycle so that you are ready for renewal when the time comes and can maintain your registration. This includes participation in the Professional Liability Insurance Program administered by RECO and the education requirements, which differ depending on whether you are in your initial two-year cycle or a later one. Maintaining registration is essential for all salespersons and brokers to continue with any and all trading activities. Completion of this lesson has enabled you to: • Describe the requirements and procedures for a salesperson or a broker to maintain their registration

Registration Renewal

Registration renewal is required at the end of every two-year cycle. You must complete the application and pay the renewal fee by the deadline in order to continue trading without interruption. Completion of this lesson has enabled you to: • Describe requirements and procedures for a salesperson or a broker to renew their registration

Common Mistakes and Leading Practices

Being aware of, and familiar with, the common mistakes and leading practices of your industry can help you avoid making those same mistakes. It can also help you to establish good habits to promote efficiency and productivity. Completion of this lesson has enabled you to: • Identify common mistakes and leading practices for a salesperson or a broker related to the renewal process and maintaining registration

Registration Transfer

Registration transfers take place all the time in the real estate industry, so it is important to know what is required. Though only a broker of record or a manager can perform a transfer, you should be familiar with the process and be aware that you must complete the

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transfer within 60 days of terminating your registration with your current brokerage. Completion of this lesson has enabled you to: • Describe the requirements and procedures for transfer and termination of registration

Registration Reinstatement

Registration reinstatement is the process you are required to go through after any break in registration lasting longer than 60 days or if your registration lapses (not renewed by the expiry date). This requires a reinstatement application. It is important to know the details of the reinstatement process so you can be prepared if you ever need to take a break in registration for any reason or are unable to renew on time. Completion of this lesson has enabled you to: • Describe the requirements and procedures for reinstatement of registration

Registration Termination

The registration termination process is one that every salesperson and broker will go through at some point. When transferring from one brokerage to another, the registration with your current brokerage must be terminated. It is also the process for leaving the industry. Completion of this lesson has enabled you to: • Describe the requirements and procedures for transfer and termination of registration

Broker Registration

Broker registration is the process that any salesperson must go through in order to achieve broker status. It is the natural next step for many looking to advance their careers in the real estate industry. Completion of this lesson has enabled you to: • Describe the process steps and requirements for a salesperson to pursue the optional broker registration

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