BC Real Estate Trading Services Course Ethics and Professional Standards — Questions and Answers
Question 1: Under RESA, what is a real estate licensee's primary duty?
- To maximize the sale price for their client
- To act in the best interests of the client while treating all parties honestly and with reasonable care and skill (Correct answer)
- To complete the transaction as quickly as possible
- To earn the highest possible commission
Correct answer: To act in the best interests of the client while treating all parties honestly and with reasonable care and skill
A licensee's primary duty is to act in the best interests of their client while also treating all parties to the transaction honestly and with reasonable care and skill. This dual obligation means that while the licensee advocates for their client, they must not deceive or act unfairly towards the other party.
Question 2: What is 'dual agency' and what are its restrictions in BC?
- When two agents work together on a transaction
- When one licensee represents both the buyer and seller in the same transaction, which is now prohibited in BC (Correct answer)
- When an agent represents two buyers bidding on the same property
- When a brokerage has offices in two cities
Correct answer: When one licensee represents both the buyer and seller in the same transaction, which is now prohibited in BC
Dual agency (now called 'limited dual agency') has been prohibited in BC since June 2018. A single licensee cannot represent both the buyer and the seller in the same transaction. If a buyer client is interested in a property listed by their agent, the agent must refer one party to another licensee. This protects both parties from conflicts of interest.
Question 3: What are a BC real estate licensee's obligations regarding the disclosure of material facts?
- Only disclose information specifically requested by the buyer
- Disclose all known material facts that could affect a reasonable buyer's decision, including latent defects known to the licensee (Correct answer)
- Only disclose information listed on the MLS listing
- Only disclose positive information about the property
Correct answer: Disclose all known material facts that could affect a reasonable buyer's decision, including latent defects known to the licensee
Licensees must disclose all known material facts that could reasonably affect a buyer's decision to purchase or the price they would offer. This includes latent (hidden) defects, environmental issues, legal restrictions, and neighbourhood factors. Failure to disclose material facts can result in disciplinary action and civil liability.
Question 4: What must a real estate licensee do with a deposit received from a buyer?
- Deposit it into their personal bank account
- Place it in the brokerage's trust account in accordance with RESA and the brokerage's policies, within the prescribed time (Correct answer)
- Hold the cash in the office safe until closing
- Give it directly to the seller
Correct answer: Place it in the brokerage's trust account in accordance with RESA and the brokerage's policies, within the prescribed time
All deposits must be placed in the brokerage's trust account within the time prescribed by RESA (generally within one banking day). Trust funds must be kept separate from the brokerage's operating funds. Mishandling trust funds is one of the most serious violations a licensee can commit and can result in licence revocation.
Question 5: What constitutes 'conflict of interest' for a real estate licensee in BC?
- Having a personal dislike for the other party
- Any situation where the licensee's personal interests, or interests of another client, compete with the interests of the client they are serving (Correct answer)
- Working for a competing brokerage
- Selling a property in a neighbourhood where they live
Correct answer: Any situation where the licensee's personal interests, or interests of another client, compete with the interests of the client they are serving
A conflict of interest arises when a licensee's personal interests (e.g., purchasing the property themselves) or the interests of another client compete with their current client's interests. Licensees must identify, disclose, and manage conflicts. Examples include buying a client's listing, representing competing buyers, or having a financial interest in the transaction.
Question 6: What is 'phantom' or 'shadow' bidding and why is it prohibited?
- Submitting a bid online rather than in person
- Creating fictitious offers to drive up the price or pressure a buyer into making a higher offer, which is fraudulent and violates RESA (Correct answer)
- Bidding on a property through a corporation rather than personally
- Submitting an offer after the listing has expired
Correct answer: Creating fictitious offers to drive up the price or pressure a buyer into making a higher offer, which is fraudulent and violates RESA
Phantom bidding involves fabricating non-existent offers to create a false sense of competition and drive up the price. This is illegal and constitutes fraud. Licensees who engage in or assist with phantom bidding face disciplinary action, licence revocation, and criminal prosecution. All offers must be genuine and verifiable.
BC Real Estate Trading Services Course Ethics and Professional Standards
Under RESA, what is a real estate licensee's primary duty?