C1 M5 Introducing the Real Estate and Business Brokers Act Print V2 PDF

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C1 M1 Introducing the Real Estate Profession Print V2 C1 M1 Introducing the Real Estate Profession Print V2 C1 M1 Introducing the Real Estate Profession Print V2...

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Module 5: INTRODUCING THE REAL ESTATE AND BUSINESS BROKERS ACT (REBBA) 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 ©2019 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.

©2019 Real Estate Council of Ontario

Module 5: INTRODUCING THE REAL ESTATE AND BUSINESS BROKERS ACT (REBBA) The Importance of Understanding REBBA All brokerages, brokers, and salespersons must be registered under REBBA in order to trade in real estate and must comply with the legislation that defines the duties and obligations of the profession. REBBA requires the broker of record to ensure the brokerage and all employees comply with REBBA, and a salesperson is obligated to ensure their activities do not cause their brokerage to be in contravention of any obligation. As a brokerage is legally responsible for the actions of all its brokers and salespersons, assistance needed while carrying out any trading activities should be obtained from the brokerage’s broker of record or manager. This module gives focus to understanding: • Disclosure requirements to become registered as a salesperson • Requirements under REBBA related to ensuring appropriate conduct of a salesperson and brokerage • How the Code of Ethics is the underlying principle for all trading activities The module also provides opportunities to apply key sections of REBBA to real-world scenarios. But first, this lesson provides a brief background about the history of REBBA. To check your understanding of this module, you must complete all the activities in the online module.

©2019 Real Estate Council of Ontario

While navigating through the online module, click the Legislation button to view laws and regulations related to this module. While navigating through the online module, click the KMS button to access the Knowledge Management System or visit the Module Resources to find the list of all the KMS assets for this module. The contents of the thumbnail throughout this Accessible PDF.

and References from the module are added to support your learning

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Menu: INTRODUCING THE REAL ESTATE AND BUSINESS BROKERS ACT (REBBA) Number of Lessons Lesson Number Lesson 1 Lesson 2 Lesson 3 Lesson 4 Lesson 5 Lesson 6 Lesson 7 Lesson 8

9 Lessons Lesson Name Regulatory Governance for the Profession Prohibitions Re: Practice Registration Complaints, Inspections, and Discipline Conduct and Offences The Code of Ethics – Providing Services The Code of Ethics: Upholding Compliance and Professionalism Summary Practice Activities Module Summary

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Lesson 1 | Page 1 of 8

Lesson 1: Regulatory Governance for the Profession

This lesson introduces the legislation that regulates the real estate profession, the Real Estate and Business Brokers Act and associated Regulations (collectively known as REBBA). REBBA consists of the legislation (“the Act”) and five associated Regulations, three of which impact a salesperson. The Regulation containing the Code of Ethics is highlighted.

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Lesson 1 | Page 2 of 8

This lesson introduces the Real Estate and Business Brokers Act (REBBA), which includes the legislation (“the Act”) and associated Regulations. The Act details the legislative requirements for a brokerage, broker of record, broker, and salesperson when trading in real estate. This module also focuses on one of the associated Regulations, the Code of Ethics (“the Code”). The Code establishes the minimum standards of conduct for all registrants. Compliance with the Act and associated Regulations is part of a registrant’s day-to-day activities. The lesson also demonstrates the importance of understanding these requirements and ensuring trading activities comply with REBBA. Upon completion of this lesson, you will be able to: • Describe the significance of the Act and the impact it has on salespersons • Describe the significance of the Code of Ethics and the impact it has on salespersons

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Lesson 1 | Page 3 of 8

History of REBBA Regulation of the real estate profession dates to 1930 when the Government of Ontario introduced the first Real Estate Brokers Act. As real estate ownership expanded, the opportunities for real estate brokerages also increased. As the profession grew, the Act underwent several changes, most notably the provisions for mandatory education in 1967 and additional education requirements after registration, in 1988. In the earlier versions of the Real Estate Act, there was no Code of Ethics which meant only members of the Canadian Real Estate Association (CREA) were governed by the CREA Code of Ethics. In 1997, RECO introduced its own Code of Ethics that applied to all registrants, not just those who belonged to organized real estate. The legislation currently in effect, Real Estate Business Brokers Act and associated Regulations collectively referred to as “REBBA”, was introduced in 2002 and enacted on March 31, 2006. REBBA consists of the statute (“the Act”) and five Regulations, three of which have a direct impact on registrants. The Real Estate Council of Ontario (RECO) administers the Act on behalf of the Ontario government.

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Lesson 1 | Page 4 of 8

Familiarity with the Act and Associated Regulations REBBA consists of the Act (the legislation) and five associated regulations, three of which, also known as primary regulations, will have a direct impact on the activities of a brokerage, broker, and 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, records, and other matters) • Ontario Regulation 580/05: Code of Ethics

©2019 Real Estate Council of Ontario

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 record-keeping. The two additional regulations are: • O. Reg. 568/05: Delegation of Regulation-Making Authority to the Minister • O. Reg. 581/05: Delegation of Regulation-Making Authority to the Board of the Administrative Authority Familiarity with REBBA helps a salesperson to fully understand their obligations as topics can span both the Act and one or more regulations. For example, there are three different areas of REBBA that affect remuneration: • Section 36 of the Act identifies allowable ways to charge remuneration • Section 23 of O. Reg. 567/05 identifies the circumstances under which a brokerage is entitled to charge or collect remuneration • Section 9 of the Code states that remuneration cannot be indicated as fixed or approved

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Lesson 1 | Page 5 of 8

Impact of REBBA on a Salesperson The Act sets out the regulatory requirements for trading in real estate and the various obligations of a brokerage and salesperson. The Act is divided into eight parts, four of which will be covered in this module. The remaining obligations are not applicable to a salesperson and have been excluded. The following four sections contain information on the topics addressed in each of these parts.

Part III: Prohibitions Re: Practice

This part of the Act addresses the restrictions affecting a brokerage and salesperson related to trading in real estate and the exemptions to registration. Lesson 2 provides further details regarding registration.

Part IV: Registration

This part of the Act outlines the regulations regarding registration of a brokerage and salesperson. Lesson 3 provides further details regarding registration requirements.

Part V: Complaints, Inspection, and Discipline

This part of the Act regulates the procedures related to complaints, brokerage inspections, and discipline proceedings. Lesson 4 provides further details regarding disciplinary procedures.

Part VI: Conduct and Offences

This part of the Act regulates the conduct of a brokerage and salesperson with some sections focused on the interactions held with a seller or buyer. Lesson 5 provides further details regarding conduct and offences.

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Lesson 1 | Page 6 of 8

The Code of Ethics One of the associated Regulations found in REBBA is the Code of Ethics. The Code identifies the minimum standards a registrant must follow when trading in real estate. Specifically, the Code sets requirements for acceptable conduct to protect the public interest and to help ensure public confidence in the professionalism of all registrants. Complying with the Code speaks to the individual’s reputation and character and, ultimately, is what contributes to a long and rewarding career. The Code’s regulatory provisions provide clear requirements for appropriate and professional conduct.

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Lesson 1 | Page 7 of 8

Consequences of Non-compliance with the Code of Ethics Registrants who fail to comply with any Code section can face strict penalties imposed by the Discipline Committee. When a matter is referred to the Discipline Committee, a panel will hold a hearing and prepare a final decision, including reasons for that decision. These penalties can range in severity depending on the nature of the violation. The Discipline Committee may order the salesperson to do any of the following: • Complete relevant educational courses • Pay a fine • Pay a fixed/imposed cost Additionally, the Discipline Committee will publish a copy of its decision, including the reasons for that decision, on RECO’s website for a minimum period of 60 months. RECO’s website is accessible by the public. Most registrants conduct themselves professionally and uphold the Code. However, a salesperson may violate the Code unintentionally by simply not fully understanding their obligations. The obligations under the Code should be the foundation of a salesperson’s daily activities.

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Lesson 1 | Page 8 of 8

Congratulations, you have completed the lesson! There are two sections on this page with a summary of the key topics that were covered in this lesson.

The Real Estate and Business Brokers Act (REBBA)

REBBA is the legislative framework that regulates the real estate profession to enhance consumer protection. REBBA includes regulations and obligations related to restrictions to trading, registration requirement, complaints, conduct, and offences. REBBA consists of the Act (the legislation) and five associated Regulations.

The Code of Ethics

The Code of Ethics is one of the associated Regulations and identifies the minimum standards of a registrant when conducting business. Registrants who fail to adhere to the Code can face strict penalties imposed by the Discipline Committee including the requirement to take additional educational courses, payment of a fine, and payment of fixed/imposed costs.

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Lesson 2 | Page 1 of 14

Lesson 2: Prohibitions Re: Practice

This lesson explains which activities are deemed to be trading in real estate and identifies the requirements under REBBA for registration when performing any of these activities. Specific exemptions to registration are also detailed, along with the activities an unregistered person employed by a brokerage can and cannot perform.

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Lesson 2 | Page 2 of 14

The previous lesson introduced the structure of REBBA and underscored the importance of having a good working knowledge of the obligations the legislation imposes. This lesson explains the restrictions affecting a brokerage and a salesperson related to their registration and identifies those who are exempt from registration under REBBA. Understanding the restrictions associated with registration is essential as trading in real estate without being registered or exempt from registration is a violation of REBBA. Upon completion of this lesson, the learner will be able to: • Identify the requirements set out in REBBA to be registered to trade in real estate • List the exemptions to registration as set out in REBBA • Identify the requirement that a registrant be notified in writing regarding registration to be eligible to trade in real estate • Identify the requirement that an individual be registered with RECO at the time of providing real estate services to clients or customers to make a claim for remuneration

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Lesson 2 | Page 3 of 14

A brokerage is permitted to trade in real estate when registered under REBBA. All brokers and salespersons are employed by the brokerage which allows them to perform the activities deemed to be trading in real estate. You will learn about the specifics of trading in real estate throughout the lesson.

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Lesson 2 | Page 4 of 14

Trading in Real Estate The Act sets out specific information about trading in real estate, including the definition of the term trade. Understanding this definition is integral to ensure compliance with REBBA when conducting activities considered trading. The Act also details requirements for registration in order to trade, and what is prohibited by a person who is not registered. The following three sections contain information on Trading in Real Estate. While navigating through the online module, click the KMS button in the Module Resources for tools and information on this topic. ©2019 Real Estate Council of Ontario

Definition of a trade (Section 1(1) of the Act)

The Act defines a trade as: “a disposition or acquisition of or transaction in real estate by sale, purchase, agreement for purchase and sale, exchange, option, lease, rental or otherwise and any offer or attempt to list real estate for the purpose of such a disposition, acquisition or transaction, and any act, advertisement, conduct or negotiation, directly or indirectly, in furtherance of any disposition, acquisition, transaction, offer or attempt, and the verb “trade” has a corresponding meaning.” In other words, any activity that furthers a real estate transaction is considered trading in real estate. For example: • Listing a property for sale • Showing a property to a buyer • Marketing a property such as hosting an open house • Arranging a commercial lease • Acknowledging a notice related to an offer on behalf of a seller or buyer • Explaining information about a property to a potential buyer

Registration requirement to trade (Section 4(1) of the Act)

A brokerage, broker, and salesperson must be registered under the Act to perform any activities deemed to be a trade in real estate. The Act states that: “No person shall, a) trade in real estate as a brokerage unless the person is registered as a brokerage; b) trade in real estate as a broker unless he or she is registered as a broker of a brokerage; c) trade in real estate as a salesperson unless he or she is registered as a salesperson of a brokerage; or d) trade in real estate unless registered under this Act”

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A broker or salesperson must be employed by a brokerage to be registered under the Act.

Unregistered The Act also addresses activities of an unregistered person: persons (Section 4(2) “A person who is not registered as a brokerage, broker or salesperson shall of the Act) not, a) directly or indirectly hold himself, herself or itself out as being a brokerage, broker or salesperson, respectively; or b) perform any of the functions of a brokerage, broker or salesperson as provided in this Act.” An unregistered person can fill an important role at a brokerage in various ways. A registrant can employ a person who is not registered to perform specific duties to assist them when trading in real estate. The following screens illustrate some of the activities an unregistered person can and cannot perform.

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Lesson 2 | Page 5 of 14

Unregistered Person An unregistered person will be limited in the activities they can perform relating to assisting a salesperson when employed at a brokerage. Examples of permitted activities (under the guidance of a broker or salesperson): 1. Attend a listing or offer presentation in a support role with a salesperson such as taking photographs or assisting in measuring rooms. 2. Set up listing files, complete marketing sheets based on the listing or data form obtained by the salesperson, and submit listings and changes to the local listing service. 3. Witness a seller or buyer signature. 4. Schedule appointments for a broker/salesperson to show listed properties. 5. Draft an offer based on the directions of a broker/salesperson. 6. Provide listing information to consumers, such as a flyer. 7. Prepare or produce promotional material or place a “For Sale” or “Sold” sign on a property. 8. Install lockboxes with the seller’s permission to have access to the property. 9. Attend an open house for the public with a broker/salesperson; for example, to help safeguard the property or for personal security reasons. Examples of activities not permitted: 1. Be an active participant in a listing or offer presentation, such as providing advice on an appropriate listing price or terms of an offer. 2. Explain or advise the seller on any changes to the listing agreement. 3. Receive or acknowledge a notice on behalf of a seller or buyer. 4. Show a property to a buyer. 5. Explain or negotiate an offer with a seller or buyer. 6. Answer questions regarding the listing information on a property. 7. Perform any type of prospecting, such as phone solicitation or door knocking. 8. Access a property to assist a buyer or third-party professional during an inspection. 9. Host an open house for other salespersons or the public to view the property. While navigating through the online module, click the KMS button in the Module Resources for tools and information on this topic. ©2019 Real Estate Council of Ontario

Lesson 2 | Page 6 of 14

Which of the following activities require registration as a salesperson under the Act? There are four options. There are multiple correct answers.

1 2 3 4

Advising a seller on an appropriate listing price for their property. Showing a buyer through a property that is listed for sale. Creating a flyer to provide to buyers during an open house. Booking an appointment for a property to be shown to a buyer.

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Lesson 2 | Page 7 of 14

Which of the following activities require registration as a salesperso...