Proposed Licensing Framework Clarifications
| November 07, 2023
It has come to RECA’s attention there is a campaign underway to reach out to Alberta MLAs to raise concerns about RECA’s Rules Review process and a proposed change to the real estate industry’s licensing structure. RECA would like to take this opportunity to provide licensees with additional clarity on the process and the rationale and origins of the proposed licensing structure.
The Proposed Framework is Revenue Neutral
As mentioned in the Discussion Paper for this consultation, and in the accompanying survey, RECA’s Board has committed to ensuring the changes in licensing will be revenue neutral. This means you will not be paying $475 per licence. It is possible you will pay a total of $475 for all licences, or a lower fee for a single licence, or something in between. As with the licence framework, nothing has been decided. We are in the consultation stage.
The Proposed Framework Will Reduce Red Tape
The proposed framework will not increase the administrative burden on brokerages or individuals licensed in multiple sectors. Brokerages who want to hold licences in multiple sectors will be able to do so under the same brokerage and would not be required to open separate brokerages or corporations, to open separate trust accounts, or to undertake additional trust account reporting. Also, individuals currently practicing in multiple sectors would not have to retake education in those sectors.
Currently, many real estate licensees, including all brokers and associate brokers, are accountable to three industry councils under one licence, due to the requirement that each real estate broker must have all four real estate practice areas on their licence (residential, commercial, rural (agribusiness), and property management, even if they do not practice in all those areas. Similarly, all real estate licensees who only practice property management are accountable to two industry councils.
Each Industry Council has the authority to set separate standards in their industry sectors and to set the licensing requirements. This creates significant red tape for each Industry Council when attempting to regulate their particular industry sector, as changes to education requirements and standards have to be approved by two or three industry councils, even when the requirement only applies to one industry council. It also creates a regulatory burden on brokers who must meet the education requirements for all four practice areas, even if they only practice in one. The proposed framework would eliminate these regulatory burdens.
Rationale and Source of the Proposed Licensing Framework
As part of its 2022-2025 Strategic Plan, RECA made a commitment to undertake a comprehensive review of the Real Estate Act Rules with three objectives in mind:
- to ensure the rules are focused on consumer protection
- to revise rules to meet the current needs of the industries regulated by RECA
- to reduce red tape where feasible.
To facilitate this review, the Board created a Rules Review Steering Committee made up of industry licensee representatives from each Industry Council, and a public member as Steering Committee Chair. Mr. Neil McCrank, a former Deputy Minister with the Alberta Government, was engaged to take on the role of Chair.
In Phase 1 of the consultation, RECA consulted with key stakeholder groups by requesting feedback on issues or problems with the current Rules, and potential changes. Using that feedback, and feedback from ongoing conversations with all stakeholders, the Rules Review Steering Committee drafted the proposed rule changes for further consultation. The Committee, made up of licensee Industry Council members, has directed RECA to consult on the proposed new licensing framework.
The proposal also stems from concerns raised, especially by RECA licensees in commercial and agribusiness sectors. They inform RECA that allowing a catch-all licence for real estate puts consumers at risk, as those who focus in a single sector, and rarely trade in other sectors, often cannot meet the standards expected in providing competent service. The proposed framework would improve consumer protection in those areas, by ensuring those sectors are appropriately regulated by the appropriate Industry Council.
What Would Change Under the Proposed Framework
The proposed framework would create seven industry sectors with separate licences, with each industry sector accountable to only one Industry Council. They would be:
- residential real estate
- commercial real estate
- residential property management
- commercial property management
- agribusiness real estate
- condominium management
- mortgage brokerage.
No Decisions Have Been Made
It is important to note the proposals are before all licensees for input as part of this process and no decisions have been made. Feedback from the surveys and other consultation processes in this phase will be reviewed by the Rules Review Steering Committee as they consider recommending any rule changes to the Industry Councils, who are responsible for rule setting as outlined in the Real Estate Act.
If you were unable to attend RECA’s town hall on November 2 discussing this proposed change and other proposals in this part of the Rules Review, we have made the recording available.