WHEREAS by Section 12 of the Real Estate Act (Act), the Real Estate Council of Alberta (Council) has the authority to make Rules;
WHEREAS by sections 12(k), (p), (q) and (r) of the Act, Council has the power, duty and responsibility to prescribe, adopt and approve requirements respecting the issuing of authorizations and for industry members to acquire, maintain or provide insurance against their liability for errors and omissions and/or a bond or other form of security.
At its meeting on May 4, 2011, Council passed a motion to amend the Real Estate Act Rules, Part 4, Errors and Omissions Insurance, effective September 1, 2011, as follows:
1. Adding the following wording after “Part 4, Errors and Omissions Insurance”:
“Division 1 – Requirements for Real Estate Brokers”
2. Amending section 111 to read as follows:
“111 (a) This Division applies to all classes of real estate brokers and includes a brokerage, broker, associate broker and associate.
(b) In this Division, “Real Estate Insurance Exchange Agreement” means an agreement entered into between brokerages, brokers, associate brokers and associates providing for the establishment and administration of an insurance or indemnity plan referred to in Rule 113.”
3. Adding the following wording after section 116:
“Division 2 – Requirements for Mortgage Brokers”
4. By re-numbering the current section 117, Part 5 (Fees) to section 121.
5. By inserting new sections 117 and 118 to read as follows:
117 In this Division, “Brokerage” means mortgage brokerage.
118(1) Every brokerage must have insurance against liability for errors and omissions and additional coverage for loss resulting from fraudulent acts in the carrying on of the business of a mortgage broker in accordance with these Rules. The errors and omissions insurance must:
(a) be in a form of insurance and terms and conditions approved by the executive director;
(b) include extended coverage for loss from fraudulent acts; and
(c) is sufficient to pay a minimum of:
(i) $500,000 with respect to any one occurrence involving the mortgage brokerage or any broker or associate authorized to deal in mortgages on behalf of the mortgage brokerage; and
(ii) $1,000,000 with respect to all occurrences during a 365-day period involving the mortgage brokerage or any broker or associate authorized to deal in mortgages on behalf of the mortgage brokerage.
(2) Every mortgage brokerage shall, at all times while it holds an authorization, maintain errors and omissions insurance in the form of insurance and terms and conditions approved by the executive director.
AND WHEREAS by Section 15(1) of the Act, the Council has the authority to delegate its powers, duties and responsibilities relating to the requirement of mortgage brokers to maintain errors and omission insurance and other security pursuant to section 118 of the Rules;
THEREFORE BE IT RESOLVED THAT:
Dated at Calgary this 4th day of May, 2011