Mortgage Rule Changes

RECA is proposing changes to the Real Estate Act Rules regarding mortgage broker standards of practice. RECA is proposing:

• Amendments to the Real Estate Act Rules
• New forms and updates to existing forms, both of which contain mandatory content for all disclosure and relationship forms

More information is in the Consultation Paper: Proposed Changes to REA Rules – Mortgage Broker Standards of Practice.

Proposed Modification to the Residential Measurement Standard (RMS)

In March 2019, RECA completed a consultation about the Consequences of the Current Methodology for Measuring Semi-detached and Attached Properties. The feedback Council received from this consultation ranged considerably, but several key consequences were identified. These included the potential for under-insured, under-valued, and under-appraised properties, that some properties may be refused financing, and that there was a lack of clarity and consistency for consumers.

Council created an ad hoc committee which met in May and June 2019. In July, the committee recommended proposed amendments to the RMS.

More information is the Consultation Paper: Proposed Modification to the Residential Measurement Standard. The consultation closed on September 16, 2019.

Graduated Licensing for Property Managers

From April 15 – July 15, 2019, RECA consulted on the feasibility of graduated licensing as a means to address the shortage of property management professionals. Property management brokerages have indicated to RECA that they have difficulty attracting individuals to enter the property management profession. The shortage of property management professionals could result in existing professionals being overworked, not completing their responsibilities or taking shortcuts. It also can result in unlicensed activities. These situations place the public at risk and have the potential to undermine the integrity of the profession.

The Consultation Paper contains important information about the scope of this consultation.

RMS Consultation: Consequences of the Current Methodology for Measuring Semi-detached and Attached Properties

From January 18, 2019 until March 18, 2019 RECA held a consultation about the Residential Measurement Standard (RMS).  At the October 2018 Council meeting, Council directed RECA to consult with stakeholders about the potential consequences of the current RMS methodology for measuring semi-detached and attached properties. The current methodology is measuring interior perimeter walls at floor level (paint-to-paint). More information is within the RMS Consequences Consultation Paper.

Mortgage Brokerage – Proposed Standards of Practice and Rule Changes (phase 1 complete)

The Real Estate Council of Alberta (RECA) is reviewing mortgage brokerage standards and Rules to enhance consumer protection, ensure our standards of practice are strong, and to document current practices in the mortgage brokerage industry. We want to know what our stakeholders think of the proposed changes.

In February 2018, RECA posted the Mortgage Brokerage Proposed Standards of Practice and Rule Changes Consultation Paper. The formal consultation period for this initiative ended on May 9, 2018. RECA is reviewing the feedback it received. Please watch for future updates.

In June 2018, the Mortgage Brokers’ Advisory Committee met to review the feedback from the consultation survey, town hall meetings, and written submissions. After the June meeting, RECA staff and a subcommittee began adjusting the original proposals to reflect the feedback received while remaining consistent with the original objectives. The MBAC will meet again, in the Fall of 2018, to consider the revisions and determine next steps.

Condominium Manager Regulation Consultation (Phase 1, Complete)

In December 2014, the Government of Alberta passed legislation that will require licensing for condominium managers. When the legislation takes effect, the Real Estate Council of Alberta (RECA) will be responsible for setting standards, licensing and regulating individuals who provide condominium management services.

In fall 2015, RECA launched a consultation to gather feedback from condominium industry stakeholders, including condominium managers, boards, owners and consumers on the proposed regulatory model for condominium managers. That consultation process included a consultation paper and town-hall meetings in Medicine Hat, Lethbridge, Ft. McMurray, Lloydminster, Edmonton, Edson, Grande Prairie, Calgary and Red Deer. Stakeholders were invited to respond to the consultation paper in writing by December 9, 2015 and attend one or more of the town hall meetings.

Results from Phase 1 consultation: Council approved a Regulatory Model for Condominium Managers.
The Real Estate Council of Alberta’s (RECA) Condominium Manager Implementation Advisory Committee (CMIAC) recently completed Phase 1 of the Condominium Manager Regulation Consultation. As a result of this consultation, CMIAC provided, and Council approved, recommendations in six areas:

Licensing recommendations

• RECA will license and regulate all persons who provide “condominium management services” for compensation. The eligibility and licensing structure will be similar to the other industries RECA regulates (brokerage, broker, associate).
• Council will recommend the following licensing exemptions to the Alberta Government:
  • accountants who provide financial reporting to condominium boards (budgets, monthly financials, etc.)
  • self-managed condominiums
  • court-appointed administrators
  • industry members who are unit owners in a condominium corporation in relation to their provision of condominium management services to or on behalf of no more than two
  • condominium corporations (if certain conditions are met)
  • other parties exempt according to the REA regulations

Education recommendations

• Council approved a transitional and ongoing education model
• this education model will include conditional licensing, challenging exams with a passing grade of 70%, and a one-year experience to challenge exams to become an associate

Bonding or real estate assurance fund recommendation

• Bonding as the means of protecting the condominium corporation’s funds
  • if a condominium manager brokerage holds funds in trust on behalf of a condominium corporation, the condominium manager brokerage must have its own bond.
  • if a condominium corporation holds its funds in its own bank accounts, the bond should cover the condominium manager, though the condominium manager brokerage may also have a separate bond

Trust account audit & review program recommendations

• RECA’s Trust Assurance and Practice Review program will apply to condominium managers to improve trust accounting, record keeping, and administrative procedures
• will include a mandatory trust account audit at the time of licensing a condominium manager brokerage that holds trust funds, and ongoing audits for brokerages that hold trust funds
• only the broker, brokerage industry member, employee, or a lawyer or an accountant the brokerage has engaged, may sign on the brokerage trust accounts

Professional liability insurance recommendation

• Condominium management brokerages will be required to hold a minimum $1 million in errors and omissions (E&O) professional liability insurance

Unlicensed condominium manager activity and licensed condominium manager misconduct recommendation

• RECA will use the current complaint process for licensed condominium manager misconduct.

RECA’s consultation on and implementation of Real Estate Act amendments for the regulation of condominium managers has been on hold pending the Government of Alberta’s completion of Regulations under the Condominium Property Amendment Act.

RECA’s Condominium Manager Implementation Advisory Committee met on February 20, 2018 to review the status of RECA’s project.

On December 14, 2018 the Government of Alberta announced the second stage of regulation changes to the Condominium Property Amendment Act and announced they will begin stage three consultation which includes condominium manager licensing. For more information, contact Doug Dixon, Real Estate Practice Advisor: DDixon@reca.ca.

If you would like information about the Government of Alberta’s progress on CPAA Regulations, please visit the Service Alberta website at: http://www.servicealberta.ca/Consumer-condominiums.cfm.

Proposed Changes to Sections 96, 97 of the Real Estate Act Rules (Complete)

RECA is proposing amendments to the Real Estate Act Rules that would allow brokerages to deposit funds in a brokerage “other account.” This account could be used to segregate commissions from which a brokerage could pay professionals’ commissions. If a brokerage sets up the other account as a brokerage trust account, this trust account would not be a RECA-regulated trust account and it could not hold consumer deposits.

The proposed amendments would also clarify that the Real Estate Assurance Fund was and is intended as a consumer protection fund for consumers only.

Openness and Transparency (complete)

Residential Measurement Standard (complete)

New Licence Model (Complete)

Real Estate Act Amendment Consultation (Complete)

The Real Estate Council of Alberta (RECA) undertook a comprehensive review of the Real Estate Act in late 2012 prior to beginning consultation with a wider group of stakeholders. Some of the amendments RECA put forward in its first consultation paper (December 2012) were not ultimately put forward to the Government of Alberta as a result of feedback from industry professionals.

At a high level, the amendments RECA has put forward focus on:

• The application of the Real Estate Act to banks, treasury branches, credit unions, loan corporations, insurance companies, and their agents, when they are dealing in mortgages from other financial institutions.
• The Real Estate Act not applying to mortgage investment entities, such as MICs, syndicated mortgages and mortgage investment trusts.
• Clarifying and strengthening provisions related to conduct proceedings.
• Remodeling and simplifying the Real Estate Assurance Fund claim mechanisms and categories of loss; and,
• General items for clarification and efficiency.

For more information on the recommendations put forward by RECA, click here.

To read the Consultation Report on the Real Estate Act amendments submitted to Service Alberta, click here.

While the Government of Alberta had originally indicated the Real Estate Amendment Act would be scheduled on the legislative agenda for the Spring 2014 sitting of the Legislature, legislative priorities have since changed and it is unclear when this Act may move forward.

Consultation Grow Op-Free Alberta

Condominium Property Act Consultation

Privatization of Alberta Land Titles Consultation