Below are some of the more common questions RECA receives from consumers on a variety of topics.
By now you may have heard that as of July 1, 2014, if you’re buying a residential property in Alberta – and you’re the client of a licensed real estate professional – that licensed real estate professional is going to ask you to sign a written service agreement (a Buyer Representation Agreement).
The Real Estate Council of Alberta introduced mandatory written service agreements to enhance consumer protection, by providing greater clarity of the roles and obligations between real estate professionals and their clients, and to reduce any potential for conflicts and confusion.
The real estate professional will explain the options available, and give you a Consumer Relationships Guide that outlines the options, the difference between being a customer or a client, and the responsibilities of the real estate professional in each option.
Yes. As of July 1, 2014, the Real Estate Council of Alberta requires residential real estate professionals to use written service agreements when working with a client. Real estate professionals will ask buyer and seller clients to sign a written service agreement.
Written service agreements inform clients about what they can and should expect from their relationship with their authorized industry professional. They:
Yes, as long as the brokerage is not treating you as a client. A brokerage may facilitate your purchase of real estate without entering into a written service agreement. In these cases, the brokerage would treat you, as the buyer, as a customer. This is typical when a buyer is purchasing a new home or condominium, and the brokerage represents the builder.
If you are a customer, a real estate professional may:
If you are a customer, a real estate professional may not:
No. The brokerage and buyer must agree to the terms of the agreement. Buyers should make an informed choice about the type of relationship they wish to have with a real estate professional. They should also understand the implications of the options available to them.
In an exclusive buyer representation agreement, the buyer agrees to only use the services of that brokerage to represent and assist them in purchasing a property.
In a non-exclusive buyer representation agreement, the buyer may use the services of multiple brokerages at the same time. Buyers can enter into multiple non-exclusive buyer representation agreements.
It will depend what information you provide to the real estate professional before viewing homes. If or when you start providing confidential information, such as needs, motivation or financial qualification, to the professional, he or she needs to clarify your working relationship – to find out if you want to be treated as a client or a customer. If you want to be a client, and have that professional represent you, you will need a written buyer representation agreement. The requirement for a written service agreement won’t be triggered simply by visiting an open house, small talk about housing price ranges or property styles, or when a real state professional simply responds to general, factual questions from a buyer or a seller.
The duration of such an agreement is negotiable between you and the brokerage; it could be a day or many months, depending on the specific circumstances.
In most real estate transactions, the seller or the transaction pays the real estate fees. There are situations where the seller will not pay the buyer brokerage portion of the fees and your brokerage may ask you to pay in that situation. Your industry professional should discuss this issue with you and alert you if you wish to view one of these properties. Often, the net result of what you pay for the property is not affected by who pays the buyer brokerage portion of the fees.
The Real Estate Council of Alberta is the independent governing authority that sets, regulates and enforces standards for real estate, mortgage brokerage, property management and real estate appraisal professionals in Alberta. For more information about written service agreements, the Real Estate Council of Alberta or Alberta’s real estate industry, please contact a licensed real estate professional or visit www.www.reca.ca.
Yes, there are a few different kinds of mortgage fraud. The main types to be aware of are fraud for housing, fraud for title, fraud for profit, and foreclosure fraud. For details on the different kinds of fraud, see Mortgage Fraud Awareness and Prevention.
Fraud for housing is providing misleading or false information on a loan application (usually by misrepresenting income or other debts) to qualify for a mortgage loan you would not otherwise get and/ or representing on the loan application you are going to live in the home, when in fact, you have no intention to live in the home.
Fraud for profit is fraud where the motive is financial gain. This usually includes a number of individuals working together to inflate the price of a home or get loans for non-existent homes. Organized crime is often the mastermind of these fraud schemes. Industry insiders are normally involved, and the fraud is more complex. For an example of a typical Straw Buyer mortgage fraud for profit, click here.
That’s not really true. Fraud is fraud. Just because it was for housing rather than for profit does not make it any less serious. The fact is, it’s a fraudulent action. Law enforcement bodies and other regulators take fraud seriously.
Your best bet is to speak to a lawyer about your suspicions.
Yes. Fraud is a Criminal Code of Canada offence.
The Real Estate Council of Alberta is one resource for consumers about mortgage fraud prevention and awareness, but there are others:
“Straw buyers” are phony loan applicants. A fraudster usually offers a straw buyer payment in exchange for the use of their name and credit information. Straw buyers may say they did not know their name would be used on a mortgage application, but saying you didn’t know your information would be used to commit mortgage fraud is not a legitimate excuse under the law. Straw buyers may also be used to sign documents containing false information. To learn more about straw buyers, click here.
No. Mortgage fraud can affect anybody; good or bad credit, employed or unemployed. Some mortgage scam artists try to recruit buyers with good credit who might be attracted to quick, high return investment opportunities.
RECA administers the Real Estate Assurance Fund in Alberta (also known as the Consumer Protection Fund). The Fund compensates consumers who suffer a financial loss as a result of fraud, breach of trust, or a failure to disburse or account for money held in trust by an industry member with respect to a trade in real estate or deal in mortgages. The protection does not extend to clients of unlicensed professionals.
All professionals who are licensed to trade in real estate or deal in mortgages in Alberta can be found through a quick online search at www.reca.ca. Go to our Find a Professional tool and type in the name of an individual or a company.
The RMS gives consumers and industry professionals accurate and consistent property measurements, which they can use to compare properties and determine their suitability. Proper application of the RMS ensures real estate professionals provide reliable and verifiable property size and dimensions.
It depends on the type of property you are measuring.
No. You can use long runs.
To compare different types of residential properties, real estate professionals can provide an additional measurement for attached properties using the property’s exterior. Real estate professionals must base this additional measurement on reasonable assumptions about the exterior wall thickness, and can extrapolate the exterior wall thickness from the thickness of the exterior door casings and/ or exterior window casings. If real estate professionals provide additional measurements based on exterior assumptions, they must make it clear it is not the RMS area for the property, and explain their assumptions.
It depends on the seller’s direction. Sellers are not required to represent the size of their property; however:
If the seller wants you to communicate the size of the listing and/or the listing service/property database has a mandatory property size field, it must be the RMS.
No. You can measure the property yourself or you can engage another qualified person to measure it using the RMS. To determine whether someone is competent to measure properties in accordance with the RMS, you might ask them to detail:
In addition, you should ensure the person or service has Errors and Omissions (E&O) insurance for their measurement services.
The RMS provides an exception for properties that are entirely below grade. The outcome of this exception means that if apartments in a building were the same and were one level, there would be no discrepancy between all ofthe apartments in the building except that the apartments below grade would have a clarification to say that the entire property is below grade. To be consistent with this outcome, you can include the below grade portion in your local board’s RMS field, but you will need to identify size of the area that is below grade in the public comments of the listing information. You may also provide additional information that would be of value to the marketing of the property such as identifying the depth of the level below grade. This approach will also be applicable for stacked townhouses with identical units.
No. Real estate professionals have an obligation to their clients to perform their due diligence. Measuring the property according to the RMS or having it measured by a qualified individual is part of that due diligence. There is no guarantee as to the accuracy of the previous listing’s measurements and the property may have been renovated or added to since it was last listed which could have changed its area measurements.
However, there are some limited circumstances when re-measuring is not required. Re-measuring is not required when renewing a recently expired listing or the property is a rental unit with a property management agreement that indicates the property will be listed for rent multiple times during the agreement as vacancies arise.
No. You must use the RMS.
The Condominium Unit Registered Size was not intended to enable size comparisons between properties. The purpose of the Condominium Unit Registered Size is to calculate the condominium unit’s “unit factor”. The condominium registered size does not provide proper comparisons between units in the same condominium or between units from different condominiums, as the CURS can include items, such as garages, parking spaces, separate storage areas, below grade areas, and balconies.
If the RMS is larger than the condominium unit registered size, you should recheck your calculations. In the majority of cases, the condominium unit registered size will be larger than the RMS size because most condominium unit registered sizes include wall thickness and other areas such as such as garages, parking spaces, separate storage areas, below grade areas, and balconies.
The seller may have purchased the property under a different size standard that provides a larger size value by including areas that are not included as part of the RMS.
It is important for you to discuss this with the seller. When buyers purchase resale residential properties, there is often a correlation between the property size and the sale price, but the correlation is not proportional. The property’s size is only one of many factors that influence the sale price. Other factors include the property’s location, layout, style, modernization, finishing, amenities, etc.
Explain to the seller that their property has not shrunk, and that all real estate professionals who are listing properties will measure according to the RMS so there is consistency, and there will not be a competitive disadvantage. If the seller’s property is attached and you believe buyers will compare it to detached properties, you can advise the seller that you will also communicate the assumed exterior size.
RECA only has jurisdiction through the Real Estate Act over real estate, mortgage brokerage, real estate appraisal, and property management professionals.