Good Character Policy - Professional Conduct Review
The Real Estate Council of Alberta (RECA) is the independent governing authority that sets, regulates, and enforces standards for real estate brokerage, mortgage brokerage, property management, and real estate appraisal professionals in Alberta.
The purpose of this policy is to answer:
- Rule 42(g): What conduct undermines public confidence in the industry, harms the integrity of the industry, or brings the industry into disrepute?
- What triggers a review on whether conduct breached Rule 42(g)?
- Does RECA review private conduct?
- What is the conduct review process and possible outcomes?
- What factors does the executive director and hearing panel consider when sanctioning conduct?
Real Estate Act
12 The Council may make rules (a) prescribing or adopting standards of conduct and business standards for industry members
Real Estate Act Rules
42 Industry members must not: (g) engage in conduct that undermines public confidence in the industry, harms the integrity of the industry, or brings the industry into disrepute.
Rule 42(g): What conduct undermines public confidence in the industry, harms the integrity of the industry, or brings the industry into disrepute?
The Real Estate Act or Rules do not define what conduct undermines public confidence in the industry, harms the integrity of the industry, or brings the industry into disrepute. RECA defines Rule 42(g) with reference to five key areas:
- respect for the rule of law
- financial responsibility
Respect for the rule of law
Public confidence in the real estate industry requires industry professionals to respect and comply with the law. Respect for the law is not limited to the Real Estate Act or laws directly related to providing goods or services. RECA considers convictions under any law of any country when evaluating whether an industry professional’s conduct demonstrates respect for the rule of law.
Industry professionals must be honest in their dealings with RECA, clients, industry professionals, and third parties. Industry professionals must conduct themselves honestly when in the care and control of money, property, and information. Honest conduct is truthful, trustworthy, and genuine. Dishonest conduct deceives or manipulates the truth by lying, misrepresenting the facts, or omitting material facts.
When dealing with RECA, industry professionals must:
- answer questions about an incident truthfully and completely
- address requests for information in a timely manner
- disclose all relevant information
RECA must ensure industry professionals are governable to serve public interest, protect consumers, and protect the reputation of the real estate industry. An industry professional’s conduct demonstrates a lack of governability when they fail to:
- accept the responsibilities that come with being part of a self-governing profession
- respect the rules established by legislation and RECA as an essential part of the profession
- adhere to professional standards
- respond to RECA appropriately and in a timely manner
- take responsibility and be accountable for their actions
Conduct that demonstrates a lack of financial responsibility may undermine public confidence in the industry. Conduct of concern is:
- intentionally avoiding financial responsibility
- seeking personal interest over financial obligations
- disregarding contractual or legal obligations such as trust obligations
Financial concerns resulting from an economic downturn or negligent mismanagement of money or property does not necessarily undermine public confidence in the industry.
Professionalism is a standard of conduct based on ethics that govern the real estate industry. Consumers hold industry professionals to a high standard of professionalism. This encompasses an industry professional’s quality of work, ethics, and communication with any party when providing services.
- fulfilling fiduciary obligations and acting in the best interest of clients
- providing competent business services to the public with integrity
- being knowledgeable in your area of practice, including legislative changes, and relevant legal or practice considerations
- acting ethically at all times
- being accountable for your actions and taking responsibility
- meeting obligations when dealing with personal or confidential information
- treating RECA, clients, industry professionals, and third parties with civility, respect, and professional courtesy
- putting the interests of your client and the profession above your own
What triggers a review on whether conduct breached Rule 42(g)?
The executive director reviews conduct when receiving sufficient particulars of a potential breach of Rule 42(g) in:
- a complaint
- any information received indicating a potential breach of Rule 42(g)
- a referral from a licensing review after a Rule 40 notification
A potential breach of Rule 42(g) may arise from past conduct or conduct during the review process.
Rule 40 Notification
Industry professionals must immediately notify the executive director of certain events under Rule 40. These events include:
- discipline by an industry association, or any professional, occupational, or regulatory body
- judgments against the industry professional related to the provision of services or the sale of goods to consumers
- judgments in the past three years against a business where the industry professional is or was an owner, partner, director or officer
- bankruptcy proceedings
- bankruptcy or receivership proceedings in the past three years against a business where the industry professional is or was an owner, partner, director or officer
- criminal charges or proceedings
- criminal convictions
Notification requirements include:
- immediately notifying the executive director after a triggering event through your myRECA account
- complying with RECA’s requests for information about the event
- notifying your broker
What is a licensing review?
Consumer and Industry Services (CIS) commence a licensing review when an industry professional notifies the executive director of an event under Rule 40. CIS reviews the industry professional’s sworn statement and documentation relevant to the event. Licensing reviews result in a referral to Professional Standards if the industry professional’s conduct potentially breached the legislation. Typical referrals involve potential breaches of Rule 40 or Rule 42(g). CIS notifies the industry professional when a referral to Professional Standards occurs.
Does RECA review private conduct?
Private conduct refers to activities that do not require a licence. RECA reviews and sanctions private conduct if that conduct undermines public confidence in the industry, harms the integrity of the industry, or brings the industry into disrepute. The executive director considers the following when reviewing private conduct:
- Does the conduct impair the ability of a professional to carry out his or her professional duties? For example, does the conduct impair the member’s reputation with the public? Does the conduct cause a loss of trust and confidence by the public in the professional?
- Does the conduct demonstrate that the individual is unsuitable to practice the profession?
- Does the conduct bring the profession into disrepute by damaging its reputation or cause a loss of confidence in the profession?
- Is the conduct significantly more unacceptable for a person in the member’s profession as compared to members of the public generally?
- How serious was the conduct?
- Does the conduct relate to licensed activities?
- Was the conduct made public?
- Has the industry professional linked the conduct to their licence with RECA?
Examples: RECA will review the conduct of an industry professional if they:
- drive clients while impaired
- drive while impaired and kill someone
- make unprofessional comments on social media about a client or transaction
- make unprofessional comments on social media about another industry professional, brokerage, or RECA
- engage in conduct that attracts media attention in the local newspaper that reflects poorly on the profession
What is the conduct review process and possible outcomes?
When an industry professional’s conduct potentially breaches the legislation, Professional Standards reviews that conduct under the Real Estate Act,Part 3 – Conduct Proceedings and recommends an outcome to the executive director.
During the conduct review process, an industry professional can expect:
- notification of the conduct review with a copy sent to their broker
- questions surrounding the conduct at issue
- an opportunity to provide an explanation
- notification of the outcome
The executive director reviews the evidence and may:
- find insufficient evidence of a breach of the legislation
- issue an advisory note (educational, not sanction)
- issue a letter of reprimand
- issue an administrative penalty
- refer the matter to a hearing panel (severe or egregious circumstances)
When the executive director issues a letter of reprimand or administrative penalty to an industry professional, that industry professional has the right to appeal the decision to a hearing panel.
In all cases, RECA applies “right-touch regulation.” This means RECA’s approach to compliance and enforcement of standards are consistent, proportionate, effective, transparent, and timely. Where appropriate, RECA focuses on providing information, advice, and suggestions for change in future behaviour. RECA utilizes the full range of sanctions available to protect consumers and obtain industry compliance. When appropriate, RECA encourages consumer complaint resolution through the industry professionals and brokerages providing the services. At the same time, RECA embraces scalable enforcement, which means deliberate or repeated professional misconduct by the same industry professional typically results in greater penalties.
Please refer to the Guide to a Professional Conduct Review for Industry Professionals for more information.
What factors does the executive director and hearing panel consider when sanctioning conduct?
The executive director considers an industry professional’s actions since the conduct, their insight into the conduct, and the circumstances surrounding the conduct when deciding the appropriate sanction. The executive director places significant weight on cooperation and honesty during the review process and expects industry professionals to accept responsibility for their conduct and rehabilitate when appropriate.
- Nature and gravity of the proven allegations
- Age and experience of the offending person
- Previous character of the person and in particular the presence or absence of any prior convictions
- Age and mental condition of any affected party
- Number of times the offence occurred
- Role of the person in acknowledging what had occurred
- Whether the person had already suffered serious financial or other penalties as a result of the allegations having been made
- Impact of the incident on the offended person
- Presence or absence of any mitigating circumstances
- Need to promote specific and general deterrence and, thereby, to protect the public and ensure the safe and proper practice of real estate
- Need to maintain the public's confidence in the integrity of the real estate profession
- Degree to which the offensive conduct was clearly regarded, by consensus, as being the type of conduct falling outside the range of permitted conduct
- Range of sentences in similar cases
- Nature and gravity of conduct
RECA considers the nature, seriousness, and duration of the conduct. RECA compares what a prudent industry professional or reasonable person would have done in similar circumstances.
- How serious was the conduct?
- Was the conduct intentional?
- Did the industry professional use deception for personal gain?
- Age and experience of industry professional
An industry professional’s lack of experience or ignorance of legislative requirements is generally not a mitigating factor. RECA considers whether the matter was in RECA communications to the industry, RECA courses, or addressed at a practice review.
- Should the industry professional have known better?
- Did the industry professional use knowledge from their experience or education to their advantage?
- Presence or absence of prior warnings or discipline
- Did the industry professional receive warnings or discipline about similar conduct? How recent were the past warnings or discipline?
- Age and mental condition of any affected party.
Did the conduct affect a vulnerable individual? If so, this is an aggravating factor. Characteristics of vulnerable individuals may include:
- advanced age or a minor
- mental or physical limitations
- being new to Canada and unfamiliar with Canadian business practices
- not understanding English well
- Number of times the conduct occurred.
- Was the conduct an isolated event? Were there multiple instances?
- Role of industry professional in acknowledging the misconduct
- Does the industry professional understand the conduct was wrong?
- Has the industry professional taken responsibility and shown remorse for their conduct?
- Did the industry professional attempt to make restitution? Was that attempt successful?
- Was the industry professional honest about the conduct?
- What were the consequences of the misconduct?
- Did the industry professional suffer serious financial or other consequences as a result of the conduct?
- How does the decision impact the industry professional’s livelihood?
- Impact of the conduct on the public
Impact on the public may include evidence of financial loss, physical pain or damage, psychological or emotional anxiety, or damage to property.
- Presence or absence of any mitigating circumstances
- Did the industry professional receive and complete treatment or counselling?
- Did the industry professional take reasonable steps to rehabilitate?
General deterrence refers to the impact of a decision on preventing industry professionals from engaging in similar conduct. Specific deterrence refers to the impact of a decision on preventing a specific industry professional from engaging in that conduct. RECA’s scalable enforcement policy is an example of specific deterrence, where deliberate or repeated professional misconduct by the same industry professional typically results in greater penalties.
- Does the industry professional’s conduct undermine public confidence in the integrity of the industry?
- Has the brokerage learned from the conduct and taken steps to ensure its handling its business competently and with integrity?
- Does the conduct show the industry professional is a danger to the public?
- Is this industry professional in jail?
- Did the industry professional cooperate in the conduct review process?
Industry standards refer to the legislation, information bulletins, education, and all relevant RECA communications relevant to the conduct. It also includes generally accepted norms of conduct in the real estate industry.
Similar situations should result in similar outcomes. This maintains consistency in decisions. Recent similar decisions should receive more weight and consideration than older decisions.
Example Cases – Conduct Review Decisions:
An industry professional’s conduct demonstrated a lack of governability by:
- being rude and belligerent to a RECA investigator
- refusing to answer questions of a RECA investigator
- failing to provide records of a transaction
This industry professional received a fine and suspension. The Alberta Court of Appeal upheld RECA’s decision.
An industry professional’s conduct demonstrated a lack of professionalism and respect for the rule of law by driving clients while impaired. This industry professional received an Administrative Penalty.
A broker’s conduct demonstrated a lack of professionalism by making inappropriate comments to a customer on the handling of a deposit. This broker received a Letter of Reprimand.
An industry professional’s conduct demonstrated a lack of governability, professionalism, and respect for the rule of law by:
- gaining access to a property without permission through a basement window when the lock box wasn’t working
- allowing an individual to access the property when specifically prohibited by the owner
This industry professional received an Administrative Penalty.
An industry professional’s conduct compromised the investigative process and demonstrated a lack of governability by contacting complainants and threatening them with legal action unless they retracted their statements to RECA. This industry professional received an Administrative Penalty.
An industry professional’s conduct breached Rule 42(g) by driving while impaired and killing another person. A hearing panel initially found the conduct not in breach of the legislation. The Executive Director appealed that decision. The Appeal Panel overturned the decision finding the industry professional breached Rule 42(g). The Appeal Panel cancelled the industry professional’s licence.
Industry professionals’ conduct demonstrated a lack of professionalism by:
- uttering threats and profanities at another industry professional; this industry professional received a Letter of Reprimand
- sending emails with profanity to another industry professional when they were unhappy with a transaction; this industry professional received a Letter of Reprimand
- making derogatory remarks about an industry professional and their brokerage to a group of industry professionals at an open house; this industry professional received a Letter of Reprimand
Example Cases – Other Regulatory Bodies:
- a registered nurse engaged in professional misconduct when posting comments on Facebook criticizing a health care facility and its employees
- a chartered accountant engaged in unprofessional conduct when sending emails in a private dispute; the Court of Appeal upheld the decision