RECA Fundamentals Exam Study Questions and Answers 2024, Exams of Nursing

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Which of the following is NOT a RECA educational resource for industry professionals?

• Spatial Information System (Spin 2) Which entity has the authority to amend the Real Estate Act - Provincial Legislature Which of the following measures the change in a cost of a fixed basket of goods and services purchased by families over a period of time - Consumer Price Index (CPI) Which of the following will occur to the supply of a good when there is a change in quantity supplied due to a price increase? - an increase in quantity supplied Microeconics - studies the basic theories of supply and demand as it relates to individuals, households and firms Resource Markets - facilitate the exchange of factors of production What causes the quantity demanded to shift? - change in tastes, expectations, and number of consumers benefits of economic growth - depletion of natural resources Real Property Report - document produced by Alberta Land Surveyor Which of the following is not a non-price determinant of demand - cost of production What type of economy does Canada have? - mixed economy Benefits of RECAS trust assurance and practice review program - - effective record keeping and administrative procedures
• education and advice in relation to brokerage trust accounting
• identifies and resolves potential problems regarding brokerage trust accounting requirements Responsibilities of RECA - - Handling professional conduct review
• establishing industry standards of practice
• issuing authorization to trade in real estate Four factors of production - land, labor, capital, entrepreneurship

RECA Fundamentals Exam

Study Questions and Answers

RECA provides the following annual reports - - financial reports

• industry statistics
• reports for the previous year The structure of real estate in Alberta includes; - - local real estate boards
• alberta real estate association
• canadian real estate association Referral definition - The act of recommending or directing a person for service to another person or business
• brokerage is responsible for paying and receiving remuneration in connection to trade RECAS professional conduct review Objects - - gather all relevant information
• treat parties fairly -gather information efficiently Amendments to the Act - - can be made by provincial legislature with recommendations by the Minister of Service Alberta Amendments to the rules - The rules contain the day to day activities
• council has the authority to create and amend Executive Director can suspend license - - determines the length of suspension
• serves the decision on the industry professional
• will consider the evidence when making the decision Whats includes in written service agreements? - - the services to be provided by the brokerage
• the responsibilities of each party to the agreement
• the names of the parties to the agreement failure to immediately notify Executive Director of changes to information provided in support of license results in: - - Exec. Director may refer the matter for a professional conduct review
• Exec. Director may suspend industry professionals license
• Exec. director may cancel the industry professionals license How long is license valid if not registered with brokerage? - 36 months Levels of Disclosure - 1. other party represented by another brokerage 2. other party not represented

3. other party represented by same brokerage Designated Agency vs Common law - Designated Agency

• relationship with individual instead of brokerage
• conflict of interest only if agent has an interest in property

Common Law

• agency relationship exists
• conflict of interest extends to whole brokerage
• must be disclosed Inducement vs incentives - - Inducement is client specific
• incentives must be offered by brokerage to everyone If industry professional withdraws from profession during disciplinary proceedings - - RECA issues a news release
• all disciplinary proceedings terminated
• lifetime ban from all industry professions governed by RECA Advisory Notes - Technical breach of legislation
• ex. forgetting brokerage name on marketing Letters of Reprimand - - where cases of conduct deserving sanction is less serious
• agent has also received an advisory note Administrative penalties - - actions breached a section of rules and deemed potentially serious Approaches to complaints agent agent - - Advisory notes
  • technical breach
• letter of reprimand
  • less serious, already received advisory note
• Administrative penalty
  • potentially serious
• hearings
  • severe in nature Records must be: - - kept in Alberta
• maintained in electronic form
• kept by brokerage for 3 years
• accessible to RECA for inspection To become licensed - - must become registered with brokerage before one year.
• must renew by September 30, each year Privacy legislation regarding client information - - Personal Information Protection Act (PIPA)
  • Provincial legislation
• Personal Information protection and Electronic Documents Act (PIPEDA)
  • federal legislation Personal Ethics - Morals - held by individual

Ethics - Standard of Conduct (values/beliefs that guide actions) Professional Standards - Rules and Regulations Ethical Decision Making - 1. Recognize 2. Analyze

3. Test 3A. Seek assistance if needed 4. Implement Golden rule - Do unto others as you would have them do unto you Real Estate Insurance Exchange (REIX) - - provides financial protection

• compensates consumers up to $35,
• mandatory errors & omissions insurance + negligence
• excludes injuries or death, transfers of title, commission/fees
• $3,500 is the first deductible
• $7,000 if second claim.
• RECA collects premiums with licensing fees Tort Law - Compensation for civil wrongs that result in harm
• Negligent Tort
  • carelessness, failure to exercise reasonable care
• Intentional Tort
  • assault, fraud, theft, defamation
• strict liability Tort
  • the act itself, producting defective products, using hazardous materials Benefits of REIX - - enhances the image of the profession
• has the potential to save on insurance costs
• The profession is active in managing the program and its risks Duty based approach to ethical decision making - - individuals intentions or motives
• belief in universal moral system of ethical reasoning
• individuals should do the right thing because its the right thing to do Errors and Omissions Insurance - real estate equivalent of malpractice coverage Comprehensive General Liability Insurance - - broad coverage for claims against injury/damage
• civil liability (a fall)
• any damages or injuries
• legal defense costs
• does not cover issues related to real estate transactions Voluntary Broker Resolution Process (VBRP) - - enables broker to take the lead in resolving complaints and disputes

• prior to RECA + Formal courts
• brokers confer with REIX before proceeding Privacy Law - - Brokerages must designate a privacy officer to be accountable for compliance
• must be consistent with the applicable privacy legislation Benefits of Voluntary Broker Resolution Process - - avoids time and intrusion involved with RECA investigation
• identifies deficient brokerage practices that need improvement
• allows participation in the process to achieve acceptable resolution
• opportunity to mend relationship with consumer Three components of broker leadership - Authority, responsibility, and accountability Reactions to conflict - Physical, Cognitive, Emotional Principles of Competition Act - - Do not collude with competitors
• do not discriminate against or refuse to do business with competitors
• do not mislead the public through advertisement or representation Proceeds of Crime (Money Laundering) and Terrorist Financing Act - - Federal act
• specific measures to detect and deter money laundering
• facilitates investigations
• responds to threats posed by organized crime
• fulfill international commitments to fight multi-national crime Financial Transactions and Reports Analysis Center of Canada (FINTRAC) - - responsible for collection, analysis and disclosure of information
• identifies lists of groups under their watch
• brokers must report suspicious transactions Safeguards to protect personal information - Administrative, Technological, Physical Confidential information - includes both personal and business information
• not readily available info, may have value Civil liability - - private legal action between disputing parties
• involves and plaintiff and defendant appearing in court
• established by the courts at the conclusion of legal proceedings Types of Consent - Express (most important)
• given verbally or in writing Implied
• does not specifically give, but volunteers personal information

Opt-out

• unless the individual takes action, can assume consent is given Legacy Information - - personal information collected before application privacy legislation came into effect
• considered to be collected with consent
• may be used for a new purpose other than original purpose if new consent is obtained Disputes come from: - Assumptions Omissions (non actions) Commissions
• act that did not meet approval, creating issues ex. young couple in 55+ building Complaints and Disputes can - - indicate need for improved policies/procedures
• are associated with learning opportunities Types of Authority - Express
• written or verbal Implied
• whatever needed to accomplish action Customary
• widely accepted way of behaving or performing action General Obligations - perform mandate, exercise care and skill Fiduciary obligations - act in best interest Common Law - Laws put in place by the courts Statute law - Laws passed by federal/provincial governments Customer vs Client - Customer (non representative relationship)
• will not get confidential advice, services that require discretion/judgement, advocacy or representation Client
• most relationships established by express agreement (oral/written) Types of Representation Termination - Agreement
• mutual (both parties agree)
• expiry (set date)
• completion/performance (ends once purpose is achieved)

Revocation

• mutual consent
• lawfully - either party fails to fulfil duties
• unlawful - terminated without consent from both parties (parties fulfilled duties) Operation of Law
• impossible, illegial, death, mental incapacity, bankruptcy Designated Agency - - discretion of broker, must be applied to brokerage
• helps avoid conflicts of interest
• conflict arises if same designated agent is representing multiple clients with interest in same property, either competing or opposing
• broker remains neutral Elements of representation relationships - - controlled by principal (client)
• involves fiduciary duties
• affects principals legal position Transaction Brokerage - -means to resolve conflict of interests
• if both clients accept conflict trade can proceed
  • written agreement
  • clients must have opportunity to review agreement before signing
  • must get opportunity to ask questions Rights of Land - Fee Simple - freehold, absolute owner of land Leasehold - interest in land expires with lease agreement life estate - interest in land for duration of life
• reverts to fee simple with death Dover Act - upon death non-titled spouse acquired interest
• only applies if legally married and matrimonial house
• dissolves with divorce Quantum Meruit - amount awarded by courts for contractual work done to date Essential Elements of a Contract - Legal object, capacity of both parties, consideration, intent to contract, genuine consent, mutual agreement Discharged contract - was valid and has now ended privity of contract - - legal actions can only be taken by contracting parties
• only original parties are bound by contract

Powers of Attorney - General

• has no limits, can make financial and legal decisions
• cannot make decisions about health care and where they reside Special
• specific/limited powers Immediate
• appoints an attorney to make financial/legal decisions
• terminates upon loss of mental capacity/death Enduring
• takes effect immediately if donor becomes incapable Conditions precedent - - used in alberta
• party needs to waive or remove conditions for contract to proceed
• must be waived for contract to proceed Bundle of rights - right to possess, use, enjoy and sell the land
• lease/rent
• sell/give away
• enter/use/do nothing Land - includes physical ground and air space characteristics;
• durable, rigid, immobile, unique, scarce Real Estate vs Property vs Real Property - Real estate
• Raw land + any improvements that are permanent or fixed Property
• rights of ownership, intangible Real Property
• land, real estate, and property rights
• rights include right to lease,sell or giveaway land Types of Ownership - Sole ownership
• one individual or company
• dower rights Joint Tenancy
• co-owners equal interest
• four conditions

• time, receive interests at same time
• title, all joint tenants must obtain title from same document
• interest, same type of ownership
• possession, undivided interest if any of the conditions about are terminated switches to tenancy in common Tenancy in Common
• may own different shares Eminent Domain - right of government to expropriate Escheat - government regains ownership if taxes arent paid Encumbrances - interests registered on title
• will transfer with title to new owner Registered Encumbrance - Easement - right to use land in common with others ex. access roads, walkways, parking rights conservation easement - voluntary agreement, runs with land Registered Encumbrance - caveat - notice/warning that someone is claiming an interest in the land. Complicated sale Registered Encumbrance - encroachments - item being placed, erected/built on adjoining property. If adjoining owner does not sign, cannot be built. Registered Encumbrance - Restrictive Covenants - restriction on use/architectural detail Registered Encumbrance - Liens - financial claims, not mortgage Registered Encumbrance - builders Liens - in favor of party that did work, claim for unpaid services in excess in $ Registered Encumbrance - certificate of Lis Pendens - notice that litigation is in progress Registered Encumbrance - leases - in excess of 3 years Registered Encumbrance - writs of enforcement - written directive from court Registered Encumbrance - Party wall Agreements - common wall divides property Registered Encumbrance - mortgage - charge on land for security for a debt or loan

Torrens System - -provides security of guarenteed title Mirror principal - all current interests are reflected Curtain principal - all current + any interests previously registered Insurance principal - govt provides compensation for loss of rights Lease timelines - Rent increases

• weekly tenancies - 2 weeks notice
• monthly - 3 months
• yearly - 90 days Termination
• weekly - one week
• monthly - landlord must give 3 months, tenant 1 month
• yearly - landlord must give 90 days, tenant 60 days Land title assurance fund - provides owners compensation if they suffer a loss due to an error on title Water Act - individual must have a water license to divert water Rural land legal discriptions - - Meridians and ranges are longitudinal lines
• townships run east and west
• township is divided into sections
• grid system of survey is used for undivided land Condominiums - - main source of income from monthly fees
• to pass a special resolution must have 75% of eligible voters with at least 7,500 of unit factors Owners monthly contribution calculation - 1. determine annual anticipated expenses 2. divide by 10,00 to get cost per unit factor (always 10,000)

3. times unit factor by number of unit factors per owner 4. divide by 12 to get monthly contribution Condominium funds - Operating funds

• regular, recurring expenses ex. utilities, maintenance, repairs, administration Reserve fund
• major capital repairs and replacements
• must be completed every five years

1. reserve fund study - must be completed within 2 years for new condominium 2. reserve fund report
2. reserve fund plan - developed by board of directors

Condominium additional plan sheet (CADS) - legal description of condominum plan, registered name of corporation, number of units, registered bylaws, any encumbrances, any financial obligations, any pending litigation.

• can be accessed on SPIN Esstopel insurance - signed statement regarding finances Annual general meetings - - must be held within 15-months of last one Condominium plans - - condominium only exists once plan has been created and registered with alberta land titles Conventional plans
• first type identified in condominium property act
• most commonly registered
• units are defined with structure bare land condo plans
• units are parcels of land
• boundaries defined by width and depth barely blended condo plans
• divides bare land units into smaller units -boundaries defined by space within structure Value Types - Subjective Value
• emotion, value in the mind of buyer/seller Objective Value
• cost of creation, value as determined by cost Value in Use
• $terms, value expressed in monetary terms Investment Value
• financial goal, value to investor based on their financial goals Operational Value
• Value in conjunction with an ongoing business Insurable Value
• claim value, in terms of insurance policies/claims Assessed Value
• taxation, value for purpose of tax reasons

Market Value

• Property value, expected value

1. Principal of Balance - value is created and sustained where there is equilibrium
2. Principal of Change - economic, political, and social forces are constantly in play and contribute to the dynamic nature of property values
3. Principal of Competition - excessive profits breed opportunities which then tend to destroy those profits
4. Principal of Consistent Use - when improved land is in transition to another highest and best use, one use cannot be allocated to the land and another allocated to the building
5. Principal of External Factors - various factors beyond the property itself can impact its value and these factors may include economic, political, social and physical issues
6. Principal of Increasing/decreasing return - capital improvements add value to a property to a certain point
7. Principal of Surplus productivity - factors of production that generate net income, which is then attributed to the land and tends to set the value
8. Principal of Supply and Demand - market value is determined by the interaction of market forces such as the quantity of available properties and the interest of buyers able to purchase them
9. Principal of highest and best use - considers legal permissibility, physical possibility, financial feasibility and maximum productivity 10.Principal of Substitution - a buyer will pay no more for a property than the cost of acquiring a similar and equally desirable property 11.Principal of Contribution - value of a property attribute relates to the value it adds to the overall value of the property. basis by which adjustments are made to the sale prices of comparable properties 12.Principal of Progression - properties in the same area are dissimilar, the property with the lesser value will be enhanced in value its proximity to properties of greater value. 13.Principal of Regression - where properties in the same area are dissimilar, the property with the greater value will be adversely affected in value by its proximity to properties of lesser value

14.Principal of Anticipation - value is created for the buyer by the expectation of future benefits, whether based on money or amenities Principal of Conformity - a property must reasonably confirm to the existing standards of the area Appraisal Process - 1. define problem

2. Complete preliminary inspection and appraisal plan
3. Collect and analyze data
4. Decide on Approach
5. Reconcile final property value estimate
6. Write appraisal report Fraud for housing vs Fraud for profit - fraud for housing

• borrower attempts to obtain larger mortgage and falsifys information to qualify fraud for profit
• organized crime Type of Fraud - False documentation - altered to enhance borrowers ability to qualify Type of Fraud - Non-occupancy - false statement that they intend to live in property, use as revenue producing instead Type of Fraud - Name Manipulation - used by people with bad credit, change date of birth/name. creates new credit bureau record Type of Fraud - Identity theft - Type of Fraud - Mortgage assumption - target properties with existing mortgage Type of Fraud - Seller financing scheme - targets sellers who may be offering to hold the mortgage sellers target potential buyers that have little or no credit Type of Fraud - Private financing scheme - investors promise high returns Type of Fraud- Bankruptcy fraud - aquires revenue generating property Type of Fraud - debt consolidation - offers to pay mortgage if signs over the title

Type of Fraud - Title Fraud - transfer of property from legitimate owner Type of Fraud - false deposit - false statement causing lender to make decision Type of Fraud - equity access - owner seeks funds using accumulated equity Type of Fraud - Secret Second - second mortgage that is kept secret Type of Fraud - Air loan - loan advanced on property that does not exist Type of Fraud - inflated appraisal - appraiser values property higher than worth Type of Fraud - vendor cash back - purchased property for higher price, amends price however lender uses higher price for mortgage Type of Fraud - Contract Kiting - two contracts, one agreed price, one higher price. Higher price is given to lender Type of Fraud - Straw buyer - sells credit information Type of Fraud - Property flip -