Real Estate Regulation – module 5

Vocabulary flashcards summarising principal terms, statutes, regulatory bodies, procedures, duties, insurance, and legal concepts governing Alberta’s real-estate industry under the Real Estate Act.

Common Law

Judge-made law that interprets written legislation and sets precedents for future cases.

Precedent

A past judicial decision that influences the outcome of later similar cases.

Fee Simple

The greatest bundle of rights in land short of outright ownership by the Crown.

Statute of Frauds

Requires real-estate contracts to be in writing and signed to be enforceable in court.

Law of Property Act (Alberta)

Provincial statute that governs property rights and interests such as mortgages and court orders.

Dominion Lands Act (1872)

Federal law that opened western lands for settlement using the township survey system.

Mineral Rights

Ownership of subsurface minerals, usually retained by the Alberta government and leased to industry.

Registrar (Land Titles)

Official responsible for maintaining land titles and registering land transfers.

Real Estate Commission Act (1922)

Early Alberta statute that clarified when commissions could be claimed in court.

Real Estate Agents’ Licensing Act

Series of Alberta statutes (1929–1970) that progressively introduced licensing, bonds, bookkeeping, trust rules, and advertising requirements for agents.

Canadian Real Estate Association (CREA)

National trade group formed in 1943; owner of REALTOR® and MLS® trademarks.

Alberta Real Estate Association (AREA)

Provincial industry association referenced in later Real Estate Act amendments.

Real Estate Act (REA) 1995

Current Alberta legislation establishing self-regulation and the Real Estate Council of Alberta.

Real Estate Council of Alberta (RECA)

Independent governing authority that sets, regulates, and enforces standards for Alberta real-estate licensees.

Industry Council

One of four RECA bodies (residential, commercial, property management, mortgage) that create rules and licensing requirements.

Bylaws (RECA)

Internal regulations made by RECA’s Board governing operations, fees, hearings, and education.

Rules (RECA)

Standards developed by Industry Councils that licensees must follow in daily practice.

Real Estate Assurance Fund (REAF)

Statutory fund that pays certain court judgments and trust-account losses caused by licensee fraud or breach of trust.

Alberta Real Estate Foundation (AREF)

Organisation that receives interest from brokerage trust accounts to fund education, research, and law reform.

Licensee

Any person holding a brokerage, broker, associate-broker, associate, property-manager, or mortgage-broker licence issued by RECA.

Brokerage

Licensed entity that employs or contracts brokers/associates and trades in real estate under a broker’s supervision.

Broker

Individual who qualifies for broker licence, operates a brokerage, and supervises associates and trust accounts.

Associate Broker

Individual with broker education/licence who trades in real estate under another broker’s brokerage but does not operate it.

Associate

Licensed salesperson who trades in real estate under a supervising broker.

Mortgage Broker (REA definition)

Person who, for compensation, arranges, negotiates, collects, or trades in mortgages, or advertises such services.

Property Management

Activities including leasing, rent collection, advertising, condominium management, and holding rental money for owners.

Condominium Management Service

Exercising powers or duties of a condo corporation on its behalf.

Trade (in Real Estate)

Purchase, sale, offer, advertisement, or showing of real estate for consideration.

Substantial Interest

Ownership of 25 percent or more in a piece of real estate.

Holding Yourself Out

Giving the public the impression that you are licensed to perform regulated real-estate services.

Guaranteed Sale Agreement (GSA)

Written contract in which a brokerage promises a seller a fixed or determinable amount within a set time, requiring a special trust account and 5 % deposit if brokerage benefits.

Trust Account

Separate bank account in Alberta where brokerage holds client money according to written terms.

Practice Review (Audit)

RECA’s proactive examination of brokerage records to ensure compliance and reduce Assurance Fund claims.

Complaint

Written allegation of misconduct against a licensee that triggers RECA investigation.

Registrar (RECA)

RECA officer who oversees licensing, investigations, inspections, and can issue administrative penalties or freeze assets.

Hearing Panel

Three-member RECA tribunal that determines conduct deserving sanction and imposes disciplinary orders.

Appeal Panel

Three-member RECA body that reviews hearing-panel or registrar decisions upon request.

Administrative Penalty

Monetary fine issued by registrar for clear, limited contraventions; payable without formal hearing but appealable to a panel.

Conduct Deserving of Sanction

Behaviour by a licensee that breaches REA, regulations, rules, or fiduciary/ethical duties, warranting disciplinary action.

Civil Liability

Legal responsibility in court for damages or remedies arising from negligence, contract breach, or torts.

Professional Liability Insurance (E&O)

Mandatory coverage protecting licensees against claims for errors, omissions, or negligence in professional services.

REIX (Real Estate Insurance Exchange)

Reciprocal insurance program providing E&O coverage for Alberta real-estate licensees.

Vicarious Liability

Legal doctrine holding employers (brokers) responsible for certain acts of their employees or associates.

Common Law Agency

Traditional brokerage model where all licensees in a brokerage collectively owe fiduciary duties to each client.

Designated Agency

Model where a brokerage designates specific licensees as sole agents for each party, isolating confidential information.

Transaction Brokerage

Facilitation service wherein one brokerage assists both buyer and seller without fiduciary duties, using a written agreement.

Customer Status

Relationship where a party receives limited services without agency representation or fiduciary obligations.

Conflict of Interest

Situation in which a licensee’s duties to multiple parties or personal interests are incompatible, requiring disclosure or avoidance.

Immunity (REA)

Protection from legal action for RECA officials acting in good faith under the Act.

Quorum

Minimum number of Board or council members required to conduct official business.

Bylaw Resolution in Writing

Mechanism allowing RECA Board or councils to pass decisions without a physical meeting.

Service Agreement

Written contract defining services and obligations between a licensee and client.

Inducement

Promise offered to influence a party to enter or complete a transaction; must be in writing and brokerage-approved.

Standard of Care

Level of competence and prudence a reasonable professional would exercise in similar circumstances.

Negligence

Failure to meet the standard of care, causing foreseeable harm.

Recklessness

Conscious disregard of a substantial risk that harm will result from one’s actions.

Fiduciary Duty

Highest duty of loyalty, confidentiality, and full disclosure owed by an agent to a client.

Material Latent Defect

Hidden property problem that would significantly affect a buyer’s decision or terms, requiring disclosure.

Sub-Agent

Another brokerage appointed with client’s consent to assist but who owes fiduciary duties to the original client.

Attributed Knowledge

Concept in designated agency that knowledge of one designated agent is not automatically imputed to brokerage or other agents.

Personal Real Estate Trade

Licensee’s own property transaction requiring disclosure of licence status, interest, and brokerage affiliation.

Broker Delegation

Written assignment of certain supervisory tasks to another licensee, with oversight retained by the broker.

Guaranteed Commission Ban

Rule prohibiting commissions based on difference between list price and sale price.

Three-Way Trust Reconciliation

Monthly process matching trust bank balance, trust ledger totals, and client sub-ledgers.

Freezing Assets Order

Registrar’s directive preventing a licensee from accessing funds during investigation or shortage.

Receiving Order

Order directing third parties to pay monies owed to a licensee into court rather than the licensee.

Real and Substantial Connection

Legal test to determine Alberta jurisdiction over cross-border real-estate matters.

On-Site Manager Exemption

Provision allowing resident managers to collect rent and show units without a broker licence, if they do not negotiate leases.

Mortgage Broker Exemption – Agriculture

Exclusion for organizations providing farm financing from mortgage-broker licensing.

Errors vs. Omissions

Errors are wrong acts; omissions are failures to act when required—both covered by E&O insurance.

Punitive Damages

Court-awarded sums intended to punish egregious conduct; not covered by REIX.

Cyber Liability Insurance

Coverage for costs associated with hacks, data breaches, or ransomware attacks on a brokerage.

Key Person Insurance

Policy indemnifying a business for financial loss due to death/disablement of a crucial individual.

Quasi-Criminal Liability

Exposure to fines or penalties under regulatory statutes like REA, distinct from civil damages.

Duty to Cooperate

Licensee obligation to assist RECA investigators, provide documents, and answer questions truthfully.

Administrative Definitions (REA)

Section of the Act defining Board, Council, Fund, Foundation, Industry, Person, Real Estate, etc.

Budgetary Spending Limits (Bylaws)

Rule that RECA may only spend funds approved in operating or capital budgets, emergencies, or legal obligations.

Guaranteed Sale Deposit

Minimum 5 % trust deposit required when brokerage benefits from a GSA.

Audit Selection Factors

Criteria such as new brokerage, trust balance, past deficiencies, or complaints used to trigger a practice review.

Complaint Limitation – Two Years

Former licensees must retain records for two years, during which RECA may initiate proceedings.

Civil Contempt

Finding against a witness who refuses to obey a panel summons or answer questions.

Specific Performance

Court-ordered equitable remedy compelling a party to complete contractual obligations.

Equitable Rescission

Court remedy cancelling a contract to return parties to pre-contract positions.

Workers Compensation Insurance

Mandatory provincial program covering employee injuries during work.

Commercial General Liability (CGL)

Insurance covering bodily injury or property damage to third parties arising from business operations.

Occupiers Liability Insurance

Coverage for claims arising from injuries to visitors within leased office premises.

Transfer of Trust Surplus to AREF

Rule that trust monies held over two years must be remitted to Alberta Real Estate Foundation.

Education Code of Conduct for Learners

Standard of behaviour for students in RECA-approved education programs; breach can affect licensing.

Lifetime Licensing Ban (Withdrawal)

Consequence when a licensee’s application to withdraw instead of facing discipline is accepted.

Dower Rights

Spousal approval requirement in Alberta when only one married person holds property title.

Meridian–Township–Range System

Survey grid dividing western Canada into legal land descriptions (meridians, ranges, townships, sections, LSDs).

Trust Shortage Notification

Broker obligation to inform parties in writing when required deposit not received or cheque bounces.

Guarantee of Honest Advertising

Standard prohibiting misleading statements or reckless ads by licensees.

Injunction

Court order requiring a party to cease a specified action.

Liquidated Damages

Pre-agreed amount payable for contract breach, enforceable if a genuine estimate of loss.

Specific Damages

Compensation for actual, quantifiable losses suffered due to wrongdoing.

General Damages

Compensation for non-quantifiable harm such as pain, suffering, or loss of reputation.

Board Chair (RECA)

Public member appointed by Minister to lead RECA’s seven-member Board.

Official Administrator

Person appointed by Minister to run RECA or an Industry Council temporarily if governance fails.

Real Estate Appraiser (REA)

Individual compensated to estimate real-estate value, sign reports, or hold out as an appraiser.