I85PREP
⌘ K
Ontario RE Essentials Exam study materials
Ontario RE Essentials Exam study resources

Ontario RE Essentials Exam practice questions

One question at a time. Build your Ontario RE Essentials Exam understanding.

First 50 of 200 questions. Each one lists the choices, the correct answer, and an explanation. The checker at the top of this page saves progress in this browser when it is available.

Continue in the practice tool above to load more questions, 50 at a time.

Question 1Real estate as a business and professional practice

In Ontario, which body administers the statute governing real estate trading and enforces the Code of Ethics for registrants?

  1. The Financial Services Regulatory Authority of Ontario
  2. The Ontario Real Estate Association
  3. The Real Estate Council of Ontario Correct answer.
  4. The Ministry of Municipal Affairs and Housing

Explanation

RECO is the delegated administrative authority that administers TRESA and enforces the Code of Ethics for Ontario registrants. OREA is a voluntary trade association, FSRA regulates other financial services, and the ministry does not handle day-to-day registration or complaints.

Question 2Real estate as a business and professional practice

Who is permitted to trade in real estate in Ontario on behalf of a client?

  1. A lawyer acting outside a real estate transaction
  2. A salesperson registered with a brokerage Correct answer.
  3. An unregistered assistant employed by a brokerage
  4. A property manager who holds no real estate registration

Explanation

TRESA requires anyone trading real estate on behalf of another to be registered with RECO and to act through a registered brokerage. Unregistered assistants may perform limited administrative tasks but cannot trade, and lawyers need separate registration to act as real estate registrants.

Question 3Real estate as a business and professional practice

Under Ontario real estate law, how is the commission payable to a brokerage determined?

  1. By negotiation between the brokerage and the client Correct answer.
  2. By a schedule of rates published by RECO
  3. By the minimum rate prescribed in TRESA regulations
  4. By a tariff set by the local real estate board

Explanation

Commission rates in Ontario are negotiable between the brokerage and its client; no statute, regulation, or real estate board sets a mandatory rate. RECO does not publish a fee schedule, and competition law prohibits price fixing among brokerages.

Question 4Real estate as a business and professional practice

Which duty does the RECO Code of Ethics require a registrant to owe to every party in a trade, whether or not that party is a client?

  1. A duty to provide legal advice about the agreement
  2. A duty to treat the party fairly and honestly Correct answer.
  3. A duty to keep all information about the party confidential
  4. A duty to obtain the highest possible price for the seller

Explanation

The Code of Ethics requires registrants to treat every party to a trade fairly, honestly, and with integrity, even if that party is self-represented. Confidentiality and advocacy duties flow from a client relationship, and registrants must not give legal advice.

Question 5Real estate as a business and professional practice

Before a brokerage can be registered in Ontario, what insurance must it maintain?

  1. Mortgage default insurance issued by CMHC for every buyer
  2. Errors and omissions insurance acceptable to RECO Correct answer.
  3. Workplace safety insurance covering all clients and customers
  4. Title insurance covering every property listed by the brokerage

Explanation

A brokerage must maintain errors and omissions insurance acceptable to RECO as a condition of registration. Title insurance protects property owners, mortgage default insurance protects lenders, and workplace safety insurance covers employees rather than clients.

Question 6Real estate as a business and professional practice

When a salesperson advertises a property for sale, what must the advertisement identify?

  1. The registered name of the brokerage Correct answer.
  2. The commission offered to cooperating brokerages
  3. The seller's full legal name
  4. The salesperson's home address

Explanation

Advertising by a registrant must clearly identify the registered name of the brokerage, because the brokerage is the entity licensed to trade. The salesperson's home address, the seller's name, and commission offered are not mandatory advertising disclosures.

Question 7Real estate as a business and professional practice

Under TRESA, when does a brokerage's representation of a buyer begin?

  1. When the buyer submits an offer through the brokerage
  2. When the buyer and brokerage sign a written representation agreement Correct answer.
  3. When the salesperson gives the buyer a comparative market analysis
  4. When the buyer first attends an open house

Explanation

Under TRESA, representation arises from a written representation agreement between the client and the brokerage. Attending an open house, receiving a market analysis, or submitting an offer does not by itself create a representation relationship.

Question 8Real estate as a business and professional practice

A seller client tells their salesperson that the seller will accept a price well below the listing price because of a job transfer. The salesperson is asked by a buyer's agent about the seller's motivation. What should the salesperson do?

  1. Tell the buyer's agent only after the offer is accepted
  2. Disclose the motivation to help generate an offer
  3. Keep the information confidential and not disclose it Correct answer.
  4. Hint that the seller is flexible without giving details

Explanation

A salesperson owes the seller client a fiduciary duty of confidentiality, including keeping the seller's motivation and negotiating position private. Disclosing or hinting at that information would harm the client's bargaining position and breach the duty.

Question 9Real estate as a business and professional practice

A buyer gives a salesperson a $10,000 deposit cheque payable to the seller. What must the salesperson do with the cheque?

  1. Deposit it in the salesperson's personal account until closing
  2. Give it directly to the seller to hold until closing
  3. Cash it and hold the funds in the salesperson's office safe
  4. Deliver it to the brokerage for its trust account Correct answer.

Explanation

Deposit funds belong to the transaction and must be delivered to the brokerage for deposit into its trust account. A salesperson may not deposit client funds into a personal account, hold cash in an office safe, or give the deposit directly to the seller.

Question 10Real estate as a business and professional practice

A salesperson wants to buy a property that is listed by their own brokerage. What must the salesperson do before making an offer?

  1. Ask another salesperson to submit the offer without disclosing the interest
  2. Disclose the interest in writing and obtain required consent Correct answer.
  3. Wait until the listing expires and then buy it privately
  4. Buy it through a corporation so no disclosure is needed

Explanation

A registrant who has a personal interest in a trade must disclose that interest in writing to the client and any affected parties and obtain consent where required. Using a corporation or another salesperson does not avoid the disclosure obligation.

Question 11Real estate as a business and professional practice

Which statement best describes the usual employment relationship between a salesperson and a brokerage in Ontario?

  1. The salesperson is a partner in the brokerage by operation of law
  2. Usually an independent contractor supervised by the brokerage Correct answer.
  3. The salesperson is a provincial civil servant assigned to a region
  4. The salesperson is automatically an employee entitled to overtime

Explanation

Most Ontario salespersons work as independent contractors rather than employees, but the brokerage must still supervise their activities and remain responsible for trust funds and records. Independent contractor status does not remove regulatory obligations.

Question 12Real estate as a business and professional practice

A brokerage collects a buyer's financial information to assess mortgage pre-approval. Under privacy law, what is the brokerage generally required to do?

  1. Share it with all salespersons in the brokerage automatically
  2. Keep the information indefinitely regardless of the purpose
  3. Sell the information to lenders without telling the buyer
  4. Obtain the buyer's consent and use it only for stated purposes Correct answer.

Explanation

Privacy law requires an organization to collect personal information with the individual's knowledge and consent and to use it only for purposes it has identified. Financial information cannot be sold, kept indefinitely, or shared broadly without proper consent.

Question 13Real estate as a business and professional practice

Two brokers at different brokerages agree to charge the same 2.5% commission rate to all sellers. What is this agreement?

  1. Allowed if both brokers disclose it to clients
  2. Permitted because the rate is reasonable
  3. Required by RECO's commission guidelines
  4. A criminal offence under the Competition Act Correct answer.

Explanation

Agreeing with a competitor to set commission rates is price fixing, a criminal offence under the Competition Act. Commission rates must be independently negotiated with each client, and disclosure does not cure an otherwise illegal agreement.

Question 14Real estate as a business and professional practice

A seller instructs their salesperson not to show the property to buyers of a particular religion. What should the salesperson do?

  1. Show the property only to buyers who meet the seller's preference
  2. Ask the buyer to confirm their religion before scheduling a viewing
  3. Follow the instruction because the seller owns the property
  4. Refuse and explain that it violates the Human Rights Code Correct answer.

Explanation

The Ontario Human Rights Code prohibits discrimination in housing on grounds such as religion, race, and family status. A registrant must not follow a seller's discriminatory instruction and should explain the legal obligation to the seller.

Question 15Real estate as a business and professional practice

Under Ontario real estate regulations, how long must a brokerage keep records relating to a trade?

  1. Six years after the date of the trade Correct answer.
  2. Ten years after the brokerage closes
  3. One year after the trade closes
  4. Three years after the listing expires

Explanation

Ontario real estate regulations require a brokerage to retain records relating to trades for at least six years after the date of the trade. Shorter periods, or retention tied only to listing expiry, do not meet the requirement.

Question 16Real estate as a business and professional practice

A salesperson receives a $1,000 referral fee from a mortgage broker for introducing a client. What must the salesperson do?

  1. Report the fee only to RECO, not to the client
  2. Donate the fee to the brokerage's charity of choice
  3. Disclose the fee to the client and obtain consent as required Correct answer.
  4. Keep the fee without telling anyone because it is separate from the commission

Explanation

A registrant must disclose any referral fee or other remuneration received in connection with a trade and obtain the client's consent where required. Keeping the payment secret, donating it, or reporting only to RECO does not satisfy the disclosure duty.

Question 17Real estate as a business and professional practice

Under TRESA, a brokerage wants to represent both the buyer and seller in the same transaction. Which arrangement is permitted?

  1. The brokerage may represent both parties only if it reduces its commission by half
  2. The brokerage may represent both parties if the salesperson verbally tells them at the showing
  3. The brokerage may never represent both parties under any circumstances
  4. It may use designated representation with different registrants and written consent Correct answer.

Explanation

TRESA permits designated representation, in which the brokerage represents more than one client in the same trade through different designated registrants, provided each client consents in writing. Verbal notice or a commission reduction is not sufficient, and a blanket prohibition is no longer correct.

Question 18Real estate as a business and professional practice

A registrant receives $15,000 in cash from a buyer as a deposit. Under federal anti-money-laundering rules, what must the brokerage do?

  1. Report the deposit only if the buyer appears suspicious
  2. Submit a large cash transaction report to FINTRAC Correct answer.
  3. Refuse all cash deposits over $5,000 without exception
  4. Nothing, because the funds are held in trust

Explanation

FINTRAC requires reporting entities to submit a large cash transaction report when they receive $10,000 or more in cash in the course of a real estate transaction. Trust account status does not exempt the brokerage, and suspicion is not the threshold for this report.

Question 19Real estate as a business and professional practice

A seller's brokerage receives five competing offers. The seller wants buyers to know how many offers exist. What does TRESA permit the brokerage to disclose?

  1. The identity of every buyer who submitted an offer
  2. The number of offers if the seller agrees in writing Correct answer.
  3. The number of offers only after the seller accepts one
  4. The price and conditions of every competing offer

Explanation

Under TRESA, a seller's brokerage may disclose the number of competing offers if the seller instructs it to do so in writing. It may not disclose the price, conditions, or identity of competing buyers without authorization.

Question 20Real estate as a business and professional practice

A brokerage's registrant provides services to a self-represented party. Under TRESA, what is the brokerage's obligation regarding representation?

  1. The brokerage must represent the party if it shows a property
  2. The party automatically becomes a client once services begin
  3. It may assist without representing the party, after disclosure Correct answer.
  4. The brokerage owes no honesty or fairness duties to the party

Explanation

A brokerage may provide services to a self-represented party without entering into a representation relationship, but it must clearly disclose that it does not represent that party. It still owes honesty and fairness, and representation does not arise automatically from providing services.

Question 21Legislation, regulation and ethical obligations

Which organization administers Ontario's real estate legislation and registers brokerages and salespersons?

  1. The Canadian Real Estate Association (CREA)
  2. The Real Estate Council of Ontario (RECO) Correct answer.
  3. The Ontario Real Estate Association (OREA)
  4. The Financial Services Regulatory Authority of Ontario (FSRA)

Explanation

RECO is the delegated administrative authority that administers the Trust in Real Estate Services Act, 2020 and its regulations, including registration, complaints and discipline. OREA is an industry association, CREA is a national association, and FSRA regulates other financial sectors.

Question 22Legislation, regulation and ethical obligations

Before a new salesperson may trade in real estate in Ontario, what must be in place?

  1. RECO registration through a brokerage Correct answer.
  2. Incorporation as a real estate brokerage
  3. Membership in a local real estate board
  4. A separate municipal business licence

Explanation

TRESA requires individuals who trade in real estate to be registered with RECO, and a salesperson must be registered to act on behalf of a brokerage. Local board membership and municipal licensing are separate matters and do not replace provincial registration.

Question 23Legislation, regulation and ethical obligations

A salesperson posts an advertisement for a listing on social media. Which item must the advertisement include to comply with Ontario advertising requirements?

  1. The registered name of the brokerage Correct answer.
  2. The listing brokerage's commission rate
  3. The salesperson's home address
  4. The seller's telephone number

Explanation

Advertising by registrants must clearly identify the brokerage by its registered name and must not be misleading. Seller contact details, the salesperson's home address and commission rates are not mandatory advertising elements.

Question 24Legislation, regulation and ethical obligations

A brokerage receives a buyer's deposit cheque for a residential resale transaction. Which handling is permitted under Ontario trust account rules?

  1. Hold it in the salesperson's desk drawer until the offer is firm
  2. Deposit it into the brokerage's trust account Correct answer.
  3. Deposit it into the brokerage's general operating account until closing
  4. Use it to pay the brokerage's advertising invoice

Explanation

Money received in trust must be deposited into a trust account and kept separate from the brokerage's operating funds. It cannot be used for brokerage expenses or held outside a trust account.

Question 25Legislation, regulation and ethical obligations

Under Ontario real estate regulation, how long must a brokerage keep records of a trade?

  1. One year
  2. Six years Correct answer.
  3. Two years
  4. Ten years

Explanation

Brokerages must retain trade records for six years, which supports RECO inspections and the handling of complaints. Shorter retention periods do not meet the regulatory record-keeping requirement.

Question 26Legislation, regulation and ethical obligations

Which standard does the Code of Ethics require a registrant to meet when dealing with a client or customer?

  1. Fairness, honesty and integrity Correct answer.
  2. Maximize the brokerage's commission
  3. Avoid disclosing any information unless asked
  4. Act only in the seller's interest in every trade

Explanation

The Code of Ethics requires registrants to treat clients and customers fairly, honestly and with integrity. Loyalty and confidentiality are owed to clients, but the baseline fair-dealing duty covers all parties.

Question 27Legislation, regulation and ethical obligations

What does RECO require of registered salespersons and brokers with respect to continuing education?

  1. Repeat the initial registration course every year
  2. Attend a local board meeting every month
  3. Complete RECO-approved continuing education each cycle Correct answer.
  4. Complete a full real estate degree before each registration renewal

Explanation

Registrants must complete RECO-approved continuing education requirements each registration cycle to maintain registration and stay current. A degree, annual repetition of the initial course and monthly board attendance are not the regulatory requirement.

Question 28Legislation, regulation and ethical obligations

A buyer tells a salesperson, 'Don't show me homes in neighbourhoods where many people of a particular religion live.' What should the salesperson do?

  1. Report the buyer to the local real estate board
  2. Follow the instruction because the buyer is the client
  3. Ask the seller to decide which buyers to serve
  4. Refuse and explain the duty not to discriminate Correct answer.

Explanation

Ontario human rights law prohibits discrimination in housing, and registrants must not participate in steering based on a protected ground such as religion. The salesperson should decline the instruction and explain the legal obligation.

Question 29Legislation, regulation and ethical obligations

Under TRESA, a brokerage agrees to represent a buyer. What must the brokerage have in place before providing services to that client?

  1. A deposit held in the brokerage's operating account
  2. A written service agreement signed by the client Correct answer.
  3. Approval from the local real estate board
  4. A verbal understanding confirmed by text message

Explanation

TRESA requires a written service agreement before a brokerage provides services to a client, setting out the services and the terms of the relationship. A text message or oral understanding is insufficient, and board approval is not part of the requirement.

Question 30Legislation, regulation and ethical obligations

At the first substantive contact with a consumer, what must a registrant explain under TRESA?

  1. The representation choices available to the consumer Correct answer.
  2. The exact commission the seller will pay
  3. The names of every other buyer who has viewed the property
  4. The brokerage's internal disciplinary record

Explanation

Before services are provided, registrants must explain the types of representation available, including client and customer status, so the consumer can make an informed choice. Commission details, other buyers' identities and internal records are not required at this stage.

Question 31Legislation, regulation and ethical obligations

A brokerage represents the seller in a trade. A buyer who is not represented by any brokerage asks the seller's salesperson questions. Which duty does the salesperson owe the buyer?

  1. Undivided loyalty
  2. Full confidentiality
  3. Fairness and honesty Correct answer.
  4. Obeying the buyer's lawful instructions

Explanation

An unrepresented buyer is a customer, and the brokerage owes fairness and honesty but not the fiduciary duties of loyalty, confidentiality or obedience that belong to a client. The salesperson must not mislead the buyer.

Question 32Legislation, regulation and ethical obligations

A brokerage proposes to represent both the buyer and the seller in the same trade. What does TRESA require before the brokerage may act for both clients?

  1. Written consent from both clients after full disclosure Correct answer.
  2. Approval from the local real estate board
  3. Only the seller's consent is needed
  4. No consent is needed because the brokerage is neutral

Explanation

Multiple representation requires informed written consent from both clients after the brokerage discloses the conflict and its implications. Neither party's consent alone is sufficient, and board approval is not the legal test.

Question 33Legislation, regulation and ethical obligations

A salesperson representing a seller learns that the seller would accept $25,000 less than the listing price. A buyer's agent asks whether the seller is flexible. What should the salesperson do?

  1. Hint that an offer below asking will be accepted
  2. Tell the buyer's agent the lower acceptable price
  3. Post the information in the brokerage's internal chat
  4. Keep the seller's bottom line confidential Correct answer.

Explanation

Confidential information obtained through the client relationship must not be used or disclosed to benefit another party without the client's consent. Revealing the seller's bottom line, even indirectly, would breach that duty.

Question 34Legislation, regulation and ethical obligations

A salesperson wants to buy a property that their own client has listed for sale. What must the salesperson do first?

  1. Buy the property through a corporation to avoid disclosure
  2. Ask another salesperson to make the offer without disclosing anything
  3. Disclose the interest in writing and obtain consent Correct answer.
  4. Wait until the listing expires and buy it privately

Explanation

A registrant who has a personal interest in a trade must disclose that interest in writing and obtain the client's informed consent. Using another person or a corporation to hide the interest does not satisfy the conflict-of-interest duty.

Question 35Legislation, regulation and ethical obligations

A mortgage broker offers a salesperson $500 for sending a buyer client to the broker. What must the salesperson do before accepting the payment?

  1. Keep the payment secret to avoid influencing the buyer
  2. Disclose it in writing to the client and brokerage Correct answer.
  3. Donate the payment to the local real estate board
  4. Nothing, because referral fees are always prohibited

Explanation

The Code of Ethics requires registrants to disclose any remuneration received from a third party in connection with a trade. The client must be able to see the incentive, and the brokerage must be aware of it.

Question 36Legislation, regulation and ethical obligations

A salesperson wants to advertise a property that is not listed with their brokerage. What must the salesperson obtain first?

  1. A verbal okay from the seller's neighbour
  2. A promise to pay the salesperson a bonus
  3. Written authority from the property owner Correct answer.
  4. Permission from the local real estate board

Explanation

Registrants may advertise a property only with the authority of the owner and in accordance with the brokerage's policies. A neighbour's approval, board permission or a bonus promise does not establish authority to advertise.

Question 37Legislation, regulation and ethical obligations

A brokerage receives a deposit cheque on Monday morning. By when must the funds be deposited into the brokerage's trust account under Ontario regulation?

  1. Within thirty days after receipt
  2. Within ten business days
  3. Within five business days Correct answer.
  4. Only after the transaction closes

Explanation

Trust money must be deposited into a trust account within five business days after the brokerage receives it. Waiting until closing or holding it for thirty days does not meet the requirement.

Question 38Legislation, regulation and ethical obligations

A brokerage acts for a buyer in a residential purchase. Under federal anti-money-laundering rules, what must the brokerage do?

  1. Accept a cash deposit without identifying the buyer
  2. Report the buyer to the local real estate board
  3. Verify the buyer's identity using a prescribed method Correct answer.
  4. Ask the seller to identify the buyer

Explanation

Real estate brokerages are reporting entities under the federal anti-money-laundering regime and must verify client identity using prescribed methods. Board reporting and relying on the seller do not satisfy the identification requirement.

Question 39Legislation, regulation and ethical obligations

A seller's salesperson receives two competing offers. Under TRESA, what is the default rule about disclosing the contents of one offer to the other buyer?

  1. The salesperson must post the highest price publicly
  2. The salesperson must read both offers to all buyers
  3. Not disclose contents without the offeror's consent Correct answer.
  4. The salesperson may disclose any offer contents if the seller agrees

Explanation

Competing offer information is confidential to the offeror, and a registrant must not disclose its contents without consent. The seller's agreement alone does not override the offeror's confidentiality.

Question 40Legislation, regulation and ethical obligations

A client wants to pay a salesperson's commission cheque directly to the salesperson. What is the correct approach under Ontario real estate regulation?

  1. The salesperson may split it with the client
  2. The salesperson may deposit it into a personal account
  3. The salesperson may keep it if the brokerage is told about it later
  4. Payment must go to the brokerage, which pays the salesperson Correct answer.

Explanation

Salespersons are registered to act on behalf of a brokerage, and remuneration for trading in real estate must flow through the brokerage. A salesperson may not accept commission directly from a client.

Question 41Legislation, regulation and ethical obligations

A brokerage wants two of its salespersons to represent the buyer and the seller in the same trade under TRESA's designated representation model. What is required?

  1. Written consent from both clients after disclosure Correct answer.
  2. The same salesperson must represent both parties to avoid any conflict
  3. RECO must approve each designated representation before it begins
  4. Only the seller must consent because the seller usually pays the commission

Explanation

Designated representation allows a brokerage to designate different salespersons for different clients in the same trade, but only with informed written consent from both clients after disclosure. RECO does not pre-approve individual trades, and using the same salesperson would not be designated representation.

Question 42Legislation, regulation and ethical obligations

A buyer's deposit is held in a brokerage trust account. Before closing, the seller asks the brokerage to release the deposit to the seller. What is required?

  1. The brokerage's designated representative can release it alone
  2. The seller's oral request is enough because the seller is the client
  3. Written direction from the buyer and seller, or a court order Correct answer.
  4. The deposit can be released after thirty days automatically

Explanation

Trust funds may be released before completion only with proper authorization, typically the written direction of the parties who have an interest in the funds, or by court order. A unilateral oral request or automatic release after thirty days is not sufficient.

Question 43Legislation, regulation and ethical obligations

RECO revokes a salesperson's registration. Where may the salesperson appeal the decision?

  1. To the brokerage's designated representative
  2. To the Ontario Court of Appeal
  3. To the Licence Appeal Tribunal Correct answer.
  4. To the local real estate board

Explanation

Registration decisions made under TRESA may be appealed to the Licence Appeal Tribunal, which hears appeals from certain regulatory decisions. The local board and the brokerage cannot overturn RECO's registration decision.

Question 44Legislation, regulation and ethical obligations

A salesperson belongs to a team that advertises under a team name. What must the advertisement include?

  1. The name of every buyer who has viewed the listing
  2. The team leader's home address and phone number
  3. Both the registered brokerage name and the team name Correct answer.
  4. Only the team name, so the brand stands out clearly

Explanation

Advertising must identify the brokerage by its registered name, and team names must be registered with RECO. An advertisement using only a team name would not meet the identification requirement.

Question 45Legislation, regulation and ethical obligations

A buyer insists on paying a large deposit in cash and asks the salesperson not to report the transaction. What must the salesperson do?

  1. Report the buyer to the local real estate board instead
  2. Report it to FINTRAC and do not tip off the buyer Correct answer.
  3. Refuse the deposit but make no report
  4. Agree to keep it confidential because the buyer is the client

Explanation

Suspicious transactions must be reported to FINTRAC, and the registrant must not disclose that a report was made. Client confidentiality does not override the federal reporting obligation.

Question 46Legislation, regulation and ethical obligations

A brokerage completes a residential resale trade in which it acted for the seller. Under Ontario's record-keeping requirements for brokerages, how long must the records relating to that trade be kept?

  1. Until the brokerage's next RECO inspection.
  2. Ten years from the date the trade closes.
  3. Two years from the date the trade closes.
  4. Six years from the date the record was created. Correct answer.

Explanation

Ontario's brokerage record-keeping rules require records relating to a trade - the agreement, disclosures, correspondence and financial records - to be retained for six years from the date the record was created. The period is not measured from the closing date, and the records must remain available for inspection by RECO throughout that time.

Question 47Legislation, regulation and ethical obligations

A salesperson's registration is suspended because the renewal was not completed. The salesperson has a client appointment booked for that afternoon. What is the salesperson required to do?

  1. Complete the appointment and then refer the client to another registrant before an offer is written.
  2. Proceed with the appointment, because the suspension is administrative and existing clients are not affected.
  3. Proceed only if the brokerage's broker of record attends the appointment as well.
  4. Cease trading immediately and take no further steps until the registration is reinstated. Correct answer.

Explanation

A registrant may trade in real estate only while registered, so a suspended or lapsed registration removes the legal authority to trade. Trading while suspended is an offence under Ontario's real estate legislation and also exposes the brokerage to discipline, so all trading activity must stop until reinstatement.

Question 48Legislation, regulation and ethical obligations

A salesperson wants to thank a landscaper who regularly recommends the salesperson to homeowners by paying $300 each time a recommendation leads to a signed listing agreement. How does Ontario's regulatory framework treat this arrangement?

  1. It is prohibited, because an unregistered person may not be paid for a referral. Correct answer.
  2. The payment is permissible if the salesperson discloses the arrangement to the brokerage in writing.
  3. The payment is permissible only if the landscaper signs a written referral agreement first.
  4. The payment is permissible if it comes from the salesperson's share of the commission.

Explanation

Remuneration for trading in real estate, including a fee for a referral that leads to a trade, may be paid only to a registered brokerage or registrant. Paying an unregistered landscaper per referral is unlawful, and neither disclosure to the brokerage nor a private referral contract changes who is entitled to be paid.

Question 49Legislation, regulation and ethical obligations

For two years a salesperson acted for the seller of a commercial property. The sale closed 18 months ago. The salesperson's new buyer client now asks why the seller sold and whether the seller was under financial pressure. How should the salesperson respond?

  1. Answer, because the information became public when the sale was registered in the land registry.
  2. Answer only if the buyer promises in writing to keep the information confidential.
  3. Answer honestly, because the duty of confidentiality ends when the representation agreement expires.
  4. Decline to answer; the duty of confidentiality continues after the client relationship ends. Correct answer.

Explanation

The duty of confidentiality owed to a client survives the end of the representation agreement and the closing of the trade, so a former client's reasons for selling and financial circumstances remain protected. A registrant may disclose such information only with the former client's consent or where disclosure is required by law.

Question 50Legislation, regulation and ethical obligations

A salesperson listing a house is told by the seller that the basement flooded twice and has been asked to 'keep it quiet' because no moisture is visible now. What is the salesperson required to do?

  1. Follow the seller's instruction, because the salesperson owes the seller a duty of loyalty.
  2. Say nothing, but recommend that the seller obtain a pre-listing home inspection before showings.
  3. Refuse to conceal the flooding; a known latent material defect must be disclosed. Correct answer.
  4. Disclose the flooding only if a buyer asks a direct question about water in the basement.

Explanation

A seller must disclose known latent material defects, and a registrant must not participate in concealing them or mislead buyers, so a client's instruction to stay silent does not override that duty. The salesperson should tell the seller the flooding history must be disclosed and, if the seller insists on concealing it, decline to continue acting rather than market the property on a misleading basis.