The Lapsed Registration and the Unlicensed Assistant
Grant is the broker at Northern Lights Realty in Prince Albert. He has 12 salespeople and one unlicensed assistant, Ryan. Kelsey, a salesperson, allowed her registration to lapse on March 31. She continued to show properties and write offers through April because her renewal cheque was 'in the mail.' On April 18, Ryan took a call from a buyer and said the seller would probably accept $15,000 below list; he also drafted a financing condition for Kelsey's buyer. Grant learned about both issues on April 20. Kelsey has two pending deals: one signed April 5 and one signed April 15. The brokerage's errors and omissions insurance is current. Grant's brokerage manual says all assistants must be supervised, but no one checked Ryan's calls.
1. What registration and licensing breaches have occurred?
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Conclusion: Kelsey has been trading while unregistered, and Ryan has been performing licensed activities without registration.
Reasoning: A salesperson must be registered with the regulator and associated with a brokerage in order to trade in real estate. Kelsey's registration lapsed on March 31. From April 1 onward, her showings and offers were unregistered activity, even if her renewal cheque was in the mail and even if she expected the lapse to be temporary. The brokerage also has a responsibility not to permit an unregistered person to trade. The two pending deals signed April 5 and April 15 were therefore handled by someone who was not registered at the time.
Ryan's conduct: An unlicensed assistant may perform administrative tasks, but Ryan crossed the line by telling a buyer what the seller would accept and by drafting a financing condition. Those are licensed activities because they involve negotiation, advice, and contract drafting. Ryan's lack of registration is a separate breach, and Grant's failure to supervise him is a brokerage operations failure. The fact that the errors and omissions insurance is current does not cure an unregistered-activity problem.
2. What immediate steps should Grant take?
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Conclusion: Grant must stop the unregistered activity at once, preserve records, and review the affected transactions.
Reasoning: Allowing Kelsey to continue would compound the breach. Grant should tell Kelsey in writing to cease all trading activity, including showings, open houses, negotiations, and offer drafting, until her registration is restored. He should remove or suspend her advertising and ensure another registered salesperson is assigned to her pending clients with the clients' knowledge. Ryan should be instructed to stop giving price advice, negotiating, or drafting contract terms; he may continue only administrative tasks under direct supervision.
Broker-level actions: Grant should confirm Kelsey's registration status with the regulator, help her complete renewal if appropriate, and document when she stopped trading. He should review the April 5 and April 15 deals for disclosure, deposit handling, and client consent to the change in salesperson. He should also determine whether the brokerage must report the matter to the regulator. Finally, he should implement a written supervision policy for assistants and a registration-expiry tracking system. Trying to hide the lapse would be worse than correcting it promptly.
3. What risks do the pending deals and the brokerage face?
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Conclusion: The pending deals face commission, enforceability, and client-relations risk, and the brokerage faces regulatory and insurance risk.
Reasoning: If Kelsey was unregistered when the offers were written, the brokerage may have difficulty claiming commission for those transactions, and the clients may argue they were not properly represented. The deals may still be legally binding between buyer and seller, but the brokerage's entitlement to remuneration and its professional exposure are separate questions. The clients should be told promptly about the change in salesperson and given the choice to continue with a registered salesperson or take other advice.
Brokerage exposure: The regulator can discipline both Kelsey and the brokerage for permitting unregistered activity. Errors and omissions insurance may not respond to known unregistered acts or to dishonest or unauthorized conduct. Ryan's price comment and contract drafting create a risk that the buyer relied on unlicensed advice. Grant should notify the brokerage's insurer or legal counsel as appropriate, cooperate with any regulatory inquiry, and keep a written remediation plan. The goal is not to paper over the gap but to protect the clients and prevent recurrence.