Be Aware of Unlicensed Practice

by James Porter, RECA Investigations Manager

RECA takes unlicensed activity seriously. A person cannot trade in real estate, deal in mortgages or act as a property or condominium manager without an licence issued by RECA (s. 17 of the Real Estate Act).

Sometimes the line between licensed and unlicensed activity is misinterpreted, which unfortunately leads to Alberta consumers not being protected by a regulated environment. It can also result in persons being fined or sanctioned for engaging in those activities that require a licence.

Recent Examples of Unlicensed Practice

RECA has seen examples where licensees operate outside of the business of their brokerage and in an area where they do not hold that class of licence. For instance, a real estate brokerage may decide it is only going to represent buyers and sellers, and it is not going to be a brokerage that provides property management services, despite the broker and many associates at the brokerage also being licensed in property management. In some instance, one of the brokerage’s licensees, who is also licensed in property management, chooses to engage in property management business “outside” the brokerage. This would be considered unlicensed practice by the licensee, as all licensed activity flows through the brokerage, and they would also be failing to trade in the name of their brokerage. Licensees cannot provide services outside the business of their brokerage and cannot provide services in an area they don’t hold a licence.

Consumers should have confidence that licensees have received the proper training, are competent to practice in that industry, and that the activity falls within the regulatory framework of the industry and provides the legislated consumer protections.

The co-listing of commercial properties is another area where RECA has seen unlicensed practice. Advertising commercial property on behalf of an owner requires a commercial real estate licence. Instances have occurred where a residential licensee co-listed and advertised a commercial property with someone who holds a commercial licence, assuming that it is okay to do this, despite not being licensed in commercial real estate themselves. This is not the case. You must be licensed in commercial real estate to co-list a commercial property.

Consequences of Unlicensed Practice

First and foremost, consumers using the services of an unlicensed person are not protected by the Consumer Protection Fund, mandatory errors and omissions insurance, nor the guaranteed expertise of a licensed person who has taken the necessary education and has the experience in a particular area.

Also, those engaging in unlicensed activity may be subject to investigation and potential sanction, and RECA may issue administrative penalties.

Examples of administrative penalties for unlicensed activity are posted in the Case Summaries of the RECA website. In some of these cases, Administrative Penalties were as high as $25,000.

If licensees are unsure if their activity may be considered unlicensed, it is always best to discuss with your broker. Make sure your broker is aware of any business you are doing on behalf of the brokerage. Your broker can help explain what your class of licence allows you to do. If there is any ambiguity, you can also reach out to RECA with general inquiries at info@reca.ca. Your broker can reach out to a Regulatory Practice Advisor.

Also, please review the Information Bulletins describing the various sectors within a real estate licence:

Trading in Real Estate – Residential Real Estate

Trading in Real Estate – Commercial Real Estate

Trading in Real Estate Rural Real Estate

Trading in Real Estate – Property Management