I saw on the news that fraudsters are being charged with unlicensed real estate trading. Why do you need a licence to buy or sell property?
First things first. You don’t need a licence to buy or sell property; consumers are always free to buy or sell their own property. When you need a licence, though, is when you’re helping someone else buy or sell property.
The individuals you’ve seen in the news are people who are not licensed as real estate professionals, who say they will help consumers buy and sell property, but instead, they are actually participating in various fraud schemes. That’s why they’re in the news.
Still, unlicensed trading in real estate remains a serious issue and not just because of the fraud that sometimes results. Under the Real Estate Act of Alberta, anyone trading in real estate, dealing in mortgages, performing real estate appraisals, or providing property management services requires a licence from the Real Estate Council of Alberta (RECA). It’s the law.
Buying a home is one of the largest financial commitments most people will ever make. Why would you want to trust that transaction with someone who doesn’t have education, experience, and a regulatory body behind them?
When you hire a licensed real estate professional, you can trust they’ve completed pre-licensing education, their background has been reviewed, they carry errors and omissions insurance, they’re required to complete ongoing education, and you can feel confident that a regulatory body will hold them accountable for their actions. All real estate licensees are required to carry errors and omissions insurance, and there’s a Consumer Protection Fund available in the very rare event a consumer suffers a financial loss as a result of fraud, breach of trust, or a failure to disburse or account for money held in trust by an industry member.
Think about it, you don’t want people driving on the road who don’t have a driver’s licence, right? If someone has a driver’s licence, it means they passed a competency test, and there’s an unwritten agreement that they’ll follow the rules of the road. If they don’t, they can be fined or even lose their licence. The same thing applies to licensed real estate professionals. If they violate the rules, RECA has the authority to discipline them, which can include licence suspension or cancellation.
When someone doesn’t have a real estate licence, and represents a consumer in a real estate deal, the consumer has no assurances that the person has knowledge or training, and there’s nowhere to go – other than Court – if something goes wrong.
