2.1 Code of Conduct & Professional Standards
Key Takeaways
Rules 41 and 42 require honest, competent service and prohibit reckless or intentional representations or conduct that mislead, deceive or are likely to do so.
Provide services within both your licensed sector and your competence. A consumer waiver cannot authorize trading outside your licensed sector.
A customer receives limited services without agency representation. All licensees remain subject to the conduct rules and applicable restrictions on the use and disclosure of information.
Rule 57(i) requires a seller’s sole agent to disclose known material latent defects to buyers. Under Rule 41(j), a licensee must refuse further service if the client instructs the licensee to withhold a required disclosure.
Rule 40 requires immediate written notice to the registrar when a listed event occurs. Associates and associate brokers must also give their broker a copy of that notice.
2.1 Code of Conduct & Professional Standards
General standards of practice
Rule 41 requires Alberta licensees to act honestly, provide competent service, fulfil fiduciary obligations to clients and comply with legislation. Explain your role to clients and third parties. Tell clients as early as practical how you will be paid and whether you have a conflict. Cooperate fully with RECA and comply with its orders and licence conditions.
Scope and competence are separate. Check whether your licence covers the sector before accepting work. An associate licensed solely in residential real estate should refer an industrial lease to a properly licensed commercial practitioner. An associate who holds commercial authorization but lacks experience with a complex lease still owes competent service. Discuss the limitations with the client and broker, and obtain appropriately qualified assistance or decline the mandate.
Reasonable care and skill concerns how you perform the work you accept. For example, a residential licensee can review a title and identify a registered easement. Where its legal effect on a planned addition is unclear, obtain the registered instrument and refer the interpretation to the client’s lawyer.
Real Estate Act Rules Rule 42: Prohibited Conduct & Misrepresentation
Whereas Rule 41 defines affirmative standards of practice, Rule 42 sets clear prohibitions against dishonest, deceptive, or disreputable behaviour. Under Rule 42, a licensee must not:
- Make reckless or intentional false or misleading representations: Licensees are strictly prohibited from making statements or carrying on conduct that is reckless or intentional and that misleads or deceives any person, or is likely to do so. This applies to verbal statements, written contracts, marketing claims, property data, and representations about competing offers.
- Participate in fraudulent or unlawful activities: Licensees must never assist, facilitate, or participate in mortgage fraud, value inflation schemes, straw-buyer arrangements, undisclosed side agreements, or other unlawful transactions.
- Undermine public confidence or industry integrity: Rule 42(g) prohibits conduct that harms public confidence, industry integrity or the reputation of the industry. For expressive conduct outside professional practice, Act section 17.2 limits sanctions to the circumstances specified in section 5(2)(b) of Alberta’s Regulated Professions Neutrality Act, in force for real estate from September 1, 2026.
Client duties, customer services and confidentiality
A client engages a brokerage for representation. Rule 41 requires fulfilment of fiduciary obligations. In a sole-agency relationship, protect the client's interests, maintain confidentiality, disclose conflicts and follow lawful instructions. Use reasonable care and skill in carrying out the agreement and account for entrusted funds or property. Rules 57 and 58 specify duties to a seller and buyer, respectively. A change to transaction brokerage changes the role and duties under Rules 59 and 59.1.
A customer receives limited services without agency representation. Rule 60 requires reasonable care and skill, protection against false or misleading information, proper handling of customer funds and compliance with the Act and Rules. When the brokerage represents the seller, Rule 57(i) requires the seller’s sole agent to disclose known material latent defects to buyers. A brokerage may offer the factual and administrative assistance Rule 60 describes, including preparing documents as directed and conveying offers. Rule 61 separately requires timely delivery of true copies when a licensee receives a written offer or acceptance. A customer decides what price to offer and may obtain independent advice.
Rule 44 restricts disclosure of information about a client, property or transaction unless authorized by the client or required by law, in addition to applicable privacy law. Rule 42(c) also bars use of confidential information obtained from any person for personal gain. Protect former clients’ confidential information after the service agreement ends. For example, a former client’s negotiating limit remains confidential when you later assist someone else. Customer status also leaves privacy protections in place.
Known material latent defects
Rule 1(1)(t) concerns defects that a reasonable inspection would not reveal. It includes hidden defects that make the property dangerous or potentially dangerous, unfit to live in, or unfit for a purpose the licensee knows the acquiring party intends. It may include an expensive-to-remedy hidden defect, an applicable remedial notice from a local authority, or missing municipal building or other permits. The facts matter. A former grow operation with unresolved unsafe mould can qualify, while the property’s history by itself does not establish a physical defect.
Under Rule 57(i), a seller's sole agent discloses all known material latent defects to buyers. An instruction to conceal the defect cannot be followed. Explain the duty and refuse to provide further services if the seller insists on withholding a required disclosure, as Rule 41(j) requires. If the evidence is uncertain, involve the broker and recommend expert advice. A suspected problem and a known defect call for different conclusions.
Immediate written notice under Rule 40
Rule 40(1) requires a licensee to write to the registrar immediately when any listed event occurs:
| Event | When the duty arises |
|---|---|
| Name | The licensee changes their name |
| Discipline | A listed industry association or another professional, occupational or regulatory body disciplines the licensee |
| Personal judgment | A judgment is rendered against the licensee relating to services or sales of goods to consumers |
| Business judgment | A business the licensee owns or has participated in as a partner, director or officer within the past three years has a judgment rendered against it |
| Financial proceedings | The licensee becomes subject to bankruptcy proceedings, or a business within that ownership or participation test becomes subject to bankruptcy or receivership proceedings |
| Criminal Code proceedings | Proceedings under the Criminal Code commence against the licensee |
| Conviction | The licensee is convicted of a criminal offence or another offence under a law of any country, province or state, except provincial or municipal highway traffic offences resulting only in fines, demerit points or both |
Under Rule 40(2), give particulars and any further information or documents the registrar requests. Under Rule 40(3), an associate or associate broker must give their broker a copy of the notice they send the registrar. The duty to report Criminal Code proceedings arises at commencement. For example, an associate charged with fraud sends immediate written notice even when the trial is months away.
Cooperating with RECA inquiries and investigations
Rule 41(h) requires full cooperation with RECA representatives carrying out duties under the Act. During a brokerage review or investigation, preserve original documents and transaction messages, provide required records and answer questions accurately. Under Act section 38, obstructing an investigator or withholding records required for an investigation can have consequences, including suspension for a licensee who refuses to cooperate until the registrar is satisfied that the licensee has cooperated.
Official sources
An Alberta associate licensed only in residential real estate is asked to negotiate a long-term lease of an industrial manufacturing facility. What should the associate do?
Decline to act on the commercial lease and refer the client to a properly licensed and competent commercial practitioner.
Proceed independently after disclosing in writing that industrial leasing is outside the associate’s usual practice.
Proceed if the client signs a waiver accepting the associate’s lack of commercial experience.
Negotiate the lease through the brokerage as long as another associate there is licensed in the commercial sector.
An associate has Criminal Code proceedings commenced against them for an alleged financial offence. The trial is scheduled for eight months in the future, and the associate firmly maintains their innocence. Under Rule 40(1) of the Real Estate Act Rules, when and how must the associate notify RECA?
Only if the trial results in a final criminal conviction and sentencing by the court.
Immediately in writing to the registrar when the proceedings commence, with a copy to the associate’s broker.
During the annual licence renewal cycle through the myRECA portal.
Only if the criminal proceedings result in an active sentence or fine exceeding $5,000.
During a pre-listing walkthrough, a seller client informs their listing associate that the finished basement foundation wall developed a major horizontal crack that allows water to flood the lower level during spring run-off. The seller has paneled over the wall and strictly instructs the associate not to mention this condition to potential purchasers. What is the associate's legal and ethical duty under RECA rules?
Obey the seller's instruction under the fiduciary duty of confidentiality, because listing associates must protect their client's negotiating leverage.
Remain silent during public showings but inform the buyer's home inspector if the inspector specifically asks about foundation settling.
Explain the duty to disclose the known material latent defect to buyers, and refuse further services if the seller insists it be concealed.
Disclose the crack only if the buyer enters into a formal transaction brokerage facilitator relationship with the listing brokerage.
Sections you finish are checked off in the contents.