Free practice questions · Course 1
Code of Ethics and Standards of Business Practice Practice Questions
RECO Code of Ethics obligations covering honesty, fairness, conflicts of interest, and the duty to clients and the public. Below are 5 free sample questions from our 70-question Code of Ethics and Standards of Business Practice bank. Each comes with the correct answer and a full explanation.
Question 1 of 5
The Bank of Canada announces a significant interest rate increase. How should a salesperson respond to stay informed and serve clients effectively?
- AUnderstand the potential impact on buyer affordability, market activity, and property values, and proactively communicate relevant implications to current clients
- BAdvise all buyer clients to immediately withdraw their offers
- CIgnore the announcement because interest rates are the mortgage broker's concern
- DWait until the next quarterly market report to assess the impact
Why A is correct
Interest rate changes are among the most significant factors affecting real estate markets. A well-informed salesperson understands how rates affect affordability, demand, supply, and pricing trends. They communicate these implications to clients promptly while recommending specific financial advice from mortgage professionals.
Question 2 of 5
A buyer's salesperson discovers that the seller's property disclosure statement indicates "unknown" for the question about previous flooding. What does exercising care and skill require?
- AAccept the "unknown" response at face value and proceed without further inquiry
- BConduct further investigation, such as checking municipal flood maps, and advise the buyer to consider a home inspection and inquire further
- CAssume the seller is hiding information and withdraw the offer immediately
- DIgnore the disclosure statement since it is not a legally binding document
Why B is correct
Exercising care and skill means not passively accepting information but actively investigating when responses raise concerns. An "unknown" answer on a significant issue like flooding should prompt further research, including municipal records, conservation authority data, and professional inspections. This proactive approach protects the buyer's interests.
Question 3 of 5
A client files a complaint with RECO against salesperson Fatima, alleging that she failed to present a competing offer in a timely manner. Fatima believes the complaint is unfounded. What does accepting responsibility for her actions require?
- AIgnore the complaint and hope RECO dismisses it
- BDestroy any records related to the transaction to prevent RECO from finding evidence
- CContact the complainant directly and pressure them to withdraw the complaint
- DCooperate fully with RECO's investigation, provide all relevant documentation, and present her account of events honestly
Why D is correct
Accepting responsibility includes cooperating with regulatory processes. When a complaint is filed, the registrant must respond honestly, provide requested documentation, and participate in the investigation. This applies regardless of whether the registrant believes the complaint has merit. The regulatory process exists to protect the public, and cooperation is a professional obligation.
Question 4 of 5
A seller's salesperson explains to the seller that a larger deposit provides better protection. Why might a larger deposit be advantageous for a seller?
- ABecause a larger deposit increases the purchase price of the property
- BBecause the deposit earns interest for the seller while in trust
- CBecause a larger deposit demonstrates the buyer's commitment and provides a greater pool of funds available as potential damages if the buyer fails to close
- DBecause a larger deposit guarantees the transaction will close successfully
Why C is correct
The deposit serves two primary functions: it demonstrates the buyer's commitment to the transaction, and it provides a potential source of damages for the seller if the buyer breaches the agreement. A larger deposit gives the seller greater protection because there is more at stake for the buyer and a larger pool of funds available if a breach occurs. However, no deposit amount guarantees that a transaction will close.
Question 5 of 5
What is the primary purpose of requiring deposits to be held in a brokerage's statutory trust account rather than a salesperson's personal account?
- ATo earn interest for the brokerage
- BTo make the deposit easier for the salesperson to access
- CTo protect the funds from misappropriation, ensure proper accounting, and provide regulatory oversight
- DTo allow the brokerage to use the funds for operating expenses
Why C is correct
Statutory trust accounts are a cornerstone of consumer protection in real estate. They ensure that deposits and other funds received in connection with transactions are segregated from the brokerage's operating funds, properly accounted for, and protected from misuse. RECO audits trust accounts as part of its regulatory oversight.
You've seen 5 of 70
Get the remaining 65 Code of Ethics and Standards of Business Practice questions
Subscribe to ExamAce for the full Course 1 bank, AI tutor on every wrong answer, spaced repetition, and access to all 26 Ontario real estate courses with 4,700+ practice questions.
Unlock all 70questions — $29.99/moCancel anytime · 30-day money-back guarantee · or see the full Course 1 course page