Humber/Ontario Real Estate Course 4 Exam Practice

Which of the following statements is true regarding the role of salespersons and brokers in relation to fraud?

1. Lawyers must verify the identity of their clients, but real estate registrants are not required to do so.

2. Salespersons and brokers have an obligation to look for warning signs and indicators of fraud.

3. Salespersons and brokers need not be concerned about fraud, if they are not parties to the fraud and do not share in the profits.

4. RECO does not concern itself with fraud as it is a criminal matter and beyond RECO's jurisdiction.

5. Salespersons and brokers only need to be trained in fraud detection, but are not obligated to report any suspicious activities.

6. Real estate registrants should only make their clients aware of fraud if they are directly affected.

The correct answer is: Salespersons and brokers have an obligation to look for warning signs and indicators of fraud.

Salespersons and brokers play a critical role in the real estate industry, and their responsibility extends to being vigilant about potential fraud. They are required to identify warning signs and indicators of fraudulent activity in order to protect their clients and maintain the integrity of the real estate market. This proactive obligation includes recognizing red flags in transactions, understanding common fraudulent practices, and keeping abreast of the evolving tactics used by fraudsters. By being observant and knowledgeable about fraud, salespersons and brokers can not only help to safeguard their clients’ interests but can also mitigate risks to themselves and their businesses. This duty forms part of their professional ethics and conduct, reflecting a broader commitment to ensuring fair practices in the real estate field. In contrast, other statements suggest misconceptions about the responsibilities of real estate professionals, such as minimizing their obligations towards fraud detection, suggesting that they need not report suspicious activities, or implying that certain legal responsibilities are exclusive to lawyers. These inaccuracies highlight the importance of real estate registrants actively engaging in fraud prevention and reporting.