Humber/Ontario Real Estate Course 2 Exam Practice

Which of the following is an accurate statement about recognizing fraud in real estate?

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

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. The legal consequences for fraud only apply to the involved parties

5. Verifying a client's identity is not necessary for real estate transactions

6. Only legal professionals need to verify client identities

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

Salespersons and brokers have an obligation to look for warning signs and indicators of fraud because they are responsible for ensuring ethics and compliance in real estate transactions. Recognizing fraud is crucial to maintain trust and integrity in the industry. Ignoring warning signs of potential fraud can have serious consequences, not only for the individuals involved but also for the reputation of the real estate profession as a whole. It is essential for salespersons and brokers to be vigilant in identifying fraudulent activities to protect their clients and maintain the ethical standards of the profession. The other options are incorrect because: - Option A is incorrect because RECO (Real Estate Council of Ontario) plays a significant role in regulating real estate professionals and ensuring compliance with ethical standards, including addressing cases of fraud within its jurisdiction. - Option C is incorrect because all parties involved in a real estate transaction should be concerned about fraud, regardless of their direct involvement or profit-sharing, to uphold the integrity of the industry. - Option D is incorrect because legal consequences for fraud can extend beyond just the involved parties, potentially affecting the broader real estate community. - Option E is incorrect because verifying a client's identity is a fundamental part of due diligence in real estate transactions to prevent fraud and ensure compliance with regulations. - Option F is incorrect because verifying client identities is not solely the responsibility of legal professionals; it is a shared obligation among all real estate professionals to mitigate the risk of fraud.