Country life is romantic to many Albertans. Elevated in country music, paintings of endless wheat fields and rolling hills, or photographs of turn-of-the-century barns, many Albertans live in rural settings, and many others wish they could. So when it comes time to buy or sell this dream in the form of a lovely residential homestead, who is able to represent a buyer or seller?
In Alberta, the regulator licenses individuals in four different real estate disciplines: residential, rural, commercial, and property management, and while many REALTORS® have all four designations, it is very common to have only one or two of these designations. Under consideration, this is where “Rural Residential” fits into the picture between residential and rural, so let’s jump in and see if there are some principles to follow.
Broker decision stands
It should be clear at the outset that the only individual in the brokerage who has the authority to determine what license designation a REALTOR® needs for a specific property is the broker. There are a few considerations that can help in the brokers decision-making process.
Income
Land-generated income is the first pass question. If the property, no matter how big or small, or in whatever zoning classification, is producing an income, it should be handled only by a licensee holding a rural license designation, or in some cases even a commercial designation. This income could be a grazing lease, hay lease, cell towers, oil, and gas, etc. but regardless of what it is, a residential designation is not equipped to handle such circumstances.
Competency
All REALTORS®, as members of the Canadian Real Estate Association, and licensees under the act must provide competent service, and that is not what is in view here. The broker will use the competency metric based on past experience, level of expertise in the area, etc. to make a determination on whether even in a situation where a REALTOR® may have the proper designation, they are competent to fulfill that duty effectively. For example, a newly licensed rural associate may be paired with a more experienced associate on a complex working farm transaction. Additionally, a REALTOR® who holds only a rural designation is not qualified to handle strictly residential properties either which should be kept in mind. If the broker believes the associate is competent to advise on the type of property they will proceed to consider other factors.
Likely Use
It is primarily the use of the property that the consumer is concerned with and expects help representing. For example, in a seller representation situation, if the property is currently only used as a residential dwelling, but does have the possibility of haying or grazing 80 acres, the likely use of a potential buyer is rural and the seller's rep will likely need to field rural questions which would require a rural license. In a buyer representation situation for example, if the property being considered is 80 acres of trees with only five-acre yard site, but the buyer indicated they would intend to clear the land for cattle, the buyer would need advice about rural issues, which would require a rural license.
Current Use
An additional consideration is current use. For example, in a seller representation situation where a 20-acre property mostly treed with a five acre yard site is to be listed. It could be determined that the current use is the same as its most likely use. Similarly, in a buyer representation example, a buyer client may be moving out of the city and finds the perfect place on 40 acres all treed with a little home tucked away in the back. Their only intention is to live there and not farm so their intention matches the current use.
Land Use Zoning
Land use zoning is commonly considered the primary indicator of which license designation is required, Zoning can help in determining possible likely and allowable uses, and maybe even current use, but oftentimes agricultural (AG) zoning remains on properties that are clearly only residential simply because the municipality hasn’t changed it.
Property Size
In some cases size can be telling. For example, no one buying two sections of farmland (1,280 acres) is buying it only to live in the little house on the prairie. There is obviously going to be a desire to use the land to generate an income and that would be a rural licensing requirement.
It is worth understanding that some lenders may classify properties differently than the brokerage does, but that shouldn’t affect the ability of the associate to manage the transaction, only the way the buyer gets their financing done.
Although I have laid out some of the most common questions in the rubric that could be used by a broker to help determine if one of their associates has the correct licensing designation to help with a certain property, there could be others. Alberta is varied in all regions and markets and each broker will need to use their own grid to work out the issue for their brokerage. Associates who want to avoid this issue altogether would do well to take both the rural designation and the residential designation courses and then there is no issue. Save a broker, take the education!