The Province has announced new regulations pursuant to the Real Estate Services Act
("RESA") that impose new duties on licensed B.C. real
estate agents effective May 16, 2016, that will restrict the
assignment of contracts of purchase and sale of real estate. The
Regulations are intended to cool the overheated real estate market
and reduce the number of contracts being assigned or flipped.
The Regulations require that real estate agents include a term
in any contract of purchase and sale, unless otherwise instructed
by their client, that provides that:
the contract of purchase and sale may
not be assigned without the written consent of the vendor; and
that the vendor is entitled to any
profit resulting from an assignment of the contract by the
purchaser or any subsequent assignee (the "Assignment
If a contract is presented that does not contain the Assignment
Restriction, the purchaser's real estate agent must provide a
written notice (the "Notice") advising the vendor that
the contract does not contain the Assignment Restriction. The form
of the Notice must be approved by the Real Estate Council of BC.
The Real Estate Council of BC has prepared a form of Notice and it
will be providing the Notice to real estate agents over the next
If the vendor is represented by a real estate agent, the Notice
is to be provided to the vendor's real estate agent by the
purchaser's real estate agent. If the vendor is not represented
by a real estate agent, the Notice is to be provided directly to
the vendor by the purchaser's agent.
The Regulations do not distinguish as to the type of property
impacted or the parties involved, with the exception that the
Regulations do not apply to the sale of "development
units" as defined in the Real Estate Development Marketing Act.
As a result, the Assignment Restrictions do not have to be inserted
in a contract for the sale of a new condominium unit nor does the
Notice have to be provided to the developer by a purchaser's
agent. This exception is based on the assumption that the developer
can look after its own interest and insert a restriction in the
developer's form of contract if the developer wishes.
However, the Regulations will apply to contracts for the
purchase and sale of non-residential property. So if the Assignment
Restriction is not in a contract for a commercial property, the
purchaser's real estate agent must provide the Notice to the
vendor's agent or to the vendor.
The Assignment Restriction provided for in the Regulations does
prevent a purchaser (the
"Original Purchaser") from entering into contract with
the owner, transferring title to the Original Purchaser by filing a
transfer in the Land Title Office and immediately transferring
title to a new purchaser. In such a case however, property transfer
tax will be paid twice, once on the transfer to the Original
Purchaser and again with respect to the transfer to the new
restrict or prevent a change in
control of the shareholders of a corporate purchaser; or
define what a profit is or how or
when that profit is to be paid to the vendor or how the vendor
enforces such payment.
The Regulations do not:
prevent the insertion of more
detailed or complicated assignment provisions that restricts
assignment generally but allows for assignments to affiliated
entities or to specified parties. The Assignment Restriction can be
amended in any manner the parties agree to, so for example to allow
for assignment to a company controlled by an original
apply to contracts of purchase and
sale made without the involvement of licensed real estate agents;
apply to contracts of purchase and
sale made before the effective date of the Regulations.
The Regulations do apply to contracts of purchase and sale:
used in land assemblies;
used for non-residential properties
(commercial, industrial, bare land, multi-family etc.); or
accepted after the effective date of
With the adoption of the Regulations, the BC Real Estate
Association/Canadian Bar Association standard form contracts of
purchase and sale (for commercial and residential properties) will
be amended to include the Assignment Restrictions. The parties to
such contracts can choose to keep the new provisions, change them
or strike them out completely but certainly a discussion regarding
assignment will now likely take place during the negotiation of the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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