Amendments to the BC Real Estate Services
Regulation Target Unethical and Predatory Conduct by
Licensees; Further Recommendations Forthcoming
"Government will not tolerate unethical or predatory
conduct in the real estate market" – Premier Christy
On May 10, 2016, BC Finance Minister Michael de Jong announced amendments to the Real Estate Services
Regulation regarding the imposition of additional
obligations on licensees (persons described in s 2 of the Real Estate Services Act)
as part of a broader initiative by the Province to improve public
confidence in the real estate services sector (the amendments are
available on the BC Laws website). Licensees acting
for buyers must include in any offer to purchase a clause that
indicates the purchase contract will not be assigned without the
written permission of the seller, and that any profits from an
assignment of the contract must be returned to the seller. If any
offer does not include these terms, licensees acting for a buyer
are obligated to notify the seller of their absence. Licensees
acting for a seller must inform the seller whether the
contract may be assigned, any conditions on assignment and the
seller's right to profits from an assignment. These amendments
are in force as of May 16, 2016.
There are no designated penalties for a breach of these new
regulations at this time, but changes to monetary penalties under
the Act and Regulations may be coming. Additional changes to rules
and regulations governing licensee conduct, the administration of
these rules and regulations and public access and engagement are
expected to be released in early June.
In a letter to Marylou Leslie, Chair of the Real
Estate Council of BC, Superintendent of Real Estate Carolyn Rogers
noted that "[p]ublic confidence in the integrity of the real
estate services sector and its regulations have been shaken".
The Province of BC has responded to these concerns by passing new
regulations regarding the conduct of licensees so as to protect
sellers against improper contract assignments (shadow flipping) and
misuse of limited dual agency (double ending). The regulations are
intended to "... empower sellers by providing for full
disclosure, informed consent and the opportunity for sellers to
insist they receive any resulting financial benefit".
These amendments do not impose restrictions on the use of
assignment of contract clauses, rather they impose additional
obligations on licensees to increase transparency and protect
sellers' interests. The regulations mandate that licensees
include, in their offer to purchase, terms that make an assignment
subject to the seller's approval, and that any profits from the
assignment to be returned to the seller. If the buyer wants to
remove these terms from the agreement, the buyer's licensee
must provide the seller with a Notice to Seller Regarding Assignment Terms.
In addition, the seller's licensee must inform the seller of
the absence of these "Standard Assignment Terms" as well
as whether the contract may be assigned, and whether the seller is
entitled to the profits of the assignment. These obligations apply
to dual agents. More information regarding obligations and
suggestions for licensees is available via the Real
Estate Council's website.
These regulations do not apply to purchase agreements fully
executed before May 16, 2016, or to the sale of a "development
unit" by a "developer" as defined in the
Real Estate Development Marketing Act.
On February 22, 2016, the Independent Advisory Group (IAG) was
established by the Real Estate Council of BC to assess the conduct
and practises of real estate licensees and the effectiveness of
current regulations in light of these public concerns. The Terms of Reference set out the scope and focus
of the IAG. The IAG's primary concern is whether the existing
system adequately protects consumers and the wider public interest.
The Final Report is set to be released in early June, and will
include further proposed changes regarding rules and requirements
governing licensee conduct, administration of these rules including
the scope and severity of punishments, the structure and capacity
of the Real Estate Council of BC, the quasi-regulatory role of
other industry organizations like the MLS, and public access and
Reports have been submitted to the Real Estate Council that
highlight their progress, and primary areas of concern.
We invite readers to revisit Bennett Jones' website in early
June for more information anticipated to be available on the
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