The Real Estate Services Act (British Columbia) ("RESA") creates the regime that requires a person to be licensed prior to being permitted to provide "real estate services" in British Columbia to or on behalf of another, for or in expectation of payment. "Real estate services" include trading services, strata management services, and rental property management services.
On March 25, 2015, amendments to RESA came into force that will have a direct impact on RESA licensees.
The four (4) material changes to RESA implemented by this latest amendment are summarized as follows:
1. The definition of "strata management services" has been amended to include "enforcing bylaws or rules of a strata corporation."
This amendment broadens the licensing requirements by stating that any individual, partnership or corporation who is enforcing the bylaws or rules of a strata corporation and expects payment in exchange for these services is caught by the definition of "strata management services," and thus is providing "real estate services." These individuals, partnerships or corporations must be licensed and will be regulated by RESA unless exempted by the regulations.
2. The definition of "trade in real estate" now explicitly includes "the assignment of contracts for the purchase, sale, or lease of real estate, or a transaction in relation to such an assignment."
This amendment now makes it clear that services related to contract assignments are included as a licensed activity.
3. Licensees engaged by a brokerage must now pay real estate-related referral fees that they receive to their brokerage. The brokerage must pay those fees, and any referral fees paid directly to it by a third party, into their brokerage trust account.
Referral fees will include money that is held or received by a licensee for recommending the products or services of a home inspector, a mortgage broker, a notary public, a lawyer, a savings institution or any other person in a business, profession or occupation relating to real estate.
Referral fees will now be treated the same as any money received from, for or on behalf of a principal for real estate services, as well as money held or received as payment for real estate services. The brokerage will determine when or whether the referral fees are to be paid out to the licensee as part of the licensee's remuneration, as money may be withdrawn from a brokerage trust account to pay licensees who are entitled to payment.
4. Licensees and brokerages are not required to pay money that is held or received by them into a brokerage trust account if the following conditions are satisfied:
a) the money is in the form of a
cheque, draft or money order and is payable to a third party;
b) the licensee's only action in relation to the monetary instrument is to deliver it to the person entitled to the payment; and
c) the delivery is done "immediately."
This provision streamlines how money payable to a third party is to be handled by licensees and brokerages. In the past, all money received was to be paid into a brokerage trust account unless a specific exception was available. The exception required a separate, written agreement between the parties. This new provision provides a simpler method to bypass the brokerage trust account in order to directly transfer money to a third party.
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