Contact Us Licensee Login

Brokerage Standards Manual

V. General Brokerage Procedures

Disclosure

(a) Remuneration

Section 5-11 of the Rules requires that if a licensee receives or anticipates receiving, directly or indirectly, remuneration as a result of providing real estate services to or on behalf of a client other than remuneration paid directly by a client, the licensee must promptly disclose to the client and the licensee’s related brokerage the source of the remuneration, the amount of the remuneration or the likely amount or method of calculation and any other relevant facts related to the remuneration.

The need to provide disclosure as contemplated by this provision can arise in a number of ways. For licensees providing trading services, if they are acting either as a buyer’s agent or as a limited dual agent, they will likely be receiving remuneration from someone other than their buyer client as a result of providing the real estate services. In other words, licensees acting for a buyer or as a limited dual agent will be receiving remuneration from the seller and not from their buyer client. As a result of this provision, therefore, licensees must disclose to the buyer that they are receiving remuneration from the seller. They must also disclose the amount of remuneration or the likely amount, or the method of calculation of the remuneration.

When making disclosure, section 5-8 of the Rules requires that the disclosure be in writing. Section 5-8(1.1) of the Rules permits disclosure of remuneration from a party other than a client to be contained in the service agreement and/or in a record other than an agreement giving effect to a trade in real estate that is separate from the service agreement.

In order to comply with the disclosure requirements, the licensee must provide disclosure of the remuneration to the buyer in writing. A licensee can provide the buyer with a copy of the Working with a REALTOR® brochure prepared by BCREA as well as a copy of the listing information setting out the remuneration being offered to the buyer’s agent. Alternatively, the licensee could prepare any form of disclosure, as long as it is in writing and contains required disclosure information. Caution: local real estate boards may have additional disclosure requirements in this regard.

The obligation to disclose remuneration from someone other than a client is also applicable to brokerages and licensees providing rental property management or strata management services. In all cases where a brokerage or licensee receives fees or payment for forms, such as the Form B or Form F, or payment for photocopies from someone other than the strata corporation, the obligation to make disclosure of remuneration is triggered. Brokerages should bear in mind that the entitlement to the fees must be contained in the service agreement. Unless the service agreement specifically permits the brokerage providing strata management services to retain the amounts paid in relation to a Form B or Form F, the amounts should be paid to the strata corporation.

Back to Top

(b) Referral Fees

Section 5-11 of the Rules also requires that a licensee discloses the source and amount of remuneration if the licensee receives or anticipates receiving remuneration as a result of recommending a home inspector, mortgage broker, notary public, lawyer or savings institution, or any other person providing real estate related products or services to a client or recommending a client to such individuals.

In all cases where a licensee receives a referral fee, air miles or any other form of reward or benefit for referring a client to such individuals as noted above, the licensee must make written disclosure of both the source of the remuneration, the amount or method of calculation of the remuneration and any other relevant facts relating to the remuneration.

Where a licensee receives remuneration, such as a referral fee, as a result of making a recommendation to a client, or recommending a client to a party, the disclosure must be in writing, but, it may NOT be in a written service agreement or any other agreement giving effect to a trade in real estate. Forms that the licensee may use to make disclosure are available on the Council’s website at www.recbc.ca.

Back to Top

(c) Benefit

Section 5-12 of the Rules requires that a licensee providing rental property management services and strata management services must also make disclosure of any benefits that a brokerage or licensee anticipates receiving as a consequence of making expenditures on behalf of a principal to whom the rental property management or strata management services are being provided. Additionally, if an associate of the licensee will receive directly or indirectly such a benefit, disclosure must also be made to the principal.

The need for disclosure under section 5-12 of the Rules is triggered whenever a licensee or an associate of the licensee benefits as a result of spending the client’s money. Such a benefit could arise if the client’s money was spent to hire a landscaper if, for example, the licensee or an associate of the licensee or brokerage provided the landscaping services.

Additionally, disclosure would be required if, as a result of making payments on behalf of a client, the brokerage or licensee took an additional fee.

The nature or extent of the benefit must be disclosed before the benefit is accepted. The disclosure must be in writing and must be separate from any service agreement or any other agreement under which the real estate services are provided.

Section 5-7 of the Rules defines “associate” as follows:

  • in the case of an individual licensee:
  • a spouse or family partner of the licensee;
  • a trust or estate in which the licensee or a spouse or family partner of the licensee, has a substantial beneficial interest or for which the licensee, spouse or family partner serves as trustee or in a similar capacity, or
  • a corporation, partnership, association, syndicate or unincorporated organization in respect of which the licensee, or a spouse or family partner of the licensee, holds not less than 5% of its capital or is entitled to receive not less than 5% of its profits;
  • in the case of a brokerage that is a corporation or partnership:
  • a director, officer or partner of the brokerage;
  • a shareholder of the brokerage who holds more than 10% of the voting shares of the brokerage;
  • a trust or estate
  • in which the brokerage, or a director, officer or partner of the brokerage, has a substantial beneficial interest, or
  • for which the brokerage, or a director, officer or partner of the brokerage, serves as trustee or in a similar capacity, or
  • a corporation, partnership, association, syndicate or unincorporated organization in respect of which the brokerage, or a director, officer or partner of the brokerage, holds not less than 5% of its capital or is entitled to receive not less than 5% of its profits.

Back to Top

(d) Interest In Trade

If a licensee is to directly or indirectly acquire real estate, the licensee must make disclosure of certain information to the seller of the real estate. Additionally, if a licensee intends to dispose of real estate, the licensee must also make disclosure to the buyer of the real estate.

It is important to recognize that all licensees, including those providing rental property management services and strata management services, must comply with the requirement to complete the Disclosure of Interest in Trade form.

Additionally, a Disclosure of Interest in Trade form must also be completed if an associate of the licensee is either acquiring or disposing of real estate and the licensee is providing real estate services to the associate.

The Disclosure of Interest in Trade form that licensees must use is contained on the Council’s website at www.recbc.ca.

Back to Top