II. General Information
Application Of RESA
RESA applies to all real estate services that a licensee provides. Section 2 RESA provides:
2. (1) This Act applies to every person who provides real estate services to or on behalf of another for or in expectation of remuneration.
(2) In addition but subject to the rules, this Act applies to every licensee who provides real estate services, even if the licensee
(a) provides real estate services on the licensee’s own behalf,
(b) provides real estate services to or on behalf of another but not for or in expectation of remuneration, or
(c) would other wise be exempted by this Act or the regulations from the requirement to be licensed in relation to the provision of those real estate services.
Section 2 means that the requirements of RESA, including the Real Estate Services Regulation and Rules, apply whenever a licensee provides real estate services, even if the licensee is providing the services on his or her own behalf, without expectation of remuneration, or if the provision of the services would be otherwise exempted.
As an example, under the former Real Estate Act, it was not uncommon for a real estate licensee to act on his or her own behalf to sell or rent his or her own property. It was also not uncommon for a licensee to work as an employee of a developer to market the developer’s property while also holding a real estate licence. The work carried out on behalf of a developer would be carried out pursuant to an exemption from the need for licensing.
However, as a result of section 2, all aspects of RESA, other than in the limited exceptions noted below, apply to the provision of real estate services by a licensee. Provisions, such as the requirement that a licensee may only receive remuneration in relation to real estate services from the brokerage to which he or she is licensed, would prevent a licensee from receiving remuneration from a developer. Provisions that require that all advertisements must include the name of a brokerage, prevent a licensee from advertising on behalf of a developer, or, on a licensee’s own behalf, to sell his or her own real estate. All such advertisements must include the name of the brokerage with which the licensee is engaged.
Real estate services are defined to be rental property management, strata management, and trading services. Trading services includes the activities most often associated with the listing and selling of real estate. Whenever a licensee is carrying out any activity that is related to rental property management, strata management, or the listing and selling of real estate, the licensee must consider the requirements of RESA and ensure that all aspects of the Act are met.
Another very common situation is where a licensee offers for rent real estate that the licensee or the licensee’s spouse or family partner owns. Renting out a property is a provision of real estate services. In order to avoid a situation where all such property had to be rented through the related brokerage of the licensee, an exemption was created to permit licensees to offer their own property or their spouse’s or family partner’s property without triggering the application of RESA.
(a) Exemptions for Rental Real Estate Owned by a Licensee
When offering their own real estate for rent, without an exemption, section 2 of RESA would require that the licensee comply with all of the provisions of RESA. However, sections 9-1 and 9-2 of the Rules create an exemption from the application of RESA in limited circumstances.
Under section 9-1 of the Rules, licensees who provide rental property management services on their own behalf in relation to their own real estate, are exempted from RESA, the Regulations, and the Rules if the licensee:
- provides the services in the licensee’s own name and not in the name of his or her related brokerage;
- does not indicate the name, address, or telephone number of his or her related brokerage in any advertising in respect of the rental property;
- discloses to each potential tenant before the prospective tenant enters into a tenancy agreement that the licensee is licensed but is not acting under, and is not regulated under RESA in relation to this transaction; and
- discloses in writing to the managing broker of the related brokerage that the licensee will be providing rental property management services on his or her own behalf in relation to his or her own real estate.
The disclosure to the tenant does not have to be in writing; however, a prudent licensee will ensure that the disclosure is in writing and that a copy is retained by the licensee.
Section 9-2 of the Rules permits a licensee to manage rental real estate owned by the licensee’s spouse, family partner, son, daughter, or parent without being required to comply with the provisions of RESA. Section 9-2 of the Rules also permit a licensee to manage rental real estate owned by a partnership if the partners are any combination of the licensee, and the licensee’s spouse, family partner, son, daughter, or parent. Additionally, the licensee is permitted to manage rental real estate owned by a corporation if the shareholders are limited to the licensee, or the licensee’s spouse, family partner, son, daughter, or parent without the need to comply, except as follows.
When managing rental real estate outside of RESA for a family member, partnership or corporation, in addition to complying with the provisions noted above, the licensee must provide the rental property management services without remuneration. Additionally, the licensee must advise the family member, corporation, or partnership, in writing, that the licensee is not acting as a licensee and is not regulated under RESA in relation to this transaction and provide a copy of the written disclosure to the managing broker of the related brokerage. If the licensee is managing rental real estate owned by a corporation, and the licensee is the only shareholder of the corporation, the licensee must provide written notice to the licensee’s managing broker that the licensee will be providing rental property management services to or on behalf of that corporation.
The exemptions permitted in sections 9-1 and 9-2 of the Rules are limited to rental property management. As a result, the purchase and sale of real estate may not be conducted without complying with RESA.
(b) Exemptions for Strata Management Services
Strata management services are broadly defined under RESA and include exercising the delegated powers and duties of the strata corporation. In most cases, strata council members can be considered to be providing strata management services to their strata corporation. As a result of section 2 of RESA, without an exemption, a licensee who was elected to a strata council would be considered to be providing strata management services and would be required to comply with all aspects of RESA, including holding a licence that permits the licensee to conduct strata management services.
Under section 9-3 of the Rules, a licensee may provide strata management services to a maximum of two strata corporations in which the licensee owns a strata lot without the need to comply with RESA, the Real Estate Services Regulation, and the Rules, if the licensee:
- discloses in writing to the strata corporation before providing services that the licensee is licensed but is not acting as a licensee, that the licensee is not regulated by RESA, and that the strata corporation is not entitled to the same protections under RESA as are strata corporations that deal with licensees that are not exempted;
- provides a copy of the written disclosure to the managing broker;
- does not have sole signing authority for the withdrawal or expenditure of any strata corporation funds;
- does not receive or expect to receive remuneration for providing the strata management services; and
- promptly delivers to the strata corporation any strata fees, contributions, levies, or other amounts levied by or due to the strata corporation.
Licensees should note that the Council is permitted to take disciplinary action against a licensee who fails to promptly deliver strata corporation funds to the strata corporation.
Section 9-3 of the Rules effectively permits a licensee to be elected to the strata council of, or to provide strata management services to, a strata corporation in which the licensee owns a strata lot. The exemption permitted by section 9-3 of the Rules is limited to strata management services. As a result, all other activities for which a licence is required, such as the provision of rental property management services or activities related to the purchase and sale of real estate, may not be conducted without complying with RESA.
(c) Unauthorized Practice of Law by Licensees
Although a licensee must apply his or her legal knowledge when advising a client, the licensee must not give legal advice to the client. If a client asks questions about the specific legal implications of particular terms or conditions, the licensee should explain that a licensee may not give legal advice and should encourage the client to consult a lawyer familiar with real estate matters.
For example, licensees who are drafting complex sales documents (for example, in the sale of a business or in the sale of a condominium requiring extensive remediation work), giving advice to sellers or buyers as to how to structure a transaction, or expressing an opinion as to the sufficiency of the terms of a Contract of Purchase and Sale to the buyer or seller, may be giving legal advice, and therefore, practising law contrary to sections 1(1) and 15 of the Legal Profession Act.
Licensees should ensure that the parties to a complex transaction are advised to obtain legal or the appropriate professional advice and the licensee should not be placed in a situation where he or she is giving legal advice or drafting documents beyond the licensee’s expertise.
(d) Protecting Personal Information
The Personal Information Protection Act (PIPA) regulates the way private sector organizations collect, use, keep secure and disclose personal information. Personal information means information about an identifiable individual including:
- name, age;
- home address, phone number;
- marital status, religion;
- race, ethnic origin, sexual orientation;
- income, purchases, and spending habits; and
- employment information.
Real estate brokerages and licensees should become familiar with PIPA’s privacy principles.
Principle 1 — Be accountable
Principle 2 — Identify the purpose
Principle 3 — Obtain consent
Principle 4 — Limit collection
Principle 5 — Limit use, disclosure, and retention
Principle 6 — Be accurate
Principle 7 — Use appropriate safeguards
Principle 8 — Be open
Principle 9 — Give individuals access
Principle 10 — Provide recourse
Before collecting, using, or disclosing personal information, PIPA requires private sector organizations to obtain the person’s consent. The organization is permitted to use the information only for the purposes to which the person has agreed. PIPA also requires organizations to destroy or erase personal information that is no longer needed.
The Working With a REALTOR® brochure published by the British Columbia Real Estate Association sets out the purposes for which personal information is collected, used and disclosed relative to trades in real estate services. Licensees should ensure that they review these provisions with their buyers and sellers.
In addition to obtaining a person’s consent, licensees must ensure that the personal information is used only as provided for, is kept secure, and is destroyed when no longer needed.
Licensees providing rental/strata management services must also conform to the requirements of PIPA.
Further information on PIPA can be found at www.oipcbc.org.
(e) Duty To Report Illegal Activities
Occasionally, licensees will come across a situation where a property they have listed for sale, or are providing rental property or strata management services for, is being used for illegal purposes (e.g., a marijuana growing operation, fraud with respect to a new home, and the application of the Goods and Services Tax (GST)). The general rule is that no citizen has an obligation to report to the authorities an activity which may appear to them to be illegal. Exceptions to this general rule include the obligation to report to the authorities a child in need of protection and the requirements under the provisions of the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
While this general rule would apply to licensees, they must be careful not to appear to be aiding or abetting the carrying on of the illegal activity. Aiding and abetting is a criminal offence if a person does or omits to do something with the purpose of aiding another person to commit an offence, and there is a guilty intent behind the action or omission. There would be no guilty intent if a licensee, having observed the illegal activity, walked away from it because he or she did not want to become involved.
Guilty intent may, however, be implied if a licensee, knowing of the illegal use, promotes that use as if it were not illegal. For example, the Council has previously advised licensees that they are to avoid advertising illegal suites as a possible source of revenue for homeowners.
The same principle applies to the situation where a builder claims that no GST is payable on a new home and a licensee knows this is not true. Licensees must be cautious not to knowingly make a false or fraudulent statement in advertising or representations to buyers. Do not advertise ‘‘No GST’’ if you know or suspect other wise.
All licensees have the obligation to advise their clients of all known material information. Therefore, if licensees discover that a property that they are managing or offering for sale is being used to grow an illegal cash crop, they are obligated to advise the owner.
Licensees are advised to read Legally Speaking column # 296 (available on www.realtorlink.ca), which discusses the question of licensees’ duties if an illegal activity, such as a marijuana growing operation, is discovered on a listed property.
(f) Guidelines for Personal Offices
Section 4-3 of the Rules details the requirements related to licensees having personal offices outside of the location of their related brokerage.
- Have a personal office in their home; however, no sign may be placed outside this office that indicates that real estate services are provided from that office.
- Have a personal office located in a commercial space. Where the personal office is located in a commercial space, the licensee may have a personal sign posted outside the commercial space office and on the building directory, if applicable (e.g., Joe Smith Personal Office).
- Have a secretary or other unlicensed staff who may work at the personal office, but who may not engage in any activity requiring a real estate licence.
Licensees may not:
- Answer the phone in the name of their related brokerage (e.g., Bigfoot Realty).
- Have a sign outside of their personal office displaying the name of their related brokerage.
- Indicate their personal office address on advertising, business cards, letterhead, etc. (‘‘advertisements”).
Where advertisements contain an office address, that address must be of the office to which the licensee is licensed. Advertisements may include the licensee’s personal phone number(s).
Licensees must also ensure that they:
- Provide their related brokerage in a timely manner with all documentation received related to real estate services they are providing (Section 3-2 of the Rules).
- Immediately deliver all funds received in respect of a trade in real estate or any real estate service to their related brokerage for deposit into trust (Section 27 of RESA).