Helping clients to buy or sell a strata property can quickly become complicated. To assist licensees to successfully navigate this complex area of real estate and provide the services and advice their clients need, the Council is pleased to announce the launch of a completely revised and updated Strata Sales section in the Professional Standards Manual.
The revised Strata Sales section includes new and expanded information on key topics such as sections, air space parcels, and depreciation reports, as well as a more in-depth introduction to strata property governance and legislation. The information has been completely re-organized for a logical flow, and is entirely keyword-searchable for ease of use.
You can quickly access the Strata Sales information online at www.recbc.ca/psm_section/strata-sales/
Before you dive in to explore the new material, take a moment to test your strata knowledge with our Strata Sales Quiz. You may discover there’s more to learn than you thought!
1. Is a two-strata lot duplex strata corporation exempt from the Strata Property Act?
A Yes, those small stratas don’t really count.
B. No, it must meet the requirements of the Act.
2. In a strata corporation, is the balcony part of the strata lot?
A. Yes, always.
B. No, never.
C. It depends.
3. You need to order the Information Certificate (Form B) for a strata lot that is in a residential section of a strata corporation.How many Form B’s will you need?
4. Effective January 1 2014, the Form B was amended. What additional information is now required on a Form B?
A. Parking stall allocation and property designation
B. Storage locker allocation and property designation
C. Both of the above
D. Neither-there’s nothing new required.
5. If a Rental Disclosure Statement (Form J) filed on December 31, 2010 identifies that all strata lots are permitted to be rented until January 1, 2030, would the second owner of a strata lot be able to rent their unit out on June 15, 2015, even if the strata corporation
bylaws state “no rentals permitted”?
6. A special levy is approved before a strata lot is conveyed to a purchaser but is payable one day after the strata lot is conveyed to the purchaser. According to the Strata Property Act, who pays the portion of the special levy due from the owner of the strata lot?
A. The seller
B. The purchaser
C. The strata corporation
To find the answers and check how you scored, see below. Remember, if you have limited experience in strata property transactions, consult with your managing broker whenever issues arise that you’re unsure how to handle-or, consider referring the client to another licensee with more experience in strata sales.
Here are the correct answers to the Quiz. You’ll find information on these topics and more in the new Strata Sales section in the Professional Standards Manual.
- B) No.
- C) It depends: look at the registered strata plan to determine the actual boundaries of a strata lot.
- B) 2: one from the Residential Section, and one from the Strata Corporation.
- C) Both parking stall allocation and property designation and storage locker allocation and property designation are now required on Form B.
- A) Yes.
- B) The purchaser, as the new owner, is responsible for paying the portion of the special levy.
Spring is in the air, and the property market in many parts of BC is heating up. A rising market can be an exciting time, but it’s also a time when care and attention is needed to be sure that you are always acting in the best interests of your clients.
When markets are rising quickly, properties may attract multiple offers and the possibility can arise that buyers may wish to assign their rights in the contract to another party. Because these situations can quickly become complex, as a licensee you’d be wise to consult your managing broker, and to advise your clients to seek independent legal advice in the drafting of the assignment contract. You may also wish to review the information on Acting for Buyers-Assignment of Contracts and Acting for Sellers-Offers in the Professional Standards Manual.
This issue of the Report from Council is filled with useful information to assist you in your practice. We’re pleased to announce that we’ve added a revised Strata Sales section to the Professional Standards Manual, which includes new and updated material on key topics such as sections, depreciation reports, and more. If you’re acting for a buyer or a seller in a strata property, I highly recommend you review this updated information- I guarantee you’ll learn something new. And don’t forget to test your knowledge with our Strata Sales Quiz (if you are stumped, scroll down to find the answers!).
It’s been nearly two years since the introduction of Designated Agency in BC, and we’re continuing to publish helpful information on the implications of this practice change. In this issue, you’ll find a detailed guide outlining recent changes to the Disclosure of Remuneration, Trading Services Form and how licensees in a variety of scenarios can disclose remuneration to their clients.
By turning to the Disciplinary Decisions, you’ll note that the Council has recently suspended a licensee for failing to comply with the terms of a prior suspension order. I hope that all licensees are fully aware of the importance of complying with discipline orders from the Council, whether it is a fine, a suspension, a licence restriction, or other penalty. Unsure about what’s included in a suspension order? Look back at the article in the December 2014 issue of the Report from Council: “What To Do, and Not Do, If Your Licence is Suspended.”
Licensees are also reminded not to work outside their area of expertise. It may be prudent to refer a client to another licensee rather than putting yourself and your client at risk.
In closing, a reminder that Council elections will be held this May. If there is an election for a Council member in your area, you will be receiving candidate bios and voting papers. Please remember to cast your vote in time to ensure that it arrives at the Council offices before Wednesday, May 13, 2015.
I wish you all the best for a happy and productive spring.
Susan McGougan, Chair
The old saying about buying real estate is “location, location, location.” That may be true for your clients, but for licensees representing buyers, the saying you need to keep in mind is “disclosure, disclosure, disclosure.”
As a buyer’s agent you have an obligation to disclose to your clients any remuneration that your brokerage will receive in relation to real estate services provided to the parties involved in the real estate transaction. The Council Rules require that licensees disclose all remuneration they anticipate receiving that is not paid directly by the client. This includes commissions, and also referral fees and any non-monetary bonuses you receive in exchange for a referral (such as gift certificates, air miles, bonus points, etc.). Remember, all remuneration must be paid to the brokerage-never to you directly.
In January, the Council introduced changes to its Rules about Disclosure of Remuneration. The changes make it clear that the amount of remuneration that you must disclose to your client is the amount payable to the brokerage, not the amount that will eventually be paid to you, the licensee.
As well, a new subsection in the Rules specifies that when a licensee is acting as the designated agent for only one party in a transaction, the amount of remuneration that must be disclosed is the amount payable to the brokerage in relation to that client only.
To assist licensees to make the disclosures they need, the Council has updated the Disclosure of Remuneration, Trading Services form. The new form is now available from the Council’s website, and on Webforms. To make sure you understand how to use the form, read through the following scenarios.
Joe Agent is a licensee engaged with LMN Realty Ltd. He is a Designated Agent for a buyer who is going to make an offer on Susie Seller’s home. Susie Seller, who is represented by a licensee engaged by XYZ Realty Ltd, has agreed to pay a total commission of $10,000, with $5,000 to be paid to a brokerage representing the buyer (LMN Realty Ltd.).
Q: What does Joe need to disclose to his client?
A: Joe is obliged to disclose to the buyer only the portion of the commission being paid to his brokerage: $5,000.
In this transaction, Joe Agent is the Designated Agent of both the seller and the buyer. With the consent of the seller and the buyer, Joe is acting as a Limited Dual Agent for both parties.
Q: Does this change what Joe must disclose?
A: Yes. As a Limited Dual Agent, Joe is obliged to disclose to the buyer the full amount of the commission being paid by the seller to the brokerage.
Scenario 3: Different Designated Agents from the Same Brokerage Represent Buyer and Seller Individually
In this scenario, Joe Agent of LMN Realty Ltd. is the Designated Agent of the buyer in the transaction. Larry Licensee, who is also engaged at LMN Realty Ltd., is the designated agent of the seller. As the sole agents of their respective clients, Joe and Larry are not acting as Limited Dual Agents.
Q: Does Joe need to disclose the full amount of the remuneration payable to LMN Realty Ltd.?
A: No. Joe is acting as Designated Agent only for the buyer, therefore he is obliged to disclose to the buyer only the portion of the commission being paid by the seller to LMN Realty Ltd. in relation to his services.
Mary Chow has just sold her home in Burnaby. Her home was listed for sale with LMN Realty Ltd. and Joe Agent was her Designated Agent. Mary now wants to buy a strata lot in Kelowna. She asks Joe if he can recommend a licensee in Kelowna. Joe and Mary discuss three potential licensees, and Mary says she thinks she would like to work with Dave of XYZ Realty Ltd. Joe has an arrangement with Dave: if Joe refers a client to Dave who subsequently sells or buys real estate through Dave, Dave will pay Joe a $1500 referral fee that will be paid to LMN Realty Ltd. on completion of the trade.
Q: Must Joe disclose this fact to Mary when he recommends Dave?
A: Yes. Mary is a client, Joe refers Mary to Dave, and Joe anticipates receiving $1500 if Mary uses the services of Dave and XYZ Realty Ltd. to purchase a strata lot. The following example shows the proper way for this to be disclosed to Mary using Part C of the Disclosure of Remuneration Trading Services form. The disclosure must take place at the time Joe makes the referral to Mary, so she is aware of the information when she is deciding whether to use Dave’s services.
Joe Agent has been approached by Best Rate Financial Services, a lending institution. They are willing to pay Joe 100,000 air mile points for every client’s name that Joe provides to them who subsequently borrows a minimum of $200,000. Joe is working with a buyer who is going to need to borrow $250,000 to complete a purchase, and with the buyer’s approval Joe gives the buyer’s name to his contact at Best Rate Financial Services. That person contacts Joe’s client and this leads to his client borrowing $250,000 from Best Rate Financial Services.
Q: Must Joe disclose this referral arrangement to his client?
A: Yes. Joe must disclose any form of remuneration that he anticipates receiving as a result of referring a real estate related service provider to his client. The definition of remuneration is very broad and includes any form of benefit, regardless of its size or nature.
The disclosure must be made when the information can be used by the client to make an informed decision about whether he or she wants to use the referred service provider. The following example shows how proper disclosure should be made, using Part C of the Disclosure of Remuneration Trading Services form. Note that Joe properly discloses that the travel points are going to be “paid” to LMN Realty Ltd., Joe’s related brokerage.
All forms of remuneration must be paid to the brokerage for disbursement to the individual licensee.
The Council is pleased to announce that a new Applied Practice Course for trading services licensees who intend to specialize in commercial real estate launched on March 23, 2015. The introduction of the Commercial Applied Practice Course is the culmination of several years of collaboration between the Council and the British Columbia Real Estate Association (BCREA) to review and redesign both the residential and commercial courses. The two courses will help ensure that licensees start their careers with the knowledge and practical skills they need to succeed.
The new commercial course has four components, starting with a two-week online learning unit that students must complete before receiving their licence. Students then take part in a two-day interactive in-class session focusing on drafting a commercial Contract of Purchase and Sale and an Offer to Lease, complete six practical field assignments while working in their brokerage, and end with the final component: a one-day classroom session. Feedback from new licensees who have participated in the re-designed Residential Applied Practice Course has been enthusiastic:
“In 2008, I [completed] the “old” Practice Course in Kelowna. Getting relicensed and doing the “new” on-line course now, I would like you to know that in my opinion the new one is awesome! The interactivity with other students AND instructors works great and doing the online [component] whenever you want to do it is super.”
- Student, January 2015
“One thing I appreciate about these activities is [that] not only [do] I get to learn from the instructors, I also get to hear from my fellow classmates’ points of view as we all see and analyze situations in different angles and perspectives. In the process of learning how to become a certified licensee, I am glad I could learn from my mistakes without getting penalized… I tend to learn faster this way!”
- Student, February 2015
BCREA has developed Managing Broker Toolkits for both the Residential and Commercial Courses, to help managing brokers and brokerage trainers understand the changes and learn how they can support new licensees. The toolkits, along with FAQs, course schedules and registration information, are available on the BCREA’s website at www.bcrea.bc.ca — will open in a new tab.
Many local governments have enacted bylaws pertaining to noxious weeds or invasive plants, requiring property owners to ensure that certain listed species are not growing on their property, or are controlled from spreading from the property.
Now, the Invasive Species Council of British Columbia has developed an Invasive Species Toolkit with useful information for licensees, including:
- tools for developers and real estate professionals regarding invasive species on private lands;
- local government jurisdiction and enabling legislation for local invasive species control programs;
- determining responsibility and management of private property impacted by invasive species, and
- key resources and reporting tools available on invasive species in BC.
You can find links to the toolkit in the Professional Standards Manual, at
Invasive Species Council of BC: bcinvasives.ca — will open in a new tab
A policy statement regarding the educational requirements for new licensees was added to the Council’s website effective March 1, 2015. The policy details the required education as well the timelines for completion of licensing education. The Council developed the policy in response to the change in format for the Applied Practice Course, which now requires licensees to complete a portion of the course prior to licensing.
The full policy statement is available at www.recbc.ca/licensee/policy.html#licensing3.
When you contract to provide strata management services to a client, section 3-3 of the Council Rules sets out the duties a brokerage and related licensee has to its client and specifically includes the duties to:
- act only within the scope of the authority given by the client
- act in accordance with the lawful instructions of the client, and
- advise the client to seek independent professional advice on matters outside of the expertise of the licensee
Understanding what these duties mean ensures that you act within your professional limits as a strata manager when a client’s instructions appear to put these duties in conflict. To guide you in these efforts, you have three key resources:
- the written service agreement between the strata corporation and the brokerage,
- the Real Estate Services Act (RESA), and
- the Council Rules.
1. Know Your Scope of Authority
The written service agreement should set out the responsibilities and decisionmaking capabilities that have been delegated to the brokerage. For example:
- You need to arrange for a minor plumbing repair at a strata property you manage. Do you need to check with the client before going ahead?
- You need to file a lien against a strata lot. Do you have the authority?
The answers to these questions can likely be found in the service agreement. When a strata corporation enters into a service agreement with a brokerage, it typically delegates certain responsibilities and decision- making capabilities to the brokerage. The service agreement may give the brokerage ongoing authority in particular areas, allowing the brokerage to make decisions on behalf of the strata corporation. In other areas, a service agreement may give the brokerage the authority to act only upon the specific instructions of the strata council.
Example: A service agreement gives the licensee the express authority to arrange for repairs under $500 without further instruction (subject to the aggregate limitation of spending identified within section 98 of the Strata Property Act (SPA), or any provision established in the strata corporation’s bylaws). However, the same service agreement requires the licensee to have specific instructions from the strata council in order to file a lien against a strata lot.
Understanding the difference between these two types of authority is crucial. They define the scope of decision-making the client has given the brokerage. And as the scope of authority delegated to the brokerage may be different for different clients, it is your responsibility to ensure that you are familiar with the terms of the service agreement for each of your clients.
Using the example above, if you were to file a lien against a strata lot or spend $650 on repairs without specific instructions from the strata council, you will have acted outside of the scope of authority given to you by your client.
You are required to carry out the lawful instructions of your clients, and know what to do if you receive instructions that you believe may not be lawful.
First, ensure that you have received the instructions in a form that you’re authorized to act on. While you can be given instructions a number of ways- by email, verbally, or at a strata council meeting-you may not be authorized to act in each case.
Many service agreements stipulate that licensees must receive instructions in a specific method, or a range of methods (for example: in writing after a majority decision of the strata council; or in writing by at least two strata council members). As service agreements may be different depending upon the client, make sure you review the service agreement to ensure you are acting appropriately.
If the written service agreement does not give your brokerage authority to undertake the duties your client has requested, it is important to ensure that you get specific instructions from the client before acting.
Finally, if you’ve received verbal instructions, it is prudent to confirm the instructions with the strata council in writing.
What may constitute unlawful instructions?
Instructions that could result in your client acting contrary to the provisions of applicable legislation may be unlawful. If you are concerned that instructions you’ve received from a strata council may result in such a contravention, you should take steps to deal with the situation. While the Council does not have the jurisdiction to enforce legislation other than RESA, licensees are expected to be familiar with and provide competent advice to their clients with respect to applicable legislation such as the SPA, the strata corporation’s bylaws, as well as RESA and the Council Rules. In addition, licensees will be expected to be aware of other legislation that may affect their client and advise them to seek independent professional advice on those areas of legislation that they are not familiar with.
As a licensee, you are expected to be familiar with both SPA and your client’s bylaws. If your client’s instructions appear to be in conflict with either SPA or the strata bylaws (or any applicable legislation such as the Residential Tenancy Act or Legal Profession Act), it is appropriate to discuss your concerns with your client and your managing broker.
You may draw your client’s attention to the provisions that you believe are applicable and recommend to the client what you view as the appropriate course of action. It is best to ensure that the instructions from the client and your advice to the client are in writing.
Despite your advice, your client may insist that you carry out the instructions. In this case, you may wish to recommend that your client obtain professional advice prior to taking any further steps.
If the client’s instructions pose a serious conflict, you may decide to advise the client that you are not prepared to follow the instructions. This may result in the termination of the service agreement, either by the brokerage or the client.
As a licensee you are expected to not only be familiar with, but to act in accordance with, the provisions of RESA and the Council Rules. If you receive instructions from a strata client that you believe contravene either RESA or the Council Rules, you should advise your client of this, preferably in writing.
If your client does not modify the instructions, or responds with a specific direction to carry out these instructions, you are faced with three choices:
- follow the instructions,
- refuse to follow the instructions, or
- cease to act for the strata corporation.
Choosing A, to follow instructions that you believe are in contravention of RESA or the Council Rules, may have potentially serious consequences. You should discuss the matter with your managing broker to determine how best to proceed. If you have acted upon instructions from a strata council and your conduct becomes the subject of a Council investigation, the fact that you followed the instructions of your client does not relieve you-or the brokerage-of the obligation to comply with the requirements of RESA. You and/or the brokerage may be found to have committed professional misconduct.
Your managing broker may determine that it would be prudent for the brokerage to obtain its own legal advice. It is also usually appropriate to advise the client to obtain independent legal advice on their intended course of action. The brokerage may decide that it is not prepared to continue to provide services to the client. In this case, the brokerage should review the termination provisions of its service agreement.
Generally speaking, your managing broker should be involved in any attempts to resolve the issue, as refusing to follow the instruction given by the strata council may result in a termination of the relationship between the brokerage and the strata corporation.
3. Matters Outside Your Expertise: When to Advise the Client to Seek Independent Professional Advice
It’s not uncommon for strata management clients to regard the strata manager as an expert in all strata property matters. Your clients may turn to you for advice or information on a wide variety of topics, from legal issues to insurance, finances, roofing, plumbing, landscaping and more. And although you may have some knowledge about these issues, it is usually more appropriate to recommend to the strata council that they seek independent advice from a professional in the subject field.
You should be cautious about providing advice that is outside of your expertise and which your clients may rely on in making a decision about the maintenance or governance of the strata corporation. Although clients may sometimes be reluctant to pay for specific expert advice, it is important to realize that wrong advice can have devastating results for both you and your client.
In situations where you are asked for an opinion or advice that is technical in nature, or where there may be the potential for significant costs or losses to your client, you should strongly recommend to the client that they seek independent professional advice. If you provide poor or incorrect advice, you may be found to have demonstrated incompetence (a contravention of section 35(1)(d) of RESA) and/or to have failed to act with reasonable care and skill (section 3-4 of the Council Rules).
This is the second in our ongoing series that highlights frequently asked questions from the Council’s website. This month, we’re considering the issues that can arise when licensees accept the authority to sign contracts on their clients’ behalf.
Q: What authorization is required to sign a contract on my clients’ behalf and can that authorization be given by email?
A: Before signing a contract on behalf of a client, section 5-3 of the Council Rules requires that you must have obtained written authorization from the client or an authorized agent of the client. It is not acceptable to sign a document on a client’s behalf simply on the basis of a verbal authorization from the client.
You should not rely on an email as authorization from a client unless you are certain that the e-mail was written and sent by the person from whom it appears to have been received.
When signing on behalf of a client, you should not sign the name of the client. Instead, sign your own name and indicate beside or below your name that you are signing as agent for the client. Here’s an example:
When clients are out of town, difficult to reach by phone or email, or otherwise unable to sign documents, having authority to sign on their behalf may seem like a simple and expedient way for your clients to conduct business.
But by signing on your clients’ behalf, you are stepping into their shoes. Accepting the responsibility of signing on behalf of clients is a business decision that may have unanticipated consequences. In the absence of specific written instructions, it may be perceived that your decisions were influenced by your interest in earning a commission or fee, over the interests of your clients, regardless of how well intentioned your motives may have been.
Always insist on receiving clear, written instructions from your clients before accepting the responsibility to sign on their behalf. At a minimum, the instructions should state the following:
- the clients’ directions to you
- the specifics of how they would like you to proceed, and
- the limits to your authority to act on their behalf.
The instructions should set out the exact terms and conditions under which you are authorized to sign on behalf of your client. It may be advisable to seek legal advice to ensure that you have sufficient authority to act on behalf of your client. When receiving a contract signed by another licensee acting on behalf of their principal, if your client has any concerns about the enforceability of the contract they should be advised to seek independent legal advice.
Keep in mind that when your clients give you authority to sign a contract on their behalf, they are investing a great deal of trust and reliance in you as their agent. It is a significant responsibility, and should never be taken lightly.
5-3 (1) Before signing a contract on behalf of a client, the licensee must have obtained written authorization for this from the client or an authorized agent of the client.
(2) For certainty, the authorization required by subsection (1) may be provided by a service agreement or separately.
(Council Rules, http://www.recbc. ca/licensee/rules.html#section5-3)
The Province of BC has launched a new strata housing website featuring helpful information for strata owners, residents, and strata council members. Written in easy-to-understand language, it includes new and expanded sections on topics such as Insurance, Living in a Strata, Bylaws and Rules Explained, Buying and Selling Strata and First Time Strata Owners.
Visitors to the site should note the information is not intended as a substitute for legal advice; it does not provide a legal interpretation of the Strata Property Act, regulations, bylaws and rules. Check it out at www.gov.bc.ca/strata — will open in a new tab.
The BC Law Institute (BCLI) is calling on the BC Legislature to amend how the Strata Property Act deals with cancelling a strata plan and winding up a strata corporation.
“Owners in BC’s oldest stratas could soon be facing some difficult decisions,” noted Patrick Williams, Chair of BCLI’s Strata Property Law (Phase Two) Project Committee. Owners in these aging properties must choose whether to invest in renewing and upgrading their stratas, or to consider termination. To make the decision process easier, the BCLI has completed a report containing 21 recommendations for reforming the Strata Property Act.
The major recommendation: require only 80% of a strata property’s owners to agree to termination. Currently, a unanimous decision is required to authorize termination. To ensure that any dissenting owners are adequately protected, the report recommends that after an 80% vote, stratas be required to apply for a court order authorizing termination as being in the best interests of the strata.
The full report is available at www.bcli.org — will open in a new tab.
The Land Title and Survey Authority of British Columbia (LTSA) has made important improvements to title, document and plan ordering on myLTSA Enterprise.
By switching to enhanced Search Services, myLTSA Enterprise customers will benefit from more efficient ordering of titles, documents and plans while accessing all the search methods available today. Key features include:
- Faster ordering of multiple or related titles, documents and plans
- Clear, real-time billing information prior to purchase
- Saved title searching preferences
- Automated product delivery
- Easier verification with improved title, document and plan descriptions
- Expanded web browser and mobile compatibility.
The changes to Search Services are a result of ongoing consultation by the LTSA with many stakeholders, including land surveyors, lawyers, local governments, notaries, realtors, and registry agents.
Customers can choose between using enhanced or legacy Search Services until May 15, 2015. After May 15, 2015, legacy Search Services will be retired. All current and past myLTSA Enterprise transactions are consolidated in the user’s myLTSA Inbox and on the same account statement regardless of the version of Search Services used.
During the transition period, click the “Back to myLTSA Legacy Search Services” link in the green bar of myLTSA Enterprise with enhanced Search Services for convenient access to myLTSA Enterprise with legacy Search Services.
No changes have been made to the Electronic Filing System (EFS) and myLTSA Explorer. Learn more at www.ltsa.ca — will open in a new tab.
Since the February 2015 Report from Council newsletter, the following actions have been taken as a result of disciplinary hearings and Consent Orders conducted by the Council.
- Marco Vincenzi
- Jackson Hing Yu Lai
- Tanvir (Tony) Singh Sandher
- Inderjit (Inder) Arora
- Wendy Le Hong Cheung
- Badyollah (Bob) Shadbakht
- Nissim Samuel and Nissim Samuel Personal Real Estate Corporation
- Yonghua (Henry) Zou
- Elizabeth Anne Clay and Gordon Thomas Mccrindle
- Stephen (Steve) James Albert Burk
- Laurentia Josephine Lasasso
- David John Crawford
- David William Hilts and Deloitte Real Estate Inc.
- Glenn Melroy Sauer Warren
- Martin Charles Dash
- Michele Ursula Seger
- Kevin Kim Chiang
- Lorraine Margaret Logan
- Donna Faye Mccrone and Touchstone Property Management Ltd.
- Daniel Martin Eisenhauer
- Steven Kwok Wai Wong
- Wanda Marie Smook
- Philip John Danyluk DBA Living Options Realty