February 2016 Report from Council Newsletter

As the regulator of licensed real estate professionals, the Real Estate Council of BC’s highest priority is to protect the public interest by enforcing licensee standards of conduct. It is our mandate to ensure that the public can have confidence in the services provided to them by real estate licensees. Recent news reports have raised concerns that the conduct of some licensees in the Lower Mainland has violated the standards of professional conduct which all licensees are expected to uphold. This is a matter of significant concern to the Council.

It is the legislated duty of all licensees to act in the best interest of their clients, and evidence of failure of that duty will result in disciplinary action from the Council. As a profession, we must and will confront issues of professional conduct and integrity directly, decisively, and with urgency.

Based on the issues raised in recent media reports, the Council saw that prompt and decisive action was called for, and so we have announced the formation of an independent advisory group that will make recommendations to the Council on measures that will further strengthen public protection for real estate consumers. The advisory group will make an initial report by April 8, 2016 and a full report by the end of May. I look forward to taking the recommendations in that report to government and to implementing any new measures which emerge from the recommendations to enhance the competency of real estate licensees and their compliance with the Real Estate Services Act.

As the advisory group conducts its work, the Council will continue to enforce regulations and standards to the fullest extent of its mandate.

I am proud to chair the Real Estate Council of BC because I know that it does important work to protect the public interest in real estate matters. Every year the Council conducts hundreds of investigations and disciplines those licensees who have failed in their duties to their clients. The Council also ensures that everyone who enters the real estate industry is properly educated and qualified to provide a high level of service to their clients. BC consumers have the benefit of one of the strongest and most well-established real estate regulatory frameworks in North America.

The success of self-regulation depends on more than just a strong regulator. It depends on each of us to ensure that we are acting to the highest professional standards at all times. As members of a self-regulating industry, every licensee in this province has a duty to uphold the public interest in their business practices. By making the real estate industry self-regulating, the government and the members of the public have placed their trust in us. The actions of just one licensee who decides to violate that trust can have significant negative effects on the whole industry.

As licensees, we assist people with some of the most important transactions of their lives: buying and selling homes for their families. These transactions can be very complex, but the core duties that each licensee must uphold at all times are really very simple. These duties are familiar to all of us, but they are worth repeating:

1. act in the best interests of the client;
2. act in accordance with the lawful instructions of the client;
3. act only within the scope of the authority given by the client;
4. advise the client to seek independent professional advice on matters outside of the expertise of the licensee;
5. maintain the confidentiality of information respecting the client;
6. disclose to the client all known material information respecting the real estate services, and the real estate and the trade in real estate to which the services relate;
7. communicate all offers to the client in a timely, objective and unbiased manner;
8. use reasonable efforts to discover relevant facts respecting any real estate that the client is considering acquiring;
9. take reasonable steps to avoid any conflict of interest;
10. if a conflict of interest does exist, promptly and fully disclose the conflict to the client. (section 3-3, Council Rules)

This issue of the Report from Council expands on topics arising out of these essential duties to clients, such as disclosure, limited dual agency, conflicts of interest, and other subjects that the Council expects all licensees to be knowledgeable about and able to explain clearly to clients. Complete information on all these topics is available in the Professional Standards Manual, which you can consult at any time on the Council’s website. Whenever you have questions about how to act in a particular situation, consult the Professional Standards Manual and discuss the matter with your managing broker. If you need more information, contact the Council’s Professional Standards Advisor for advice. And if you know that another licensee has acted improperly, inform your managing broker immediately, so together you can bring the matter to the attention of the Council.

The Disciplinary Decisions section of this issue includes many examples of the Council’s ongoing work to ensure that licensees who violate the Real Estate Services Act are penalized. We have recently made changes to our Discipline Publication policy, including attaching the complete Disciplinary Order to the plain language summaries available on the Council’s website, to ensure that members of the public have access to information that will help them make informed decisions when choosing a real estate licensee.

Being part of a self-regulating industry is a privilege. The public’s trust is very precious. I am confident that we will continue to ensure that the trust which the public and the government of this province have placed in all real estate licensees is well-founded-but it will take each and every licensee’s full participation.

Also in the issue, you’ll find nomination forms for election to Council. Becoming an elected member of Council is a privilege and a great responsibility. If you are licensed at a brokerage in a district holding an election this year, I urge you to think carefully about nomination. Along with the public members who sit on the Council, the elected members make important contributions to protecting the public interest in real estate matters. Those interested in nomination may wish to get in touch with a sitting Council member to talk about the duties, the challenges, the commitment, and the satisfactions of helping to govern a self-regulatory organization.

Marylou Leslie, Chair

On February 9, 2016, the Real Estate Council of BC initiated the creation of an independent advisory group to review the Council’s handling of licensee misconduct. BC’s Superintendent of Real Estate, Carolyn Rogers agreed to Chair the Advisory Group. On February 22, 2016, Ms. Rogers named her group members and outlined the Advisory Group’s key areas of focus.

The Advisory Group is tasked with examining the ways the Council identifies and responds to licensee conduct that could pose a risk to consumers, or that fails to meet the standards expected by the public. The Advisory Group will provide an interim report to the Real Estate Council by April 8, 2016, and a full report and recommendations by the end of May 2016.

Licensees and members of the public may submit their comments to the Advisory Group by email at [email protected].

Visit the Advisory Group website at www.advisorygroupbc.ca for more information about the members of the group, its terms of reference, and other resources.

The Council office will be closed on the following days:

Friday, March 25 for Good Friday

Monday, March 28 for Easter Monday

Licensees have a legislated duty to act in the best interests of their clients, and they must avoid and disclose all conflicts of interest. The Council has robust rules in place relating to personal trades in real estate, disclosure, contract assignments, and fulfillment of fiduciary duties. When licensees have a direct or indirect interest in a real estate transaction, they are required to disclose it, in writing.

Whenever the Council becomes aware of licensees who fail in their duties to clients, by putting their own financial gain ahead of their clients’ interests, those licensees can expect to have their actions investigated and they may face disciplinary action from the Council.

Brokerages have a responsibility to supervise and manage the activities of licensees engaged at the business, and brokerages who do not comply with these requirements can also expect to face discipline.

Disclosing an Interest in Trade

As a licensee, like all members of the public, you have the right to buy and sell real estate. However, because of your status as a licensee, you are required to do certain things that unlicensed members of the public are not.

Before presenting an offer to purchase real estate on your own behalf, or on behalf of an associate, you must provide the seller with a properly and accurately completed Disclosure of Interest in Trade form. Amongst other pertinent information, that form requires you to disclose your intended use for the property. Is it to be held for personal use? Is it to be resold? If it is to be resold and you or your associate are already negotiating the terms of that resale, what are those terms?

The Disclosure of Interest in Trade form advises sellers to obtain independent advice if they are uncertain about the fair market value of the property. Sellers may also need to obtain other forms of advice -such as legal or accounting advice. They must never be led to believe this advice is not necessary.

If you have an interest in acquiring a property, you must seriously consider whether it would be appropriate for you to act on the sellers’ behalf in the sale. As their agent, you would have a duty to act in your clients’ best interests and to avoid any conflict of interest. Would you be able to fulfill those duties? Would you be able to give them the independent advice they need? Would you be able to act in their best interests, while attempting to further your own? There is a very significant risk that your own personal interests will be in conflict with, and there will prejudice, your clients’ interests.

For more information:

• Associates-section 5-7 of the Council Rules: www.recbc.ca/licensee/rules.html#section5-7
• Disclosure of Interest in Trade Form: www.recbc.ca/licensing/forms.html#disclosure

Assignment of a Contract When You Are the Buyer

As a licensee, you may be in the legal position of being able to assign a contract if all the following conditions have been satisfied:

1. you have accurately completed the Disclosure of Interest in Trade form and provided that to the seller in advance of them considering your offer,
2. you have not acted in any way as the agent for the seller,
3. the seller was given adequate opportunity to seek any independent advice they wanted, and
4. the seller is given written notice of the assignment.

But even if these steps have been taken, you could be putting yourself in a position of significant professional risk. As a licensee you have a unique knowledge of the market and you will be held to a high standard of professionalism by the Council and by the courts. Continued public confidence in the industry requires that licensees, even when they are legitimately acting on their own behalf, act honestly and transparently.

For more information:

Disclosure of interest in trade: www.recbc.ca/psm/disclosure-of-interest-in-trade/

Here is a scenario that may present itself to trading services licensees:

You are the listing agent helping a couple sell their home, and over the past few weeks you’ve developed a good working relationship with them. Now, a prospective buyer is in your open house showing interest in making an offer. But the buyer is unrepresented, and wants your help.

What would you do in this scenario?

If your answer is “ask the buyer to sign a limited dual agency agreement in order to represent both the buyer and the sellers”-think carefully before deciding to pursue this course of action. Limited dual agency is legal under the Real Estate Services Act in BC, but it is complicated and fraught with risks.

Before they agree to a limited dual agency relationship with you, you must make sure that your clients clearly understand how your ability to represent them will be reduced. As a limited dual agent you will be required to:

• Deal with the buyer and seller impartially.
• Not disclose to the seller what the buyer will pay, or disclose to the buyer what the seller will accept.
• Not disclose the motivations of either party.
• Not disclose personal information about either party unless authorized to do so in writing.

Is this what your seller client is expecting from you?

The next time you are approached by an unrepresented buyer, take a moment to consider your options before you put yourself in the risky position of acting as a limited dual agent. Don’t simply assume that an agency relationship must be created with the unrepresented buyer: consider treating that buyer as a customer rather than a client.

No Agency Relationship: Customer rather than Client

Rather than acting as a limited dual agent, you can choose to act as the agent of only one of the parties, treating the other party, with their agreement, as a customer. This does not affect your ability to earn the remuneration to which you are entitled.

By not creating an agency relationship with the buyer, your duties to your seller remain undiminished. You can draft an offer for the unrepresented buyer, (as always, acting honestly with reasonable care and skill), and get the property sold.

Here’s a checklist to review when working with an unrepresented buyer as a customer:

Make sure the unrepresented party understands that:

• You represent your client and their interest.
• You do not represent them or their interests.

• Document your disclosure of agency to ensure there is no misunderstanding about the nature of your relationship with the parties to the trade.
• Do not give advice to an unrepresented buyer. If the buyer asks if their offer is appropriate, what should you do? Remind them that you are the seller’s agent and you can’t provide advice. If they ask if you can recommend a home inspector, what should you do? Remind them that you are the seller’s agent and you can’t provide advice.
• Remember who you work for-the seller. Unless and until your seller agrees, in writing, to the modification of your duties, you are their designated agent with all the obligations of agency that come with that special relationship.

• The 4 D’s of Dual Agency

  Under the Real Estate Services Act, limited dual agency is legal in BC with the informed consent of both parties. There are clear guidelines for establishing a limited dual agency relationship. Make sure you follow these guidelines before you act for an unrepresented buyer client:

  1. Decide if limited dual agency is right for you-and for your clients.

  First, take some time to review the resources suggested in the “For more information” section of this article, and make sure you fully understand your duties as a limited dual agent-and the risks of representing clients with competing interests. Some licensees make it a practice to never work as dual agents.

  Even more importantly, you must find out what your client’s wishes are. When taking a listing, explain dual agency to your clients. Clearly outline the limits to the representation you can provide to them under dual agency, and ask them what they would like you to do if an unrepresented buyer should ask you for representation. Some sellers will instruct you that they will not agree, in any circumstances, to have you modify your duties to them as their designated agent.

  Even if your seller is agreeable to the concept of you potentially acting as a limited dual agent, you must still, in every instance, get their informed consent before you can represent a buyer.

  2. Disclose that you are the designated agent of the seller.

  When speaking with any prospective, unrepresented buyer, let them know that you are the seller’s agent and that you represent the seller’s interests.

  Never agree to act as an unrepresented buyer’s limited dual agent without first obtaining the express consent of your seller-client. Until you have your client’s consent to act as a limited dual agent, you should not do anything for the unrepresented buyer that will give the impression that you are acting as their agent-such as giving advice.

  Giving advice to the unrepresented buyer could create an implied agency relationship. In some cases, the courts have found that a licensee’s actions led an unrepresented party to believe that the licensee was acting on their behalf. So be sure that unrepresented buyers understand that you represent the seller’s interests.

  3. Document your agency relationships and your disclosures.

  To ensure there are no misunderstandings about the nature of your relationships with the parties to the trade, have both parties indicate in writing that they have received your disclosure and they understand and agree to the limited representation you can provide as a Limited Dual Agent.

  4. Demonstrate actions that are consistent with your decisions, disclosures, and documents.

  Remember who you work for. If you continue to act as the designated agent for the seller, you must ensure that you represent their interest. If the seller has agreed that you can act as a limited dual agent for both them and the buyers, you must take a neutral position. You must not favour the interests of one party over the interests of the other.

For More Information:

• Agency relationships explained: www.recbc.ca/psm/nature-of-the-relationship/
• How an Agency Relationship is Created: www.recbc.ca/psm/how-an-agency-relationship-is-created/
• Duty of Disclosure of a Limited Dual Agent: www.recbc.ca/psm/duty-of-disclosure-by-a-limited-dual-agent/

February 2016

TO: ALL REAL ESTATE LICENSEES

RE: NOTICE OF ELECTION-REAL ESTATE COUNCIL MEMBER NOMINATIONS

The term of office for the following Council members expires on June 30, 2016. The Real Estate Council of BC is seeking nominations from licensees wishing to stand for election in these Districts.

Managing Broker/Associate Broker Members

• In District #1 (County of Vancouver), the terms of David Peerless and Ralph Archibald expire.
• In District #3 (County of Nanaimo), the term of Susan G. McGougan expires.
• In District #4 (County of Westminster North of the Fraser River) the term of Harvey Exner expires.
• In District #5 (County of Westminster South of the Fraser) the term of David Rishel expires.

Representative Members

In Districts #2, #3, #6 and #7 (Combined counties of Victoria, Nanaimo, Yale, Kootenay, Cariboo & Prince Rupert) the term of Subhadra Ghose expires.

There will be no election for a managing broker/associate broker in Districts #2, #6 and #7 (Counties of Victoria, Yale, and the combined counties of Kootenay, Cariboo and Prince Rupert), no election for a representative member in Districts #1, #4 and #5 (Counties of Vancouver and Westminster) and no election for a rental property/strata management member.

About the Council

The Council is comprised of up to 17 members who represent all eight counties in the province, pursuant to section 76 of the Real Estate Services Act (RESA). Thirteen members are elected by their peers for two year terms. The elected members include three representatives and nine managing or associate brokers. One individual is elected as the strata/rental property management member. Three members are appointed by the provincial government. In addition, the Council, pursuant to section 74.1 of RESA, may appoint one individual as a Strata Owner Representative.

Nomination Process

Licensees who wish to be a candidate or to nominate a candidate in their District must use the nomination form in this issue of the Report from Council.

When nominating a candidate for election, remember:

• You must be licensed at the managing broker or associate broker level to nominate brokers.
• You must be licensed at the representative level to nominate representatives.
• Candidates nominated for election in a District must be licensed at a location in that District.

Please return completed nomination forms to the Council office as soon as possible. Nominations must be received at the Council office not later than 4:00pm on April 4, 2016.

Election Process

Electronic Voting: In 2016, Council elections will be conducted electronically. Voting packages, including a biographical summary of each candidate and voting instructions, will be emailed to all licensees in districts where elections are being held. Electronic voting opens April 25, 2016, and closes May 10, 2016.

Paper Voting: Licensees who wish to vote by paper ballot may request a paper voting package and ballot by emailing the Council at [email protected]. The deadline to request paper ballots is April 4, 2016. All completed paper ballots must be received at the Council office no later than 4:00pm on May 10, 2016.

Yours truly,

Robert O. Fawcett

Executive Officer

Changes to the Strata Property Act

As of November 17, 2015 the Strata Property Act (SPA) has been amended for greater clarity. Three minor strata “housekeeping” amendments are now in effect. These three amendments:

• clarify the voting requirement for an application to court for a special levy, SPA Section 173,
• remove confusion as to what the term “all the eligible voters” means, SPA Section 193 (3); and
• clarify that regulation 6.11 for permitted investments applies to both contingency reserve funds and funds collected by special levy, SPA Section 292 (2) (l1).

For more information:

Bill 40-2015-the Natural Gas Development Statutes Amendment Act, 2015

Changes to the Residential Tenancy Branch-Direct Request Order of Possession

As of October 7, 2015, the Residential Tenancy Branch has provided the ability for landlords to apply for a Direct Order of Possession (DoP) via an online process. This update to the process should make it quicker and easier for landlords to file a DoP.

Further information on this topic can be found at:

• http://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/solving-problems/dispute-resolution/direct-request

New Legislation-Guide Dog and Service Dog Act of BC

On January 18 2016, the new Guide Dog and Service Dog Act of BC came into force, replacing the Guide Dog Act of BC. This new legislation affects both landlords and strata corporations, and licensees providing rental property management and strata management services should be aware of these changes to ensure that they are able to advise clients correctly, and manage the property correctly.

This new legislation will allow strata owners, occupants, tenants and visitors to have certified guide dogs or service dogs on the property (whether it is strata corporation property or a private rental property), regardless of any strata corporation bylaws or tenancy agreements that may state otherwise. Furthermore, an owner, tenant or occupant of this property will be able to keep their certified guide dog or service dog after it has been retired from its duties, in addition to any new certified guide or service dog that has taken over the duties.

There have been amendments made to section 18(3) of the Residential Tenancy Act and section 18(2) of the Manufactured Home Park Tenancy Act to reflect the change from the Guide Dog Act to the Guide Dog and Service Dog Act. In addition sections 123(1.01) and 123(1.02) have been added to the Strata Property Act.

For More Information:

• http://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/changes-to-legislation

The Office of the Superintendent of Real Estate at the Financial Institutions Commission (FICOM) has advised that a new consent order in relation to unlicensed real estate services has been posted to the FICOM website. Kenneth Emilien Valcourt and Mary Katherine Mariano Tecson Valcourt, doing business as K&K Homelink Network Enterprises, are ordered to cease providing rental property management services and trading services without being licensed, and to cease advertising these services.

The order is available on the FICOM website: www.fic.gov.bc.ca.

Since the December 2015 Report from Council newsletter, the following actions have been taken as a result of disciplinary hearings and Consent Orders conducted by the Council.

Trading Services

• James Sidney Parsons
• Brian William Schiebel
• Tracy-Allan James Schwartz
• Candice Claire Dyer
• Fatemeh (Fatima) Nouripour
• Balvir (Robbie) Singh Johal and Robbie Johal Personal Real Estate Corporation
• Glen Clifford Magnus
• Huitt Tracey
• Katherine Ann Campbell
• Yo-Cherng (Jeremy) Liou
• Linda Mary Jorgensen
• Carl Brian Scott and 570609 C Ltd. dba Re/Max Mid-Island Realty
• Inderjit (Indy) Singh Dhillon
• Jun Wei (Antonia) Tong and Antonia Tong Personal Real Estate Corporation

Rental Property Management

• Nacel Properties Ltd.

Strata Property Management

• Linda Ann Taphorngerald (Gerry) Franklin Blanchard and Crossroads Management Ltd.
• William (Bill) John Seger Kerr, Terrance (Terry) William John Kerr, Mary Edith Kerr and The Kerr Group Management Corporation
• Kevin Donald Duguid
• Douglas Frank Fairley

Notice of Permanent Surrender of License

• Shannon Lee Craig

Notice of Order for Conditions

• Lin Realty and Jeffrey Fee

Notice of License Cancellation

• Yu-Hsiang (Lester) Lin