June 2014 Report from Council Newsletter


Published on 23 June, 2014

  • Disclosure of Material Latent Defects - What's Required, and When

    The basement leaks, but only in a heavy rain. The damage from the last flood has been repaired, but not the source of the leak. The property showings have been during the dry season and there are no visible signs of leaks or damage. Is the leaking an issue that needs to be disclosed to potential buyers?

    Although sellers may not realize it, this is important information that does need to be disclosed to buyers. It’s just one example of a material latent defect: a defect that isn’t apparent through an ordinary inspection, but which materially affects a property’s value. The definition of a material latent defect includes:

    a) a defect that renders the real estate

    (i) dangerous or potentially dangerous to the occupants,

    (ii) unfit for habitation, or

    (iii) unfit for the purpose for which a party is acquiring it, if

    (A) the party has made this purpose known to the licensee, or

    (B) the licensee has otherwise become aware of this purpose;

    (b) a defect that would involve great expense to remedy;

    (c) a circumstance that affects the real estate in respect of which a local government or other local authority has given a notice to the client or the licensee, indicating that the circumstance must or should be remedied;

    (d) a lack of appropriate municipal building and other permits respecting the real estate.

    (See section 5-13 of the Council Rules)

    Listing licensees should explain the concept of latent defects to sellers at the time a listing is taken, to ensure they are aware of the need to inform potential buyers about the property’s defects. Licensees acting for a seller have a duty to disclose to all other parties in the trade any material latent defects in the real estate that they know of.

    Timing is Crucial

    Before there is an accepted offer, licensees must ensure that all known material latent defects have been disclosed in writing to the buyer. The Council Rules specify that licensees must disclose any material latent defects “promptly, but in any case before an agreement for the acquisition or disposition of the real estate is entered into” (section 5-13). The Council has investigated, and disciplined, licensees who have failed to disclose material latent defects in a timely way.

    To confirm that written disclosure of a material latent defect has been made to potential buyers before an offer is accepted by the seller, include the following clause in the Contract of Purchase and Sale whenever a material latent defect is disclosed:

    Disclosure of Material LatentDefect Clause

    The buyer acknowledges having received separate written disclosure of a material latent defect relating to (general reference to issue).

    You must make a written disclosure of material latent defects separately from any agreement under which real estate services are provided or from any agreement giving effect to a trade in real estate.

    Using the Property Disclosure Statement

    Licensees are not required to disclose a known material latent defect to a buyer if the seller has already disclosed all known material latent defects, in writing, to the buyer. This disclosure, which can be made on the Property Disclosure Statement (PDS), would satisfy the requirements of the Council Rules as long as the seller has provided the PDS to a potential buyer before accepting any offer.

    To be clear, when an offer is accepted and made subject to the buyer receiving and accepting the contents of a PDS, using that PDS to disclose a material latent defect for the first time would not satisfy the disclosure requirements.

    “But the Seller Didn’t Want to…”

    The Council Rules are very clear: If a client instructs the licensee not to disclose a material latent defect, that licensee must refuse to provide further trading services to the client in respect of the trade in real estate (see Section 5-13 of the Council Rules).

    Rentals Count Too!

    Keep in mind that whether a property is for sale, for lease, or for rent, written disclosure of material latent defects must be made before any agreement is entered into.

    For further information:

    See “Disclosure of Material Latent Defects” in the Professional Standards Manual

  • A Note from the Chair

    This July the Council marks its 56th year regulating the real estate industry in BC. Overseeing such a large and diverse group of licensees (more than 21,000 of us, in every corner of the province) is a challenging mandate, and the Council works hard to meet that challenge. As evidence, I draw your attention to the large number of Disciplinary Decisions included in this issue of the Report from Council. I advise all licensees to ensure that they are familiar with all their duties and responsibilities under the Real Estate Services Act and the Regulation, and to consult the Professional Standards Manual or Brokerage Standards Manual when issues arise that they are unsure about.

    I’ve been honoured to have served as the Council’s Chair over the past year, and as a Council member since 2008. During that time, I’ve had the good fortune to work with a number of very talented people, whom I’d like to thank now for their support and assistance:

    • David Moore, Director, and Kevin Arndt, Associate Director, Licensing Education at the Real Estate Division, Sauder School of Business, University of British Columbia.
    • The British Columbia Real Estate Association and its member boards-in particular, Past President Jennifer Lynch and Chief Executive Officer Robert Laing.
    • The volunteers who serve on the Council’s Education, Rental Property Management, Strata Management, and Trading Services advisory groups, as well as the Council’s Complaints Committee.
    • Vice-Chair Susan McGougan and the other members of the Council, who have made my time on the Council such a pleasure.

    On July 1st, we will welcome two new members to the Council: David Peerless (Dexter Associates Realty, Vancouver) and Harvey Exner (MacDonald Realty, Maple Ridge). They will join re-elected members Susan McGougan, David Rishel, and Subhadra Ghose, and the members currently in the second year of their term: Garth Cambrey, Richard Valouche, Abdul Ghouri, Michael Zeigler, Marylou Leslie, Joe Pearson, and Susan Lynch, as well as public members Barbara Barry and John Nagy.I wish them all the best in the year ahead.

    And on behalf of the entire Council, I bid a fond farewell to departing members Bill Phillips, Bill Binnie, and Bruce Turner.

    Finally, I’d like to extend my sincere thanks to Robert Fawcett, the Council’s Executive Officer, Larry Buttress, the Deputy Executive Officer, and all the hardworking staff at the Council for their valuable assistance and dedication to the regulation of real estate services in British Columbia during my last year as chair.

    Marshall Cowe, Chair

  • Office Closures

    The Council office will be closed on the following dates:

    • Tuesday, July 1, 2014 for Canada Day
    • Monday, August 4, 2014 for BC Day

  • Election of Real Estate Council

    Each year, the term of six or seven Council members expires and elections are held to fill the vacancies. The following have been elected for a two-year term commencing July 1, 2014.

    New Council Members

    District #1 — County of Vancouver

    Managing Broker/Associate Broker Member

    David Peerless

    Managing Broker, Dexter Associates Realty, Vancouver

    Licensed for 34 years.

    District #4 — County of Westminster (North of the Fraser River)

    Managing Broker/Associate Broker Member

    Harvey Exner

    Managing Broker, MacDonald Realty, Maple Ridge

    Licensed for 22 years (collectively between the years 1979 to present).

    In District No. 1 — County of Vancouver, one position remains vacant, as an eligible candidate was not nominated. In keeping with its authority under section 76 of the Real Estate Services Act, the Council will be considering the appointment of a person to fill this vacant position.

    Re-elected Council Members

    District #3 — County of Nanaimo

    Managing Broker/Associate Broker Member

    Susan McGougan

    Associate Broker, Re/Max of Nanaimo, Nanaimo

    Licensed for 23 years.

    District #5 — County of Westminster (South of the Fraser River)

    Managing Broker/Associate Broker Member

    David Rishel

    Managing Broker, Re/Max Little Oak, Abbotsford

    Licensed for 28 years.

    Districts #2, 3, 6, 7 — Combined Counties of Victoria, Nanaimo, Yale, Kootenay, Cariboo and Prince Rupert

    Representative Member

    Subhadra Ghose

    Representative, Re/Max of Nanaimo, Nanaimo

    Licensed for 23 years.

    The following Council members have a further year to serve

    Rental/Strata Management Member

    J. Garth Cambrey

    Cambrey Consulting Ltd., Port Coquitlam

    Licensed for 27 years.

    District #1 — County Of Vancouver

    Managing Broker/Associate Broker Member

    Richard Valouche

    TRG The Residential Group Realty, Vancouver

    Licensed for 28 years.

    District #1 — County Of Vancouver

    Representative Member

    Abdul Ghouri

    Green Team Realty Inc., Vancouver

    Licensed for 29 years.

    District #2 — County of Victoria

    Managing Broker/Associate Broker Member

    R.E. Michael Ziegler

    Newport Realty Ltd., Victoria

    Licensed for 38 years.

    Districts #4 & #5 — Counties of Westminster (N. & S. of the Fraser)

    Representative Member

    Marylou Leslie

    Macdonald Realty (Sur), Surrey

    Licensed for 25 years.

    District #6 — County of Yale

    Managing Broker/Associate Broker Member

    Joseph Pearson

    Re/Max-Vernon, Vernon

    Licensed for 40 years.

    District #7 — Combined Counties of Kootenay, Cariboo and Prince Rupert

    Managing Broker/Associate Broker Member

    Susan Lynch

    Re/Max Centre City Realty, Prince George

    Licensed for 24 years.

    Government appointed public members

    Barbara Barry, West VancouverJohn Nagy, Delta

    Retiring from Council

    District #4 — County of Westminster (North of the Fraser River)

    Managing Broker/Associate Broker Member

    Marshall J. Cowe - Chair

    Royal LePage West Real Estate Services, Coquitlam

    Licensed for 42 years.

    District #1 — County of Vancouver

    Managing Brokers/Associate Broker Members

    William (Bill) R. Binnie

    Royal LePage Northshore, West Vancouver

    Licensed for 40 years.

    William (Bill) B. Phillips

    Whistler Real Estate Company Limited, Whistler

    Licensed for 40 years

    Bruce Turner, Courtenay is retiring fter 6 years of service as a government appointed public member.

  • Changes to Canada's Anti-Money Laundering Regulations Affect Brokerages

    Recent changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations mean that brokerages are now required to perform increased customer due diligence, in order to better evaluate their clients’ risk of money laundering and terrorist financing. Canada’s financial intelligence unit, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), made the changes to bring Canada’s antimoney laundering policies in line with international standards.

    Under the new regulations, which came into force on February 1, 2014, some alterations to brokerages’ existing FINTRAC compliance policies and procedures will be necessary as a result of the regulations’ introduction of the concept of a “business relationship.” A business relationship is deemed to exist when a licensee conducts a second purchase or sale transaction with a particular client within five years. Brokerages must conduct “ongoing monitoring” of clients with whom they have business relationships.

    The requirements for ongoing monitoring of clients with business relationships include:

    • keeping client information up-to-date with any new or changed information;
    • maintaining records documenting the purpose and intended nature of the brokerage’s business relationship with the client;
    • ensuring that measures to monitor the business relationship with the client during the transaction are recorded;
    • ensuring the client’s level of risk of money laundering or terrorist financing is re-assessed; and
    • any suspicious transactions are reported.

    The business relationship between the client and the licensee is considered to have expired when five years have passed since the last purchase or sale transaction.

    Only brokerages engaged in trading services are responsible for fulfilling the compliance regime requirements. Full details of the new requirements can be accessed in FINTRAC’s Guideline 4: Implementation of a Compliance Regime  — will open in a new tab.

    FINTRAC’s Guideline also includes the following tools for assessing risk levels:

    • Checklist: Products, Services Delivery Channels and Geographic Locations Assess your business’s risk of encountering money laundering or terrorist financing.
    • Checklist: Clients Within and Clients Outside of Business Relationships Assess a client’s risk factors for involvement with money laundering or terrorist financing.
    • Risk Level Assessment Matrix

    To make compliance with FINTRAC regulations easier, the Canadian Real Estate Association is developing a number of resources which members can access online through Realtorlink.ca  — will open in a new tab.

    If you have concerns or questions about these new reporting requirements, get in touch with your real estate board, seek legal advice, or contact FINTRAC directly at [email protected]  — will open in a new tab or 1-866-346-8722. The changes bring Canada’s anti-money laundering policies in line with international standards.

  • "We're Getting Divorced."

    Issues to Consider When Representing Spouses in the Sale of the Matrimonial Home

    No licensee wants to get caught up in a scenario like this:

    Linda Licensee* at XYZ Realty Ltd was approached by two past clients, Tom and Trixie, to list their family home for sale. Tom and Trixie were getting a divorce, but they explained to Linda that their relationship was amicable and they were in agreement about selling the property. The listed price was a little on the high side, but they weren’t in a rush. Despite the circumstances, Linda was delighted to represent Tom and Trixie.

    A few days after the listing agreement was signed, Linda called to make the first appointment to show the property. Tom answered and informed her that since Trixie had moved out with her new boyfriend, he no longer wanted to sell the property. He declined Linda’s request for a showing, demanded that she cancel the listing, and announced that he was leaving for Hawaii and wouldn’t be in communication at all for several weeks. He then instructed Linda not to tell Trixie anything about his desire to cancel the listing or his planned trip toHawaii.

    Somewhat taken aback, Linda called Trixie at work, described her conversation with Tom and asked Trixie what she should do. Trixie told her not to worry, she’ d calm Tom down. She told Linda to continue marketing the property and asked her to prepare a price reduction and email it to her at work to sign, because she’ d decided to get the property sold as soon as possible. Trixie directed Linda not to tell Tom of her instructions. She’ d fill him in when she met with Tom to calm him down.

    Linda complied; the price reduction was signed by Trixie and broker-loaded to MLS®. The new price attracted a lot of interest, and the next day Linda called the house again to make appointments to show the property. Tom answered the phone. He was outraged.

    He told Linda he had filed a complaint with the Real Estate Council because she hadn’t acted in accordance with his instructions; she had failed to maintain the confidentiality of his information; she had reduced the price of the property without his authorization; and she had failed to act in his best interest, preferring the interests of Trixie over his. His lawyer was commencing proceedings against Linda for failing in her duties to him as a client.

    After alerting her managing broker and advising the Real Estate Errors & Omissions Insurance Corporation of the potential legal proceedings, Linda sat down to reflect on what she could have done to avoid this unfortunate turn of events.

    Challenges to Representing Divorcing Spouses

    Even at the best of times, selling a home can be an emotional experience. And, as Linda discovered, when the matrimonial home is being sold during a divorce, these emotions can be greatly amplified. Whether or not a divorce is amicable, deciding the fate of the matrimonial home can be a major cause of distress for the spouses and a looming source of conflict.

    Nearly every divorce presents the potential for heightened disagreement between spouses. For licensees “caught in the middle” of such conflicts, representing divorcing spouses can present a number of professional challenges. In order to safely and successfully navigate this complex legal and ethical terrain, and to avoid scenarios like Linda’s from happening to you, make sure you’re familiar with your duties and obligations as outlined in the Real Estate Services Act (RESA) and consider the following:

    1. What are my fiduciary duties?

    As a licensee, you have a duty of loyalty to your client, out of which arises other duties, such as:

    • the duty of confidentiality;
    • the duty not to act in a conflict of interest;
    • the duty to obey all lawful instructions of the client; and
    • the duty to make full disclosure of all material information you know of respecting the real estate services, the property, and any trade in real estate to which the services relate.

    2. What are the different types of representation?

    As a licensee, you may represent one or both spouses in the sale of their matrimonial home, and this representation can take one of three forms, all of which are permitted under RESA:

    • the spouses agree to be represented by a single licensee;
    • each spouse is represented separately under a co-listing agreement, in which two licensees from different brokerages work in tandem to sell the property; or
    • a different licensee designated from within the same brokerage represents each spouse.

    Fiduciary duties are inherent to each of these three licensee representations. Think carefully about the type of representation your clients have chosen, as it will significantly affect how you can act in discharging your fiduciary duties.

    3. How does designated agency affect my fiduciary duties?

    When the client is comprised of more than one individual, the designated agent owes fiduciary duties to all of those who make up the client. If the spouses do not wish you as the designated agent to disclose information or provide advice to the other spouse, then use a written service agreement to narrow the scope of your fiduciary duties.

    When the designated agent is comprised of more than one licensee, all of those licensees owe fiduciary duties to the client. When two licensees co-list a matrimonial home owned jointly by spouses, each licensee owes fiduciary duties to both spouses. In these cases, the spouses may wish to modify the fiduciary duties of their designated agent through a written agreement, specifying that each licensee will owe fiduciary duties to one of the spouses but not both.

    4. Who do I take instructions from?

    Under the BC Family Law Act [SBC 2011] (“FLA”), any property owned by one or both spouses (now including common law spouses), will be considered to be family property, subject to equal division between the spouses. Even if one spouse is not on the title but lives in the matrimonial home, that spouse must be part of all decisions pertaining to the sale of the home.

    If you are representing both spouses and they cannot agree on who will be giving instructions, or if they do not fully understand that only one spouse should be giving you instructions, there is a much higher potential for difficulties and misunderstanding throughout the representation.

    Even if the spouses agree on who will be giving instructions, there is a potential for interference-unintentional or intentional- from the other spouse, particularly if differing viewpoints emerge between the spouses. To prevent potential conflicts or misunderstandings, ensure the written service agreement clearly addresses the issue of instructions.

    5. What will the listing contract look like?

    The listing contract must contain the seller’s authorization to list the property for sale. If there are more than one registered owners of the property, all of those individuals are the ‘sellers’ and must sign the listing contract. If spouses own the property jointly then they both must sign the listing contract as the ‘seller,’ regardless of their marital situation.

    Typically, the listing contract authorizes the listing brokerage to appoint one or more licensees to act as the designated agent of the seller. Accordingly, where two licensees from the same brokerage are co-listing the matrimonial home, the listing contract will include them both as the designated agent of the seller. If the two licensees are from different brokerages, a co-listing agreement will be executed by the spouses as ‘seller’ and by both brokerages.

    6. What other important issues should I consider?

    Often, the type of representation that a licensee will provide is based on the relationship that exists between the spouses: if the relationship is amicable, spouses may choose shared representation, while couples experiencing a high degree of conflict may choose to be represented by separate licensees. However, the choice of one type of representation over another is no guarantee that that representation will remain uncomplicated.

    Given the uncertainty that can surround the representation of divorcing spouses, a prudent licensee may also wish to clarify some of the following questions about the clients at the outset:

    • What is the level of co-operation between the spouses? Is one spouse obstructive or do the spouses have divergent or conflicting interests? This may impact how the property is marketed or for how long, the availability for showings or open houses, or an agreement on an acceptable sale price.
    • Do either or both of the spouses have legal representation they can consult with on an ongoing basis if necessary? Spouses may wish their lawyers to draft a non-disclosure agreement that reflects the expectations of the spouse and protects the licensee.
    • Is there a separation agreement? If so, how does it deal with the sale of the matrimonial home?
    • Are there any court orders dealing with conduct of sale or is court approval of the sale required?
    • Do the spouses need to obtain financial advice?

    Licensees and brokerages should also consider the following when different licensees are representing divorcing spouses:

    • How will the separate licensees resolve potential differences of opinion? Disagreements between licensees may escalate a dispute between the divorcing spouses.
    • Is the brokerage mindful of the risk of advertent or inadvertent disclosure of confidential information? What procedures or processes are in place to safeguard that information?

    Licensees who, like Linda Licensee, are approached by divorcing or separating couples who wish to sell the matrimonial home should give careful consideration to these issues, and clarify any relevant points with their managing broker before accepting the listing. Licensees should ensure that, regardless of the type of representation, their clients understand and agree on key points such as who will give instructions and how any confidential information will be treated, and that this is clearly reflected in the written service agreement.

    BC Family Law Act and Property Division

    The Family Law Act [SBC 2011] (“FLA”) came into effect on March 18, 2013, and repealed the Family Relations Act [RSBC 1996]. The FLA introduced new and changed language that may affect how property is divided between spouses who are separating or divorcing.

    For those parts of the FLA dealing with property and debt, spouses are defined as married spouses and people who have lived in a marriage-like relationship for at least two years. A spouse also includes former spouses. Unmarried spouses have the same property rights as married spouses.

    Spouses trying to decide how to divide their property must determine if the property is family property (property that either or both spouses acquired while together, or an increase in value of an excluded property) or excluded property (property that belongs to one spouse, who owned, bought or received it). The FLA still assumes that spouses share family property equally.

    Most often, the division of property is settled through a separation agreement between the spouses. If the spouses are unable to come to an agreement, the Court will determine the division of property.

    Licensees with clients who are considering real estate transactions as a result of or during a separation or divorce, and who wish to clarify their rights and responsibilities under the FLA, should direct their clients to seek legal advice.

  • Selling a New Home - Requirements under the Homeowner Protection Act

    No person may build, sell or even offer to sell a new home except in compliance with the Homeowner Protection Act (HPA). This means that you may not accept a listing of a new home unless and until the owner has complied with the requirements of the HPA.

    Keep in mind that the definition of a new home in the HPA not only includes “a building, or portion of a building, that is newly constructed or being constructed and is intended for residential occupancy,” but also “a home that is or is being substantially reconstructed.” If, after renovations, 25% or less of a home’s original structure above the foundation is remaining, the Homeowner Protection Office (HPO) considers that home substantially reconstructed and thus a new home for the purposes of the HPA.

    Whether a home is entirely new or substantially reconstructed, before accepting the listing, confirm whether the owner or builder has complied with the regulations regarding home warranty insurance, and that the home can be legally offered for sale.

    Residential Builders

    All residential builders in British Columbia must be licensed with the HPO. Before obtaining a building permit, builders must arrange for third-party home warranty insurance on proposed new homes. In areas where building permits are not required for new home construction, builders must ensure that licensing and warranty insurance are in place before construction is started.

    Only insurance companies who have been approved by the Financial Institutions Commission (FICOM) and who meet the requirements of the HPO can provide home warranty insurance. A list of authorized home warranty insurance providers is available on the HPO website.

    Standards of coverage, commencement dates, exclusions and limits on coverage are set by government to ensure clarity and a consistent base-level of consumer protection.

    Owner-Builders

    Owner-built homes are an exception to the licensing and warranty insurance requirements, but there are specific requirements for owner-builders:

    • Individuals planning to build a new home for their personal use must meet eligibility requirements, pay a fee, and obtain an Owner-Builder Authorization from the HPO before starting construction of the home.
    • Owner-builders must occupy the new home themselves for at least one year after obtaining an occupancy permit. They are not permitted to sell or rent the new home during that one-year period. The owner-builder is also not permitted to sell a new home “as is” during construction without permission from the HPO.

    Owner-builders who sell their home within 10 years of obtaining an occupancy permit are personally liable to purchasers for defects in the new home during that 10-year period. An owner-builder’s obligations are similar to the obligations of a licensed residential builder under a policy of home warranty insurance:

    • 2 years for material and labour
    • 5 years for defects in the building envelope
    • 10 years for structural defects.

    Purchasers can sue the owner-builder for these defects and the owner-builder’s liability cannot be waived in a contract or agreement. There are some reasonable exceptions (for example, defects caused by someone other than the builder, natural disasters) and these are set out in detail in the Regulation.

    Owner-Builder Disclosure Notice

    Owner-built homes may not be offered for sale or sold without providing the Owner-Builder Disclosure Notice to all potential purchasers.

    • For owner-built homes completed since November 19, 2007, Owner- Builder Disclosure Notices must be obtained from the HPO and will not be released until the one-year occupancy requirement has been verified.

    If you are acting for either an ownerbuilder or a potential purchaser, you can check the HPO’s New Homes Registry to determine whether a new home built under an Owner-Builder Authorization has met the occupancy requirement and can legally be sold. The Land Title Office advises the HPO whenever the title of an owner-built home is transferred and they pursue enforcement action if the sale is illegal (which may include compliance orders, monetary penalties, court injunctions, or convictions under the HPA). Licensees who participate in an illegal sale could also be the subject of disciplinary action under the Real Estate Services Act.

    For further information:

    The Homeowner Protection Office  — will open in a new tab

    New Home Registry  — will open in a new tab

    Builder Registry  — will open in a new tab

    Professional Standards Manual: Homeowner Protection Act Matters

  • Professional Standards Manual Update - Disclosure of Illegal Activities

    The following information has recently been updated in the Professional Standards Manual.

    Disclosure of Illegal Activities

    If real estate has been used for the production of illegal substances, such as growing marijuana or as a methamphetamine laboratory, and the property has not been properly restored, a material latent defect may exist, in the form of toxic hazards that cannot be discovered on a reasonable examination of the property. While marijuana for medical purposes may be grown legally with the necessary licence, the possibility remains that its growth could result in a property defect.

    The Council recommends that licensees use the following clause to confirm that the property has not been used to grow marijuana, whether legally or otherwise, or to manufacture illegal substances:

    No Growth or Manufacture of Illegal Substances Clause

    The Seller represents and warrants that, during the time the Seller has owned the property, the property and the buildings and structures thereon have not been used for the growth of marijuana or manufacture of any illegal substances. This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, the property and the buildings and structures thereon have never been used for the growth of marijuana or manufacture of illegal substances.

    If, however, the property has been used to grow marijuana or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an ‘as is’ basis, the Council recommends that:

    a) the seller make a written disclosure to the buyer in a form separate from the Contract of Purchase and Sale; and

    b) the following clause be included in the Contract:

    Growth or Manufacture of Illegal Substances Clause

    The Buyer acknowledges that the property and the buildings and structures thereon may have been used for the growth of marijuana or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the premises. The Buyer accepts the property and the buildings and structures thereon in their present state, and in an ”as is” condition.

    NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including marijuana growing operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

    For further information:

    Professional Standards Manual

    Homeowner Protection Act  — will open in a new tab

  • Acting for Buyers in Foreclosure Sales:

    Make Sure You Don’t “Foreclose” on Your Duties to Your Client

    Foreclosure transactions differ from regular property sales in many ways, and one of the significant differences is this: unlike a regular property sale, the first accepted offer in a foreclosure doesn’t necessarily result in that buyer ultimately owning the property. In a foreclosure sale, any potential buyer can attend court on the date set for the approval of the sale and submit an offer to purchase the property.*

    It is usual practice for the listing agent to inform all potential buyers’ agents about court dates, the court and bidding process, and what should accompany the Contract of Purchase and Sale (e. g. Schedule “A” and deposit). But a buyer’s agent shouldn’t rely on this as their only source of information about the status of a foreclosure proceeding.

    It has recently come to the Council’s attention that a number of buyers’ agents have chosen to simply wait for the listing agent to inform them about the court date. The result? Their clients were not apprised of the court date, and missed the opportunity to submit a competing offer.

    Although the listing agent may have a responsibility to inform potential buyers’ agents about court dates, the buyer’s agent must also take steps to determine the relevant court dates.

    Finding the Court Date

    To verify the status of a foreclosure proceeding, conduct a title search of the property. The Land Title and Survey Authority offers online search services through myLTSA (see www.ltsa.ca  — will open in a new tab). A Certificate of Pending Litigation (“CPL”) will be registered on the title, which can be used to obtain the court action number. The court documents can then be requested through the court registry or on Court Services Online.

    If you cannot obtain any court documents, or you’re unable to ascertain the court date, contact the listing agent by phone or by email. Remember, as the buyer’s representative, you have the duty to act in your client’s best interest and to act with reasonable care and skill (sections 3-3(a) and 3-4 of the Council Rules). In foreclosure transactions, this can mean taking the proactive steps necessary to gather relevant information on court dates.

    Foreclosure Proceedings: An Overview

    A foreclosure is a Supreme Court proceeding by which a lender enforces a mortgage. In most foreclosure proceedings, after Order Nisi has been granted and once the redemption period has expired, the lender can apply to the court for an order to assume conduct of sale of the property. Any subsequent charge holder or other interested parties may also ask the court for conduct of sale.

    If the court grants conduct of sale to the lender, the lender will engage a listing agent. The listing agent, in an effort to get the best offer for the lender, will showcase the property to as many potential buyers as possible.

    When a buyer submits a written offer to the listing agent, the listing agent will present that offer to the lender. If the lender accepts the offer and all conditions are removed, the lender’s lawyer will file all the necessary court documents at the court registry, and schedule a court date seeking a court order approving the sale of the property.

    The court date and the accepted offer price then become public knowledge. Any potential buyer can attend court on the specified date and submit an offer to the court to purchase the property.

    *Licensees who have limited experience in foreclosure transactions should seek guidance from their managing broker. This is a complex area of real estate where unforeseen hurdles can cause serious problems for the licensees and the public. Local real estate boards offer courses throughout the year related to foreclosures and court ordered sales.

    Further Information and Resources

    Court Services Online

    Land and Title Survey Authority  — will open in a new tab

    See “Foreclosures,” Professional Standards Manual

    Duties to Clients, section 3-3 of the Council Rules

    Duty to Act Honestly and with Reasonable Care and Skill, section 3-4 of the Council Rules

  • BC Law Institute Releases Consultation Paper on Terminating a Strata

    Institute Seeks Feedback on Recommendations

    As strata buildings in BC age, the need to cancel strata plans and wind up strata corporations is becoming more common. But as the BC Law Institute (BCLI) has discovered, the current process for terminating a strata is not straightforward. In their recently published “Consultation Paper on Terminating a Strata,” the BCLI proposes reforming BC’s rules governing the termination of stratas. They are now inviting comments on the consultation paper, which contains 21 recommended changes to the Strata Property Act.

    One of the BCLI’s key recommendations is to lower the voting threshold for BC Law Institute Releases Consultation Paper on Terminating a Strata Institute Seeks Feedback on Recommendations authorizing termination. Currently, all strata-lot owners must consent to termination- a requirement that, the consultation paper notes, makes collective decision making very difficult, and can result in property disputes that can only be resolved through the courts. The proposed changes would reduce the requirement to 80 per cent of all voters.

    To send your feedback on the proposed changes, you can choose to email the BCLI at [email protected]  — will open in a new tab, participate in an online survey, or complete the Response Booklet available on the Institute’s website.

    One of the BC Law Institute’s key recommendations is to lower the voting threshold for authorizing termination.

    For further information:

    Strata Property Law Project, BC  — will open in a new tab

    Response Options:

  • New Online: Frequently Asked Questions about Education & Licensing

    I am expecting a baby. Am I able to put my licence on hold when the baby is born, in order to take parental leave?

    My renewal date is in 2014. What courses do I need to take to renew my licence?

    How do I transfer my licence to another brokerage?

    You have questions. We’d like to help you get the answers you need. So we’ve collected some of the most commonly asked questions about the Council’s real estate education and licensing requirements and created an Education and Licensing FAQ, now available on our website here.

    There, you’ll find the information you need, along with step-by-step instructions for procedures such as applying for licence renewals, upgrades or extensions, course exemptions, or adding services. Further information on these topics and many more is available in the Education and Licensing Guidelines.

  • New Strata Property Act Amendments

    On April 9, 2014, the BC government approved changes to the Strata Property Act intended to make it easier for strata councils to carry out their duties and to support strata corporations to maintain their buildings. The amendments, part of the Natural Gas Development Statutes Amendment Act (Bill 12) are now in effect, and include the following:

    Section 35 is amended to clarify that storage locker allocations are required records and that strata corporations must prepare a list of the storage locker number(s), identifying their ownership by, or designation to, a strata lot. As this information had to be disclosed on Form B under section 59, it was by implication a required record.

    • Section 89 is amended to allow the purchaser/owner to whom title to a strata lot is conveyed by the owner developer to apply for an order for removal of a claim of lien.
    • Section 92 is amended to clarify that strata councils are allowed to pay for depreciation reports out of the operating fund of a strata corporation.
    • Section 96 is amended to require a majority vote, rather than the previously required ¾ majority, for certain expenditures from the contingency reserve fund. These include paying for a depreciation report or for repairs or maintenance to common property recommended in the most recent depreciation report. Other expenditures from the contingency fund would continue to require a ¾ majority vote.
    • Section 109 is amended to clarify who is responsible for paying a special levy when the levy is payable in more than one installment and the strata lot changes hands.

    The full text of these amendments, as well as changes to the definitions in the Strata Property Act, can be viewed online here  — will open in a new tab. The online version of the Strata Property Act at www.bclaws.ca  — will open in a new tab will be updated to reflect these amendments in the coming weeks.

  • New Regulation on Strata Corporation Investments

    Effective July 2014, section 6.11 of the Strata Property Regulation is amended to allow strata corporations to invest in a range of high quality investments, such as certain bonds and fixed income exchange traded funds. The amendment also eliminates riskier investments (such as individual stocks, preferred shares, foreign bonds, mortgages and mortgage backed securities).

    The changes, which are intended to simplify and modernize the provisions governing investments for money held in contingency reserve funds and collected on special levies, came in response to feedback from strata councils and investment experts. Strata councils will soon be managing over a billion dollars in contingency reserve funds. The amendments to the Regulation are a recognition of the importance of saving for future repairs through these funds and the desirability of maximizing the return on investment subject to appropriate constraints on risk and liquidity.

    The majority of investments currently used by strata corporations will qualify under the new regulation, and any non-qualifying investments are grandfathered until they mature or are sold. Two existing sections of the Regulation (6.12 and 17.5) that grandfathered earlier investments (those predating the existing regulation) are now unnecessary and have been repealed.

    For further information:

    Order in Council  — will open in a new tab

    Office of Housing and Construction Standards  — will open in a new tab

  • Disciplinary Decisions

    Since the April 2014 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

    Strata Management

    Rental Property Management Services

    Notice of Licence Suspension

    Notice of Rescission Order