Report from Council, April 2005

Report from Council
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  • The Real Estate Services Act (RESA) contains an important distinction from the former Real Estate Act relating to the provision of services. Most provisions of the former Act did not apply to licensees if they were acting on their own behalf in a transaction, or providing real estate services free of charge, or acting under one of the available exemptions. This has changed under RESA.

    Section 2 of RESA states that: 2 (1) This Act applies to every person who provides real estate services to or on behalf of another for or in expectation of remuneration. (2) In addition but subject to the rules, this Act applies to every licensee who provides real estate services, even if the licensee (a) provides real estate services on the licensee’s own behalf, (b) provides real estate services to or on behalf of another but not for or in expectation of remuneration, or (c) would otherwise be exempted by this Act or the Regulations from the requirement to be licensed in relation to the provision of those real estate services.

    Essentially this means that the requirements of RESA, including the Regulations, Bylaws, and Rules, apply to licensees even if they are providing real estate services free of charge, acting on their own behalf, or could have acted without being licensed because they could have been exempt.

    The Council is aware that some licensees have acted under exemptions available under the former Act while being licensed. An example would be acting as the employee of a developer to market property owned by the developer while simultaneously being licensed. This is no longer possible. A licensee wishing to act as an employee of a developer under the exemption provided in section 2.5 of the Regulation, will have to surrender his/ her licence. In the alternative, the licensee could provide real estate services to the developer not as an employee, but rather as a licensee on behalf of his/her brokerage.

    Currently, there are only two circumstances in which a licensee would not be considered to be acting as a licensee; that is when the legislation would not apply. These two exemptions are found in sections 9-1 and 9-2 of the Council Rules and apply to the management of rental real estate owned by the licensee or the licensee’s family. (These sections were outlined on page 9 of the February 2005 Special Report to Licensees.) In these instances, licensees must, among other things, disclose to prospective tenants that even though they are licensed under RESA, they are not acting as a licensee in this case and that the licensee is not regulated under RESA in relation to the rental property management services being provided by the licensee.

    The Council has posted a copy of RESA, the Regulations, Rules and Bylaws on its website at www.recbc.ca. Licensees with any questions about their obligations as a licensee may contact the Council’s Executive Officer, Robert O. Fawcett ([email protected]) or Manager of Industry Practice, Larry Buttress ([email protected]) or call 604-683-9664 or toll-free 1-877-683-9664.

  • Licensees will note that this Report continues to provide important information about the new Real Estate Services Act (RESA). The lead article relates to providing real estate services under RESA and the obligation of a licensee to act in accordance with the legislation at all times, including whether or not the licensee is receiving any remuneration. In addition, the Report also contains reminders about licensing, disclosing disciplinary or regulatory proceedings and advertising under Sections 2-2, 2-21 and 4-6 of the Council Rules. Also included is a sample of the new Trade Record Sheet for brokerages. The Trade Record Sheet replaces the former Transaction Record Sheet under the former Real Estate Act. A copy of this form, together with the new legislation, is posted on the Council’s website at www.recbc.ca.

    This Report also contains important information for licensees who conduct mortgage brokering activity. Real estate licensees who engage in mortgage broker activity must be registered with the Registrar of Mortgage Brokers and can obtain further information by visiting www.fic.gov.bc.ca.

    This month, you will note in the Disciplinary Decisions section that the licence of a brokerage was recently cancelled for failing to, among other things, keep proper books and records. In another disciplinary decision, a managing broker was suspended for failing to ensure that one of the brokerage’s representatives was properly licensed at all times. I cannot stress the importance of brokerages maintaining proper books and records and managing brokers ensuring that all licensees engaged in relation to the brokerage are properly licensed.

    It is easy to check out who is licensed with a brokerage by going to the Council’s website at www.recbc.ca/consumer_info/ search.shtml. In addition to ascertaining who is licensed, licensees (and their managing brokers) can also ascertain individual licensee’s renewal dates, ensuring that renewal applications are submitted to the Council on time and that everyone engaged by a brokerage is properly licensed.

    On behalf of Concil,

    Rosemary Barnes, Chair

  • The definition of “agent” under the former Real Estate Act included under section 1(d) “collects or attempts to collect money secured by a charge on, or transfer of, real estate, or money payable as rent for the use of real estate.” The collection of money secured by a charge on real estate is not included in the Real Estate Services Act. It has been added to the definition of “mortgage brokering” in the Mortgage Brokers Act as a consequential amendment by inserting a new paragraph (f): (f) carries on a business of collecting money secured by mortgages; Therefore any licensee who is administering mortgages should be registered under the Mortgage Brokers Act. For further information, please contact Terri Robertson at the Financial Institutions Commission.

  • On January 1, 2005, the Real Estate Development Marketing Act was brought into force and replaced Part II of the former Real Estate Act. In conjunction with the new legislation, the Superintendent of Real Estate has published thirteen Policy Statements. The statements cover a range of issues, including specifying the form and content of disclosure statements, specifying the circumstances in which the Superintendent deems actions or arrangements to be in accordance with the new Act, disclosure in relation to real estate securities and transitional issues. The new Policy Statements replace all former Policy Statements issued under the Real Estate Act. The Policy Statements are available on the website of the Financial Institutions Commission at www.fic.gov.bc.ca.

  • The Financial Institutions Commission (FICOM) website www.fic.gov.bc.ca contains a variety of information that licensees will find useful. In addition to the Real Estate Development Marketing Act Policy Statements as noted in the article above, the site contains valuable information about the new Financial Services Tribunal that replaced the Commercial Appeals Commission last year. The site also contains useful information about the Strata Property Act, including 27 instruction guides that may be helpful for both licensees and consumers.

  • On February 22, 2005, Joann Cain, the Director, Financial and Corporate Sector Policy Branch, Ministry of Finance, together with other key staff visited the Council office. One of the purposes of the visit was to present a signed copy of Bill 41, the Real Estate Services Act, as well as a letter from Finance Minister Colin Hansen. In his letter, Minister Hansen thanked the Council for its contribution to the recently implemented Real Estate Services Act. He noted that the Real Estate Services Act is a major statute and is the first complete revision of the province’s real estate legislation in nearly 50 years.

  • Section 2-2 of the Council Rules requires that a licensee must apply for licence renewal no later than 30 days before the end of their current licence. Renewal applications that have not been received at the Council’s office by the renewal due date will be treated as a relicensing application. The fee for a relicensing application is $450.

    Section 2-21of the Council Rules states that: (2) A licensee must promptly notify the council, in writing, if any of the following circumstances apply: (a) the licensee is subject to any disciplinary or regulatory proceedings in which the licensee may be or has been made subject to a discipline sanction under legislation in British Columbia or another jurisdiction regulating (i) real estate, insurance or securities activities, or (ii) mortgage brokers, accountants, notaries or lawyers; (b) the licensee has any court order or judgment made against the licensee in relation to (i) real estate services, (ii) a dealing in insurance, mortgages or securities, or (iii) misappropriation, fraud or breach of trust; (c) any business that the licensee owns, or of which the licensee has been a director, officer or partner at any time during the past 2 years, has any court order or judgment made against the business in relation to (i) real estate services, (ii) a dealing in insurance, mortgages or securities, or (iii) misappropriation, fraud or breach of trust; (d) the licensee is charged with or convicted of an offence under a federal or provincial enactment or under a law of any foreign jurisdiction, excluding (i) highway traffic offences resulting only in monetary fines or demerit points, or both, and (ii) charges initiated by a violation ticket as defined in the Offence Act or by a ticket as defined in the Contraventions Act (Canada); (e) the licensee is the subject of any bankruptcy, insolvency or receivership proceedings; (f) any business that the licensee owns, or of which the licensee has been a director, officer or partner at any time during the past 2 years, is the subject of any bankruptcy, insolvency or receivership proceedings. (3) In addition to providing a written notice, the licensee must provide (a) particulars, and (b) any additional information or documentation, as requested by the council. (4) In the case of notice required to be provided by an associate broker or representative, the licensee must give a copy of the notice under subsection (2) to the managing broker of the related brokerage.

    Licensees must not wait for either licence renewal or licence transfer to report this information to the Council.

    Section 4-6 of the Council Rules requires that all real estate advertising must contain the licensee name* of the brokerage in a prominent and easily readable way. This will include, but not limited to, all newspaper, magazine, brochure, flyer, bus benches and shelters, radio and television, real estate magazine and newspaper publications, and licensee signs. *Licensee name in the case of a brokerage means either the legal name or the trade name of the brokerage as indicated on the brokerage licence.

  • Managing Brokers should be aware that section 8-5 [Trading records] of the Council Rules requires that brokerages keep a Trade Record Sheet. The Trade Record Sheet replaces the former Transaction Record sheet produced by the Council. It accommodates commission trust accounts (where applicable) as well as new terminology to reflect the Real Estate Services Act. A sample Trade Record Sheet can be found on the following page.

    Section 8-5 requires that brokerages keep the following information on their Trade Record Sheets: (1) A brokerage must keep copies of the following records with respect to trades in real estate in relation to which it provides trading services: (a) the contracts for the acquisition or disposition of real estate; (b) any financial statements provided to a party by the brokerage in relation to the trade in real estate; (c) any service agreements; (d) the real estate trade record sheets required under subsection (2). (2) If a brokerage or a related licensee holds or receives money in relation to a trade in real estate, the brokerage must keep a record sheet respecting the trade, in a form approved by the council, that includes the following information: (a) the nature of the trade in real estate; (b) a description sufficient to identify the real estate involved in the trade in real estate; (c) a deal number for the purposes of identifying the trade in real estate; (d) the sale price or other consideration for the trade in real estate; (e) the name and address of every party to the trade in real estate; (f) the amount of money received that is required by section 27 [payment into trust account] of the Act to be paid into the brokerage’s trust account and details of every disbursement of that money; (g) the amount of remuneration paid or payable to any licensee or other person, the name of the party paying the remuneration and the name of the person who has received or is to receive it.

  • Licensees in districts where an election is to be held will be receiving a ballot along with biographical sketches of the candidates and a letter of instruction. Please vote according to the instructions and return the completed ballot promptly as it must reach the Council office by May 10, 2005 in order to be counted on May 11, 2005. Results of the elections will be forwarded to real estate boards and associations for insertion into their newsletters as soon as voting results are complete. They will also be published in the “Year In Review” Report from Council issued in June.

  • As part of the Council’s transition to the new Real Estate Service Act, the composition of licensees on the Council is being expanded to include a licensed representative from the rental/strata property management sector. Section 9.2 of the Real Estate Services Regulation requires this individual to be appointed by the Council no later than July 1, 2005.

    The rental/strata property management representative to be appointed must be licensed to provide rental property management services. This would include individuals licensed to provide both trading services and rental property management services (formerly known as an unrestricted licence). In addition, the individual must have been actively engaged in the business of providing strata management services for at least two years immediately preceding July 1, 2005.

    In order to obtain a qualified individual for this position, the Council has written to the Professional Association of Managing Agents (PAMA), Building Owners and Managers Association (BOMA), Strata Property Agents of BC (SPABC), Institute of Real Estate Management (IREM), Royal Institution of Chartered Surveyors (RICS), and the Real Estate Institute of BC (REIBC), asking them to each put one name forward for consideration by the Council. In addition, the Council would invite an application from any qualified licensee who meets the above noted criteria. Licensees who are interested are asked to email a covering letter and resume to Robert O. Fawcett, Executive Officer ([email protected]) no later than April 15, 2005.

    Candidates put forward by the above organizations together with names received from any interested licensees will be reviewed by a sub-committee of the Council. The most qualified candidates will then be put forward for consideration by the Council, following which a vote will be taken with the individual receiving the most number of votes being appointed as the representative pursuant to section 134(3) of the Real Estate Services Act.

  • From time to time the Council has reminded licensees that no rental property management may be performed independent of the brokerage to which they are licensed. This means that all rental property management activities must be conducted in the name of the related brokerage. It is important to remember this is true regardless of whether a fee is paid for the services. Rental property management services under the Real Estate Services Act means any of the following services provided to or on behalf of an owner of rental real estate: (a) trading services in relation to the rental of the real estate; (b) collecting rents or security deposits for the use of the real estate; (c) managing the real estate on behalf of the owner by (i) making payments to third parties, (ii) negotiating or entering into contracts, (iii) supervising employees or contractors hired or engaged by the owner, or (iv) managing landlord and tenant matters. Thus, for example, it would apply where a licensee is assisting a client without charge to rent out a property, and does so in anticipation of a future listing. All rental property management agreements and records must be maintained in the name of the related brokerage. This would include signage, business cards, advertisements, management contracts, tenancy agreements, trust account bank statements and cheques.