Report from Council, August 2004

At the first meeting of the 2004/2005 Council on July 20, Rosemary Barnes of Park Georgia Realty, Coquitlam was elected as Chair and Dougal Shewan of Royal LePage — Wolstencroft, Langley was elected as Vice-Chair. There are 19 members of the Real Estate Council. Two public members are appointed by the provincial government for a one-year term and the remaining 17 are chosen through the recently held elections open to all real estate licensees in the province. Members are elected for two-year terms, with half of the Council elected each year, thus ensuring continuity.

The Land Title Branch Electronic Filing System (EFS) was brought into effect in BC on April 1, 2004 and enables lawyers and notaries to electronically submit Land Title documents for registration. Because the EFS uses the same hours as the BC Online service (Monday to Saturday 6 a.m. to 8 p.m.) registrations may now occur on Saturdays. However, as conveyancing staff and the lending staff at many financial institutions may not be available on Saturdays, this can create problems when closing.

Prior to electronic filing, if the completion date was mistakenly set for a Saturday, the Interpretation Act allowed registrations to take place on the next day that the Land Title Office was open. Licensees must now be cautious not to inadvertently arrange for a Saturday closing with the result that either a lawyer/notary or funding may be unavailable. While clients have every right to specify any closing date that they want, licensees should advise of the potential problems associated with Saturday closings.

I am pleased to have been elected as Chair for the 2004/2005 Council year. I look forward to working with the continuing members of Council and John Finlayson, the newly elected agent member from the County of Nanaimo. The upcoming year is going to see dramatic changes for the real estate industry. The Real Estate Services Act is slated to replace the existing Real Estate Act early next year, and will have a significant impact on Council operations. The roll-out of the new act will, no doubt, be a substantial undertaking, but I am confident that Council members and staff will rise to the challenge.

During my term as Chair, I want to stress the importance that licensees do a good job. We must be professional and act within the legislative requirements of the Real Estate Act. Most importantly, licensees must ensure that they only practice in areas in which they are competent to do so. If a real estate transaction is outside of your area of expertise, you must refer it to someone else who is competent in that area. This would include undertaking property management services and the related bookkeeping required. Nominees, in particular, must ensure that they have the expertise to maintain proper books and records. If they don’t, they should ensure that they hire staff with sufficient accounting experience to do so.

You will note from the discipline section in this Report that the complaints and resulting disciplinary decisions continues to be high. This trend is due to the continued activity in the residential real estate market throughout the province. As a result of this continued high level of activity and the increasing complexity of complaints, the Council has hired a second Compliance Officer to deal with the volume. Nominees will note that the Council recently suspended a company for failing to file its annual Accountants Report on time. This presented a major inconvenience for all of the salespeople licensed at that office as well as members of the public and further resulted in the Council applying for a court ordered receiver. As a result, I would urge Nominees to pay particular attention to the filing deadlines for Accountants Reports. Finally, I want to thank Past Chair, Barry Clark for all of his hard work and dedication over the past year. I, along with the rest of Council and staff, sincerely appreciated his contributions.

On behalf of Council, Rosemary Barnes, Chair

The Residential Tenancy Office has revised a number of its Fact Sheets since the introduction of the new Residential Tenancy Act (RTA)earlier this year. Included in the revisions are Enforcing an Order of Possession for a Landlord, Enforcing a Monetary Order, and Selling a Tenanted Residential Property in BC. In addition, the version of the RTA that appears on the Residential Tenancy Office website has been updated to include any consequential amendments to the Act since it was introduced. Licensees may view the Fact Sheets and the latest version of the RTA at www.pssg.gov.bc.ca/rto. Licensees should also be aware that, on June 25, 2004 the Surrey Residential Tenancy Office amalgamated its services with the Burnaby Residential Tenancy Office. All services formerly provided in Surrey will now be available at: Burnaby Residential Tenancy Office 400 – 5021 Kingsway, Burnaby, BC V5H 4A5 For further information, contact the Residential Tenancy Office information line at 604-660-3456 or toll-free 1-800-665-8779.

It has come to the attention of the Council that some licensees are writing listing agreements, Contracts of Purchase and Sale, and other contractual forms in the name of another licensee. For example, a “licensed assistant” prepares documents in the name of the team’s “lead licensee” who has no real involvement in the transaction. Questions arise as to whether appropriate agency disclosure is being made, whose name ought to appear on such documents, particularly the Contract of Purchase and Sale, and which licensee is ultimately accountable, both in terms of the preparation of the document and the client/agent relationship.

“Licensed assistants” may believe that they are not accountable if they write a Contract of Purchase and Sale in the name of the “lead licensee”. The duties and responsibilities of a “licensed assistant” are considered the same by the Council as the “lead licensee”.

Section 36(1)(a) of the Real Estate Act requires that before assisting or representing any person in a real estate transaction, a licensee must disclose to that person the nature of the assistance or representation the licensee will provide to that person. If the “licensed assistant” is providing any assistance or representation such as writing up the Contract of Purchase and Sale, it should be clear on the contract as to who is providing this assistance or representation, the “licensed assistant”, the “lead licensee”, or both. If the “lead licensee” has no involvement in the transaction then the “licensed assistant” must only include his or her own name (name of “licensed assistant”) where it states “prepared by:__________” at the top of the Contract of Purchase and Sale. In addition, his or her name must also be included in the agency disclosure section of the Contract along with the name of his or her employing agent.

If both the “lead licensee” and the “licensed assistant” are providing assistance and/or representation to the buyer, but the “licensed assistant” is writing up the contract on behalf of the “lead licensee”, then the “licensed assistant” should include his or her own name where it states “prepared by:_______” at the top of the Contract and the words “On behalf of” (include the name of the “lead licensee”). In this circumstance, both the name of the “licensed assistant” and the name of the “lead licensee” must appear in the agency disclosure section of the Contract along with the name of the employing agent. In this way both the seller and the buyer will know who is providing the assistance and/ or agency relationship. It therefore also protects licensees who have no involvement in the transaction.

Employing nominees should impress upon first-time and renewing licence applicants the importance of full and honest disclosure of information in their licence applications. Licence applications are investigated and if the investigation discloses that the application contains inaccurate, misleading or incomplete information, a hearing may be convened to deal with the application, which could result in a licence refusal, suspension or cancellation.

It is in the best interest of every licence applicant to make full disclosure with respect to criminal charges and convictions, bankruptcy or legal proceedings at the outset. If applicants conceal adverse information by providing false or incomplete information in their applications, the presumption as to their “good reputation” is compromised. Real estate licensees constantly act in fiduciary relationships and for that reason their trustworthiness must be above question.

The Council has revised its Form 2- Application for Real Estate Licence (Individual), a copy of which was recently faxed to all offices in the province. Nominees and office administrators should ensure that they are now using the new form. To confirm that you are using the latest form, please refer to the date at the bottom of the back page – it should read “Rev 06/2004”. Additional copies of this form are available under the Licensee Information tab on Council’s website at www.recbc.ca or by contacting the Council office at 604-683-9664 or toll-free 1-877- 683-9664. Please note that the Council will not accept previous versions of the Form 2- Application for Real Estate Licence (Individual) after November 1, 2004.

Sometimes when a licensee working with a Buyer introduces that Buyer to a new home or strata title project, the developer’s on-site sales team will ask that licensee to ‘‘hand the Buyer over’’ to them. This can happen whether the developer’s marketing team is licensed or employed directly by the developer and not licensed. The developer and/or its sales team are more knowledgeable about the project and various finishing issues; therefore, they might believe negotiations will be smoother if handled by them. Typically, the licensee who has introduced the Buyer to the project is told that he/she will be paid a commission if the Buyer purchases a unit.

Licensees and Buyers both need to be aware that their relationship and the buying process will change if this proposal is accepted. First, the Buyer will likely not have any agent representing his/her interests in the purchase. Second, when it comes time to write an offer, this will often be done using a contract that has been prepared by the developer’s lawyers. The pre-printed clauses in this contract may be more beneficial to the Seller (Developer) than those contained in the standard Contract of Purchase and Sale most licensees use. Finally, the Buyer may not receive timely advice with respect to appropriate holdback or deficiency provisions.

If a licensee is prepared to ‘‘hand the Buyer over’’ in this situation, and the Buyer agrees, the licensee should confirm in writing that:

• the licensee will be receiving a commission from the developer if the Buyer purchases;
• there is a change in the agency relationship, and the nature of the agency relationship, if any, the licensee will be providing; and
• the Buyer should seek independent legal advice before signing a contract to purchase.

In one situation that recently came to the Council’s attention, the developer was suggesting that by registering and then handing over a buyer, the licensee was “establishing their agency”. In fact, what the developer meant was that the licensee’s right to a commission would be protected. The developer did not wish the licensee to continue to act on the buyer’s behalf in the true sense of agency. This could create confusion in a buyer’s mind as to whether a licensee was going to continue to act as an agent. As noted above, a licensee should disclose the nature of the agency relationship, if any, the licensee will be providing.

A final note of caution. Sometimes after the “hand-off” has taken place and the Buyer is in the midst of negotiations or concerned about something, that Buyer will contact the licensee for advice. Licensees need to be careful not to step back into the role of the Buyer’s agent unless they are ready, willing and able to accept that responsibility. It may be more appropriate to refer the Buyer to his/her lawyer or the developer’s sales team.

Jessica Gossen recently joined David Berger and Brian Evans in the Council’s legal department. Prior to joining the Council staff, Jessica worked at the Law Society of British Columbia as a staff lawyer in the Professional Conduct and Discipline Departments and in private practice. In addition to her involvement with the disciplinary process, Jessica provides legal assistance to various Council Committees and senior staff.

Trent Derkoch, CA has also joined the Council staff as an Auditor/Investigator in its Audit department. Prior to joining Council, Trent worked as an auditor for the Ministry of Provincial Revenue — Consumer Taxation Branch. Trent will work with Council’s two other auditors, Darrin Bean and Burton Eldridge in performing office books and records inspections as well as investigating complaint matters as necessary.