Report from Council, June 2005

During the past year, there have been a number of important items reported in previous Reports from Council, including the introduction of the new Real Estate Services Act. Given their significance, a number of them are highlighted here again for the benefit of all licensees. Please note that further information on these subjects can be found on the Council’s page on the RealtorLink™ website at www.realtorlink.ca.

Real Estate Services Act (RESA)

On January 1, 2005, the Real Estate Services Act came into effect. Details with respect to the expanded role of Council, including its bylaw and rule-making authority, together with brokerage accounting requirements, the introduction of the Real Estate Special Compensation Fund, and changes to the Council’s disciplinary procedures were outlined in the December 2004 Special Report to Licensees. Also contained in that report was information with respect to the Council’s new forms and publications and fees.

The February 2005 2nd Special Report to Licensees highlighted important sections of the Council Rules, including, under Part 3, the general responsibility of licensees, which includes managing broker supervision and the requirement for representatives to provide their managing brokers with all the written disclosures required under Part 5 of the Council Rules. Part 5 of the Rules details licensees’ relationships with principals and parties, including the requirement under Section 5-9, which requires licensees to disclose that they are licensed when acquiring or disposing of any interest in real estate. This part also requires, under Section 5-11 of the Rules, the disclosure of the source, amount and other particulars of remuneration that a licensee anticipates receiving that is not to be paid directly by the licensee’s client. An extensive discussion of this section of the Council Rules was contained in the February 2005 Report from Council.

The 2nd Special Report to Licensees also articulated policy statements covering the payment of licensee remuneration (which was updated in the May 2005 3rd Special Report to Licensees) and the education requalification policies for both representatives and managing brokers.

The 3rd Special Report to Licensees advised that the Council had extended the transition provisions that allowed for compliance with certain aspects of the Rules from June 30, 2005 to January 1, 2006. It also highlighted a number of housekeeping amendments to the Council Rules.

Licensees are encouraged to review each of the Special Reports to Licensees, which can be found in the Latest News section on the Council’s home page at www.recbc.ca.

Licensee — Client Guidelines Respecting Offers and Counter-Offers The real estate market continues to be very active in many parts of the province. In order to assist licensees, the Council developed guidelines concerning the preparation, presentation, and negotiation of offers and counter-offers. These guidelines were circulated with the August 2004 Report from Council as Practice Points #6.

The Council continues to believe that informed clients are better prepared to face the complex and sometimes frustrating situations that may develop during the negotiation process in an active market. Discussing the Council guidelines with sellers and buyers at an early stage will help them understand what may occur and the options they may have in given situations.

Acting as a Limited Dual Agent

When acting as a dual agent, a licensee must first obtain the informed consent of both parties to the trade in real estate before doing so. “Informed” means that the licensee must disclose to both parties in a timely manner: — the nature of the conflict of interest that would arise if the licensee were to represent both parties; and — what is being proposed by the licensee and the implications to the parties of giving their consent.

“Consent” means that on the basis of the information above, both parties agree to the licensee acting as a dual agent.

The timing of this disclosure is important. It must be done when it has some real meaning. Simply put, it must be done before the licensee begins to act as a dual agent and before any conflict has arisen. Acting as a dual agent requires that the licensee act in a neutral, impartial, and objective manner. There can be no advocacy on behalf of either party. As a result, it is sometimes impossible for a licensee to act as a dual agent because of the relationship they already have with one of the parties (e.g. when involved with a family member or when a licensee has developed a relationship with a developer and is marketing a project on behalf of that developer).

Licensees are encouraged to review the full text of the article entitled “Acting as a Limited Dual Agent” as found in the February 2005 Report from Council. Licensees are also reminded that they should discuss with their managing brokers any potential conflicts of interest before entering into a dual agency relationship.

New Guidelines for Unlicensed Assistants

Circulated with the October 2004 Report from Council was Practice Points #7, which contained new guidelines on the activities that unlicensed assistants may perform. An unlicensed assistant may: ·answer the telephone, take messages, and forward calls to a licensee ·schedule appointments for a licensee, but this does not include making phone calls, telemarketing, or performing other activities to solicit business on behalf of a licensee ·submit listings and changes as approved by a licensee to a multiple listing service ·unlock a property in order that it may be shown by a licensee ·act as a courier to deliver documents, pick up keys, etc.

For a full list of activities, please refer to Practice Points #7.

My term as Council Chair ends on June 30, 2005 but I will continue to serve for a further year as one of three managing broker/associate broker members from the County of Westminster. I look forward to continuing to serve on Council in that capacity.

You will note elsewhere in this Report that the terms of Laurie Creak, formerly of Prince George, Marvin Friesen of Vernon and David Mio of Smithers, come to an end on June 30, 2005 as well. They have contributed significantly over the years they have been involved with Council and we will miss them.

We look forward to working with our new public member Danny Leung of Richmond, our newly appointed rental property/strata management representative William (Bill) Brown of Victoria as well as our newly elected members Keith Bevington of Penticton, Jim McNeal of Prince George and Ann Petrone of Kelowna.

The introduction of the new Real Estate Services Act (RESA) has made for what no doubt has been one of the busiest years, both for Council members and staff. Like previous Council Chairs, I have found my role as Chair both interesting and rewarding. I have enjoyed the opportunity of meeting many licensees throughout the province during my term.

As has been our practice, there are several people and organizations that I would like to thank for their involvement in the introduction of RESA and their continued assistance in helping the Council in fulfilling its mandate – •Finance Minister Colin Hansen, former Finance Minister Gary Collins and the staff at the Financial and Corporate Sector Policy Branch in Victoria; •Superintendent of Real Estate Al Clark, Deputy Superintendent of Real Estate John Nunez, former Deputy Superintendent of Real Estate Jay Mitchell and the rest of the staff at the Financial Institutions Commission; •The British Columbia Real Estate Association (BCREA) and its member boards/associations. Past President Gordon Maroney and Executive Officer Robert Laing were extremely helpful with the introduction of RESA.

I would also like to extend my personal congratulations to Dave Barclay on his election as President; •BCREA staff members June Piry, Director of Education, Kim Spencer, Director of Member Services and Norma Miller, Director of Communications; •David Moore, Director, and Kevin Arndt, Manager, Licensing Education at the Real Estate Division, Sauder School of Business, University of British Columbia; •Vice-Chair Dougal Shewan and the members of Council re-elected and those who will be continuing to serve next year. It has been a pleasure to work with each and every one of them. I would also like to acknowledge the Council staff for their continued commitment to serve both consumers and real estate licensees in an efficient and effective manner. The last year has been challenging for them with the introduction of RESA, the implementation of a new licensing system and preparation for the licensing of strata managers in 2006. However, as in the past, they have risen to the occasion for which I thank them on your behalf.

Finally, I would like to thank Council’s Executive Officer, Robert Fawcett, for providing assistance, not only to me, but to all of Council and to the real estate industry as a whole, over the past year

On behalf of Council,

Rosemary Barnes, Chair

Section 7 of the Real Estate Services Act (RESA) states that “a managing broker, associate broker or representative must be: (a) licensed in relation to a single brokerage, and (b) engaged by that brokerage.” The definition of “engaged” under RESA means “a person who is (a) a licensee employed by the brokerage to provide real estate services on its behalf, or (b) a licensee who is acting in an independent contractor relationship with the brokerage to provide real estate services on its behalf;” Section 3-1 of the Council Rules requires that managing brokers ensure that there is an adequate level of supervision for associate brokers and representatives.

The level of supervision required is the same regardless if the licensee is employed by the brokerage or acting in an independent contract relationship with the brokerage. All licensees, but particularly those who are acting in an independent contractor relationship with a brokerage, must understand and remember that the managing broker is required to supervise the activities of all licensees licensed with the brokerage.

As licensees are aware, anyone who engages in the provision of strata management services will require licensing through the Real Estate Council beginning January 1, 2006. The Council is in the process of finalizing guidelines with respect to this licensing requirement. Further information, including an amended version of the Council Rules reflecting strata management requirements, will be made available in July by way of a Special Report to Licensees. In addition, the Council will post information on its website at www.recbc.ca

The Council continues to receive complaints from both consumers and licensees with respect to licensee advertising. These complaints fall into two main types: 1) failure to include the name of the related brokerage on advertising and, 2) the name of the related brokerage is too small in relation to the rest of the advertisement.

Licensees should be aware that section 4- 6(2) of the Council Rules requires that the name of the related brokerage (e.g. ABC Realty Surrey Ltd.) must be displayed in a prominent and easily readable way. Tiny and hard to read font sizes at the bottom of an advertisement are not acceptable to the Council. Licensees should also be aware that section 57(1) of the Real Estate Services Act allows the Council to impose administrative penalties on licensees who fail to adhere to the Rules. In that regard, in accordance with section 2-23 of the Rules, the administrative penalties for a contravention of a rule specified by regulation under section 56 (1) [rules subject to administrative penalties] of the Act are as follows: (a) $250 for a first contravention; (b) $500 for a second contravention; (c) $1000 for a third or subsequent contravention.

Section 4-6(2) of the Council Rules applies to all advertising materials including, but not limited to, the following: TV ads and/or channels, all websites and web pages, email (and any other on-line identification, representation, promotion or solicitation), bus shelters and bus stop benches, newspaper ads, yellow pages ads, brochures, flyers, sponsorship materials and signs, billboards, stadium/arena signs, automobile signs, bus advertising, business cards, or promotional material of any sort. In the case of radio and audio only advertising, the name of the related brokerage must be clearly stated.

In assessing compliance with section 4- 6(2) the Council will give consideration to the prominence of the brokerage’s name in relation to the rest of the advertisement, and the relative ease with which a consumer can determine who the brokerage is. It is further recommended that the brokerage’s phone number be included.

As managing brokers are already aware, there is a new Accountant’s Report form for all filings beginning January 1, 2005. The form is very similar to the previous Form 1 Accountant’s Report under the former Real Estate Act. However, an important change to note is that under Part A of the Accountant’s Report “All brokerage trust accounts, commission trust accounts and other savings institutions accounts of the brokerage opened, closed or maintained during the fiscal year” must be disclosed. This is a change from the Form 1 Accountant’s Report under the former Real Estate Act which required “All trust accounts of the Agent during the period.”

As licensees are aware, the Real Estate Services Act took effect January 1, 2005. As a result, the Council changed all of its forms to reflect changes in the Act. If your brokerage is still using forms that were in existence prior to January 1, 2005, please download the newer forms available on the Council’s website at www.recbc.ca. The Council’s website continues to be a valuable resource for both licensees and the public averaging over 500,000 page hits a month. In addition to finding all of Council’s forms online, licensees will find a useful Licensee Search function that provides realtime information about the status of licensees registered with each brokerage including licence expiry dates. Licensees will also find copies of the Real Estate Services Act, Regulation, Council Rules and Bylaws on the main page of the website. In addition, licensees will find a list of useful frequently asked questions relating to the new real estate legislation.

As a result of a recent complaint to the Council, licensees who engage in the practice of holding raffles or draws for marketing purposes need to be aware of the following information provided by the Gaming Policy Enforcement Branch of the provincial government.

Raffles and draws are defined in the Criminal Code as a lottery and game of chance under section 206. It is an offence under that section to conduct such activity unless it is authorized by the Lieutenant Governor in Council of a province.

Through delegated authority, the Gaming Policy and Enforcement Branch, Ministry of Public Safety and Solicitor General for the province of BC, issues gaming event licences to qualified applicants. Generally, a qualified applicant must be recognized as a charitable institution or group. Lotteries held for promotional purposes do not qualify for licences.

There are three elements which comprise to form a lottery. 1)payment of consideration 2) chance or mixed chance and skill, and 3) prize or reward. As an example, if a real estate licensee was to offer a chance to enter a draw to win a vacation trip to the first hundred purchasers of condominiums in a development he or she is marketing, such a draw would be in contravention of section 206 of the Criminal Code.

The requirement to purchase a condominium would fall under the first element, being the consideration to qualify for entry. The drawing of a winner’s name would fulfill the second element, that of chance. The third element would obviously be the trip. In order to avoid running afoul of section 206, the foregoing draw would have to be open to entry to anyone who wished the opportunity. In other words, they would not be required to purchase a condominium to have their names entered in the draw. The contravention of section 206 of the Criminal Code is an indictable offence which imposes a maximum sentence of incarceration for up to two years.

Licensees with questions or requiring further information about qualifying for a gaming licence in relation to raffles or draws may visit the Gaming Policy Enforcement Branch at www.pssg.gov.bc.ca/gaming

The Council reminds licensees that its Buying/Selling a Home in BC booklets are available for purchase. The booklets provide consumers with important information about the buying and selling process, including home ownership options, financing information, an explanation of agency relationships, searching for a home, the offer and counter-offer process, information about deposits, closing costs and other critical information. The booklets are available from most real estate boards/ associations throughout the province as well as from the Council office. In order to cover basic printing expenses, the price of the booklets ordered from the Council office is $1.00 each including taxes. The Council has also posted copies of the booklets on its website at www.recbc.ca Licensees wishing to order copies of the booklets from the Council must either submit a cheque made payable to the Real Estate Council of BC or complete the Credit Card Payment form available on the Council’s website. For further information, please contact Anthony Cavanaugh at the Council office at 604-683-9664 or toll-free 1-877-683-9664.

Each year, the term of eight or nine Council members expires and elections are held to fill the vacancies. The following have been elected for a two-year term commencing July 1, 2005.

New Council Members

County of Yale (managing/associate broker) Keith Bevington, Re/Max Front Street Realty, Penticton (licensed for 21 years)

Combined Counties of Cariboo and Prince Rupert (managing/associate broker) Jim McNeal, Royal LePage Prince George, Prince George (licensed for 28 years)

Combined Counties of Westminster, Kootenay, Yale, Cariboo and Prince Rupert (representative) Ann Petrone, Re/Max Kelowna, Kelowna (licensed for 15 years)

Rental Property/Strata Management Member Representative William Brown, Brown Bros. Agencies Limited, Victoria (licensed for 31 years)

Re-elected Council Members

County of Vancouver (managing/associate brokers) Cynthia A. Chen, Macdonald Realtors Westmar, Richmond (licensed for 16 years) Judi Whyte, Prudential Sussex Realty, West Vancouver (licensed for 28 years)

County of Westminster (managing/ associate broker) Marshall Cowe, Royal LePage Coronation West Realty, Coquitlam (licensed for 33 years)

County of Victoria (managing/associate broker) Wayne Strandlund, Fisgard Asset Management Corp., Victoria (licensed for 36 years) County of Kootenay (managing/associate broker) Philip Jones, Royal LePage East Kootenay Realty, Cranbrook (licensed for 29 years) County of Vancouver (representative) Abdul Ghouri, Royal Pacific Realty (Kingsway) Ltd., Vancouver (licensed for 21 years)

The following Council members have a further year to serve

County of Vancouver (managing/associate brokers) Arlene Butler, Re/Max Select Properties, Vancouver (licensed for 35 years) Allan Corbett, NAI Goddard & Smith, Vancouver (licensed for 32 years) Satnam Sidhu, Re/Max Crest Realty, North Vancouver (licensed for 26 years)

County of Westminster (managing/ assocate brokers) Rosemary Barnes, Park Georgia Realty Ltd., Coquitlam (licensed for 29 years) Dougal Shewan, Royal LePage – Wolstencroft Realty, Langley (licensed for 28 years)

County of Victoria (managing/associate broker) Michael Ziegler, Newport Realty Ltd., Victoria (licensed for 29 years)

County of Nanaimo (managing/associate broker) John Finlayson, Osborne Realty Services (1992) Ltd. (licensed for 22 years)

Combined Counties of Victoria and Nanaimo (representative) Bob Clarke, Coast Realty Group (Campbell River) Ltd. (licensed for 35 years)

The three public members are Ramesh Rikhi of Penticton, William Lim of Vancouver and Danny Leung of Richmond.

Retiring from Council are

Laurie Creak, representative member for the combined Counties of Westminster, Kootenay, Yale, Cariboo and Prince Rupert after nearly 6 years of service. Marvin Friesen, managing/associate broker member for the County of Yale after 4 years of service. David Mio, managing/associate broker member for the combined Counties of Cariboo and Prince Rupert after 8 years of service.