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Report from Council Newsletter, April 2018

Report from Council Newsletter, April 2018

Report from Council
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  • The Council’s mandate is to regulate licensees and protect real estate consumers. That purpose underlies and guides everything we do-from developing licensing education courses and information resources to issuing licences, from inspecting brokerages to investigating complaints, and-when necessary-to imposing discipline. But of course, we’re not on hand every time real estate services are delivered, to ensure that things go smoothly. Nor should we be there, given the high professional standards that most licensees demonstrate on a daily basis.

    I have commented a number of times on the fact that it is each licensee’s responsibility to keep up with their job. That includes keeping up with changes to the rules. Each time you explain to a consumer what you can-and can’t-do for them should they decide to become your client or to remain as an unrepresented party, you’re building awareness that leads to increased consumer confidence in the real estate industry.

    Informed Consumers are Protected Consumers

    After the ban on dual agency takes effect on June 15, 2018 those conversations will become even more important. Licensees must be able to clearly explain what they can and cannot do when dealing with consumers. Reinforcing the understanding that real estate professionals are obliged to provide undivided loyalty, representing only their own client’s interests in a real estate transaction, is key. When all parties understand the role of the real estate professional, there are fewer misunderstandings or disputes later on.

    To support those conversations, the Council is developing resources that will help explain how the ban will affect licensees and consumers. Many of those resources are already available on our website in a variety of formats, and we will continue to add to them. Videos, FAQs, podcasts, articles and enewsletters-you can find them all online. I urge every licensee to take time to review these materials to educate themselves and to ensure they will be able to comply with all the legislative requirements that will come into effect on June 15th.

    In the weeks ahead we will also be sharing information about the launch of a new online course focusing on the changes to agency relationships and the new disclosure requirements coming into effect on June 15th. The course will help licensees build the knowledge they need to continue to deliver informed, effective real estate services.

    Compliance is an Individual Responsibility

    Each licensee is individually responsible for compliance with all of the rules, all of the time. There has been a lot of discussion already about what that means. Think, for instance, about changes to motor vehicle laws in the past few years. Distracted driving, high speed driving and impaired driving laws were changed. No one suggested that those only be effective after all drivers took and passed an exam on the new laws. No one would seriously suggest that ignorance of the new laws would provide an excuse for not complying with those laws. In the same way, responsibility for compliance with the Real Estate Services Act, Regulation and Rules rests with each licensee.

    Licensed real estate professionals have the tremendous opportunity to enhance consumer protection and confidence every time they interact with a client, potential client, or unrepresented consumer. I know through the feedback I hear from industry members that the vast majority recognize their responsibilities and take great pride in this aspect of their role.

    Together, the regulators of real estate and real estate professionals can strengthen consumer confidence and put BC at the forefront of consumer protection. It starts with each and every professional’s responsibility to stay informed and educated and live up to professional standards every day.

    Regulatory Review

    On April 18, 2018, Minister of Finance Carole James announced the launch of a review of BC’s regulatory framework for real estate regulation. The review will examine the responsibilities of the Real Estate Council and the Office of the Superintendent of Real Estate, making recommendations to clarify roles and ensure the regulatory structure is providing effective consumer protection.

    We welcome this review, and we look forward to participating and to contributing to the process of reform that was started in 2016. For 60 years, the Council’s number one priority has been to ensure that consumers are protected in real estate transactions. We support all initiatives that further the important work of consumer protection.

    To learn more about the review, and our response, see:

  • On June 15, 2018, rules from the Superintendent of Real Estate will take effect. These rules will protect consumers by:

    • prohibiting limited dual agency in almost all cases, and
    • requiring new disclosures about commissions, services to expect from a licensee, and the risks of being an unrepresented party in a real estate transaction.

    The Superintendent’s rules will transform the way real estate is practiced in BC, putting consumers first and moving from a sales-focused industry to a client-centered profession. Here are some important steps you can take now to help prepare for the changes ahead.

    1. Take Advantage of Education Opportunities

    The Real Estate Council is working with the Real Estate Division at UBC Sauder to develop an online course covering the fundamental principles of the new rules including the changes to dual agency and the required disclosures. The course will take 3-5 hours to complete and will be introduced this spring.

    As a professional, you also need to be knowledgeable about the expected standards of conduct for real estate licensees in BC. You are responsible for staying up-to-date about changes in laws, regulations, and policies that affect your practice.

    In order to be as prepared as possible, we encourage you to check the Council’s website regularly for updates and make sure to review existing resources, including:

    • Our online FAQs
    • Weekly Real Advice enewsletters
    • Video resources
    • Real Talk, Real Advice monthly podcast
    • Professional Matters webinar series (will be available to view in the coming weeks)

    2. Make Sure You’re Keeping Proper Records

    Beginning June 15th, you will be expected to begin using new disclosure forms with your clients and unrepresented parties, as required under the new rules. You won’t just need to ensure consumers give informed consent, and sign the right form; you’ll also need to keep records of the new disclosures as required by the existing rules.

    Licensees:

    You have a critical role to play in helping your brokerage keep accurate and detailed record management. You must ‘promptly’ provide your brokerage with any records related to any real estate services you have provided. Remember that ‘promptly’ means without any delay.

    Brokerages:

    Managing brokers are responsible for ensuring that records of the brokerage are maintained in accordance with RESA, the Regulation, Rules, and Bylaws. This will include the new disclosures required by the Superintendent’s rules.

    Before you set up or modify your data management system, make sure you’re familiar with sections 8-9.1 and 8-10 of the Council Rules, and section 25 of RESA.

    If you want to keep the records electronically, you need to ensure copies of all documents are kept in BC, and that the copies can easily be transferred to a printed format for inspection by the Council, if requested.

    Find Out More About:

  • Looking for leads? There are lots of companies eager to sell leads to real estate licensees. But beware: engaging a lead generation service could put consumers at risk, and could put you on the wrong side of the Real Estate Services Act. You could face an investigation and potential discipline. Here’s why:

    Companies that find people who are interested in buying, renting, or selling real estate, and that refer those people to real estate professionals for a fee (including online and telephone solicitation-e.g. ‘cold calling’), are soliciting for the purpose of providing real estate services. This activity-soliciting for the purpose of providing real estate services-requires a real estate licence.

    Before you accept any referrals from a lead generation service, ensure that the company you are dealing with is licensed to provide real estate services in BC. As a real estate professional, you cannot pay unlicensed people or companies for providing real estate services.

    The only circumstances in which you could pay an unlicensed person or company for a referral are if:

    • they do not engage in activities to solicit the names of people who may be interested in acquiring or disposing of real estate; and
    • making referrals and receiving referral fees is incidental to their main business.

    Lead Generation Can Be Risky

    If you are considering selling leads, keep in mind that as a real estate professional you cannot accept any remuneration in relation to real estate except through your brokerage. If you are found to be operating a lead generation service outside of your brokerage, you may be subject to discipline for contraventions of the Real Estate Services Act and Rules.

    More Information

  • Are you waiting for a licence application to go through? When a licensing process is delayed, it is often because of errors on the forms we receive, or because incomplete forms have been submitted.

    Common problem areas on applications include:

    • missing signatures from managing brokers or licensees,
    • incorrect or incomplete legal names, or
    • not all appropriate licensing categories selected (we only license you for the categories that you select).

    Double-check to make sure that all required information is included on application forms.

    It’s Your Responsibility to Ensure Accuracy and Completeness

    Licensees and managing brokers are equally responsible for ensuring that all information on licensing application forms is true and complete. While incomplete applications can cause delay, false applications can have much more serious consequences, such as licence suspension or cancellation.

    Use the checklist below to make sure you haven’t missed any important details.

    • Licensing Checklist for Managing Brokers

      • Is it the right form? All Council licensing forms have been updated as of April 1, 2018 to include the fee changes. Ensure any old printed versions are recycled, and visit our Forms page to download the correct versions.
      • Is the information complete and correct? Before signing a licensee’s application, managing brokers must review all the information on the form. Have all the relevant sections been completed? If the licensee has a Personal Real Estate Corporation, have they submitted an application and payment for themselves and for the corporation? A Personal Real Estate Corporation application form is available from the Council’s website.
      • Is all required information attached? All licence renewals must include proof that the licensee has completed the Relicensing Education Program (REP) requirement. If that information is not included, the renewal cannot be processed. We recommend that managing brokers do not sign renewal forms unless proof of completion of a Legal Update course is attached. If a licensee has answered “Yes” to any questions in the “Information Respecting Reputation and Suitability” section of their application, they must attach additional information. If this information is not included, the application cannot be processed.
      • What about the Criminal Record Check? If an applicant has a criminal record, further screening may be required to determine if they are suitable for licensing. If you are speaking with individuals interested in entering the real estate industry, advise them that if they have a criminal record they should review the Good Reputation Guidelines.
      • Ask About Other Employment. Has an applicant indicated that they have other employment? If so, ensure that all the information about the other employer is completed in full. Have a conversation with the applicant if their other employment seems to relate to unlicensed real estate activity such as working for a development company. For more information, see Once a Licensee, Always a Licensee (Report from Council, October 2014).

    Have questions? Contact the Council’s licensing department via email at [email protected], or call 604-683-9664.

  • This article presents a case study — a short, realistic situation followed by questions that give you the opportunity to assess your knowledge. Case studies are intended to help bring the Rules and professionals standards to life. Look for more case studies on diverse real estate topics in upcoming issues of the Report from Council.

    Please take a moment to test your knowledge by submitting your answers to the questions based on the following scenario.

    The Situation

    A strata management brokerage, ABC Strata Services, has an agreement with the 24/7 Restoration Company to provide after hours emergency services to strata corporation clients. When a strata lot owner calls the emergency number at 1:00 a.m. to report that water is pouring through their kitchen ceiling, 24/7 Restoration sends a crew to deal with the emergency. The crew evaluates the situation, stops the water, starts mopping up, and sets up some dehumidifiers. The following morning, 24/7 Restoration contacts the strata manager to let them know that they are on-site and dealing with a water leak in one of his strata complexes.

    Questions:

    Test your knowledge with the following questions, and see how you compare with other professionals. When you hit submit, you’ll see how other readers have answered these questions.

    You can find the correct answers by scrolling down to the ‘Answers’ section below.

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    Discussion:

    Many strata management brokerages offer their strata clients “24-hour emergency services,” to ensure that any emergencies (such as a water leak) are attended to quickly. Depending on the nature of the emergency, the strata corporation client may need a restoration company or other contractor to repair and remediate the damage, and prevent further damage to the property.

    To avoid the problems that ABC Strata Services may be facing, here are steps you can take to help ensure the emergency services your brokerage provides are compliant with your service agreement and the Rules.

    Answers:

    The answer to each question is C.

    Before 24/7 Restoration took any action on the night of the leak, they should have contacted a licensee from ABC Strata Services to obtain the necessary authorization to send their team out. Because they did not do this, ABC Strata Services may be in contravention of section 6-1(1) of the Rules, which states that a licensee must not pay an unlicensed person for the provision of real estate services that require licensing.

    As well, the strata manager may — depending upon the circumstances — be found in contravention of their duties to clients (see sections 3-3 and 3-4 of the Rules).

    Make sure you have the delegated authority to enter into contracts

    Brokerages that provide 24-hour emergency services to their clients must ensure that in the service agreement, the strata council has delegated the authority to enter into a contract by calling in contractors to attend at the strata corporation. A typical service agreement allows the brokerage to expend strata corporation funds in the case of an emergency, which may be subject to certain conditions including acquiring the approval of the strata corporation before any contractors are contacted.

    Make sure only licensed individuals enter into contracts

    Many brokerages provide 24-hour emergency services by ensuring that a licensee is “on-call” for either their own strata corporation portfolio, or for all of the brokerage’s strata corporation clients. When the licensee receives a call, they can take immediate steps to deal with the issue by contacting the appropriate contractor or restoration company as necessary.

    Other brokerages delegate their authority to act in an emergency to an unlicensed third party. However, negotiating or entering into contracts for a strata corporation client is a defined strata management service for which a license is required, and thus the person arranging mitigation work must be licensed with the brokerage. Section 6-1(1) of the Rules requires that a licensee must not pay, offer to pay, or agree or allow remuneration to be paid to an unlicensed person who provides real estate services.

    Practice Tip: Review how your brokerage provides 24 hour emergency call-outs to your clients. Revisit and amend any agreements with third parties to ensure that only licensees are providing real estate services on behalf of the brokerage.

  • On April 1, 2018, changes to licensing fees came into effect. The fee changes help support our commitment to strengthening regulatory compliance and enhancing the effectiveness and efficiency of our services.

    Before submitting a licence renewal application, licence transfer, or other licensing form to the Council, check to make sure it is the most current form, and that you are including the appropriate required fee. Incorrect fees are a common cause of delays in processing licensing applications — and an easy one to avoid!

    For more information on licensing fees, see:

    At their most recent meeting, the members of the Real Estate Council approved new policies that will contribute to increased transparency, as part of the Council’s ongoing commitment to building an open and consultative approach to regulation. Under the new Council Meetings Policy, a schedule of upcoming Council meetings will be posted on the Council’s website. The meeting agendas will be posted online two weeks in advance of each meeting date, and approved minutes will be published two weeks following each meeting.

    See the new Council Meetings page for the upcoming meeting schedule and minutes of the April 2018 Council meeting.

    The new policy also outlines procedures for members of the public — including licensees and members of the media — to arrange to attend the open portion of Council meeting as observers. The Council reserves the right to limit the number of observers at the discretion of the Chair, as space may be limited.

    Don’t want to read the entire minutes of each Council meeting? Don’t worry — in upcoming issues of the Report from Council newsletter we’ll include the meeting highlights and an overview of significant decisions, in the issue following each meeting.

    Other policies recently approved include:

    • a Social Media Policy with guidelines for how we will interact with the public through digital channels
    • a Media Relations Policy that outlines how we will respond to media inquiries, and which Council representatives are authorized to speak on behalf of the organization.

    Over the next few months, the Council offices will be renovated to upgrade our Hearing Room facilities, and put in place a more efficient floor plan, creating flexibility to accommodate growing operational demands and future growth. During the renovations, which are scheduled to conclude in the fall of 2018, Council hearings will be relocated to other venues. Affected licensees and members of the public will be advised well in advance of hearing dates.

    Throughout the renovation period we will be working hard to maintain service levels and ensure that any temporary disruptions are limited. If you experience any difficulties in contacting the Council, please try an alternative method of communication. You can reach us at:

    Telephone: 604.683.9664 | Toll-free: 1.877.683.9664 | Fax: 604.683.9017

    General Email: [email protected]

    Professional Standards Advisory: [email protected]

    Find detailed information for contacting other key Council departments, including licensing, education, and accounting, on our Contact Us page.

  • This month’s question is about managing personal or family rental properties without a licence for rental property management. Can you or can’t you?

    Q: I am licensed to provide trading services. Can I manage a property I own without a rental property management licence? What about managing a rental property owned by my family members?

    It depends. The Rules provide exemptions which permit licensees to manage their own rental property outside of their brokerage in certain circumstances. You may wish to consult with your managing broker or seek independent legal advice to ensure that the exemptions in the Rules will apply to your circumstances.

    As always, you must ensure that you comply with the Real Estate Services Act (RESA), Regulation, and Rules as well as all other applicable legislation, and that you conduct yourself with honesty and integrity.

    Real Estate Owned by Individuals

    The Rules permit you to manage rental property owned by you or your:

    • spouse or family partner,
    • children, or
    • parents.
    Real Estate Owned By Partnerships

    The Rules permit you to manage rental real estate or that is owned by certain partnerships if the shareholders are limited to two or more of the following:

    • you,
    • spouse or family partner,
    • children, or
    • parents.
    Real Estate Owned by Corporations

    The Rules permit you to manage rental real estate or that is owned by certain corporations if the shareholders are limited to one or more of the following:

    • you,
    • spouse or family partner,
    • children, or
    • parents.

    Here is a helpful checklist outlining the requirements of the Rules for providing rental management services to yourself or family members.

    • Renting Out Your Own or Your Family Rental Property: A Checklist

      • Provide the services in your own name and not in the name of your brokerage. Do not indicate the name, address, or telephone number of your brokerage, or any other place that you are engaged as a licensee, in any advertising about the rental property.
      • Disclose to each potential tenant before the prospective tenant enters into a tenancy agreement that although you are licensed to provide real estate services, you are not regulated under RESA in this particular transaction.
        • The disclosure to the tenant does not have to be in writing; however, a prudent licensee will ensure that the disclosure is in writing and that a copy is retained by the licensee.
      • Disclose in writing to your spouse, family partner, son, daughter, parent, partnership or corporation that although you are licensed, you are not acting as a licensee and you are not regulated under RESA in relation to the rental real estate.
      • Disclose in writing to the managing broker of your brokerage that you will be providing rental property management services on your own behalf (or your family member) in relation to your own real estate or on behalf of a corporation in which you are the sole shareholder.
        • You must also provide to your managing broker a copy of the disclosure that you provided to your spouse, family partner, son, daughter, parent, partnership or corporation.
      • Provide the rental management to your family member, partnership, or corporation for free.
    Always Act Honestly and with Integrity

    In all situations you must comply with RESA, the Regulations, and the Rules. Remember, if you are found to have committed professional misconduct, acted contrary to the best interests of the public, undermined the public confidence in the real estate industry or brought the real estate industry into disrepute through your actions in providing the rental management services, you could be subject to discipline.

    More information:

    Do you have suggestions for future You Asked Us articles? Send your questions to [email protected].

  • Council auditors regularly visit brokerages across the province, conducting inspections to ensure that there are proper controls in place to protect deposits held in trust for consumers, and reviewing for compliance with the Real Estate Services Act (RESA) and the Rules. While most brokerages are operating in compliance with the legislation, our auditors regularly uncover issues that require correction by the brokerage, or that may result in disciplinary action.

    Here are ten common issues discovered at audit. Licensees and managing brokers — have you taken steps to make sure these aren’t issues at your brokerage?

    1. Licensees providing real estate services for which they are not licensed

    The most common example of this is when licensees provide rental property management services when they are only licensed to provide trading services.

    2. Licensees providing real estate services separate from their brokerage

    Licensees are only permitted to provide real estate services in the name of and on behalf of their related brokerage.

    An example of this improper conduct would be if a licensee provides rental property management services outside of their brokerage, thinking that they are simply doing a favour for a client. Even if a licensee is not paid for these services, they must be provided under the supervision of the brokerage.

    Licensees may only be paid by their brokerage for the real estate services they provide.

    4. Unlicensed staff providing services for which a licence is required

    Unlicensed brokerage staff can provide useful administrative services, but they must not provide any services which require a real estate licence. See the Professional Standards Manual for guidelines on what unlicensed staff can and cannot do.

    5. Providing real estate services with an expired licence, or before the licence has been transferred to a new brokerage

    If a licensee has allowed their licence to expire, they must not provide any real estate services until they have again become licensed. Licensees transferring to a new brokerage must not provide any real estate services in the name of the new brokerage until they have confirmed that their licence has successfully been transferred.

    6. Deposits not turned into the brokerage promptly

    Licensees must promptly deliver to their brokerage any monies received during the course of providing real estate services, which must be held in trust by the brokerage. The brokerage also has a responsibility to promptly, upon receipt, deposit these monies into a trust account.

    7. Clients not advised that deposits have not been received in accordance with the terms of a contract

    When a deposit is not received within the time frame required by a contract, licensees must immediately notify their managing broker, who in turn must ensure that all parties to the contract are immediately notified. This procedure also applies when a deposit cheque is returned as Not Sufficient Funds (NSF).

    8. Proper disclosures not made and/or a copy of the disclosure not maintained

    Licensees must provide a copy of disclosure documents required under RESA or the Rules to their brokerage. Brokerages must retain a copy, and make them available upon request to Council auditors.

    9. Service agreements not in place, don’t contain all required content, or changes not made in writing

    Licensees are required to enter into written service agreements with sellers, landlords, and strata corporation/section clients unless those clients have waived this requirement.

    Whenever a term or condition of a written service agreement has been modified, this change must be in writing and signed by all parties. For example, if a licensee and client have agreed to change the scope of services, or the remuneration to be paid for the services, these changes must be agreed to in writing because they modify the original agreement.

    10. Advertising violations

    Any advertising must include the full name of the brokerage and the individual’s licensee name. See the Council’s Advertising Guidelines to ensure that all licensee advertising meets the requirements of the Rules.

    Learn more about the Council’s Office and Records Inspection Program:

  • Since the March 2018 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 (Sales)