Report from Council Newsletter, April 2021

Published on 6 April, 2021
Professional reading computer
  • Message from the Chair

    Elain Duvall smiling

    Elain Duvall, Chair of RECBC

    Looking Ahead: A Single, Effective, Modern Regulator of Financial Services

    With real estate sales numbers across BC continuing to climb month by month, it is essential that real estate professionals understand and discuss the risks that can accompany a busy market with their clients. As fiduciaries, real estate professionals have an important role to play in acting in the best interests of their clients and helping them to understand and manage those risks. The current state of the real estate market in some areas of BC means that properties are attracting multiple offers and clients may be considering submitting subject free offers. In these complex situations, licensed real estate professionals need to be sure they are acting in the best interests of their clients, and that they are providing competent and effective services.

    In this issue, you’ll find our advice on navigating these challenges, and for building trust with the public by demonstrating professionalism and concern for public health and safety.

    Last month, legislative amendments were passed that will bring together the Real Estate Council of BC and the Office of the Superintendent of Real Estate within the BC Financial Services Authority (BCFSA). This represents a positive step forward in better serving British Columbians. Following the integration of the three organizations, BCFSA will be the single regulator of financial services, including real estate. To learn more about the changes, please read the Government’s press release  — will open in a new tab and the joint statement from BCFSA, RECBC and OSRE.

    BCFSA, RECBC and OSRE are committed to keeping all stakeholders informed while work continues towards a smooth and seamless transition later this summer. Until the integration takes place, RECBC will to continue to regulate real estate professionals under the Real Estate Services Act.

    In this issue of the Report from Council you will find information about an important initiative to update our regulatory guidance materials, replacing the Professional Standards Manual with two new resources that have been specifically designed to be more concise, clearer to read, and consistent in structure. The Regulatory Information and Guidelines we have developed will make complying with your legislated requirements more straightforward, and the recommended best practices easier to understand. The new resources will be introduced this spring and we look forward to hearing your thoughts about them.

    You can also read about the changes we’re making to bring more of our licensing services online, reducing paper use and decreasing processing times. And we have included information in this issue about the expanded Administrative Penalties framework which came into effect earlier this year.

    As always, if you have questions about anything that you read in this issue, please get in touch with us at [email protected]. Or drop one of our Professional Standards Advisors a line; they are happy to provide information to answer your practice questions. Here’s to a busy and productive spring, with health and hope on the horizon.

  • Subject-Free Offers – Understanding and Communicating the Risks

    Magnifying glass looking at house

    Buying real estate, particularly a property that your client will call home, can be an emotionally charged process. In a competitive market with many eager buyers, your client may be tempted to submit an offer with no subject clauses, before performing typical due diligence such as a home inspection, title search review, or review of strata documentation. This is a risk for your client.

    As a real estate professional, it is your job to advise your client of the risks of subject free offers. Providing the information and advice to enable your client to make fully informed decisions about their property purchase is in their best interest. While you want to help your clients achieve their goals, the last thing a real estate professional wants to hear from a buyer-client are the words, “If only you had told me…!”

    It is crucial to understand your duties to clients, and your legal and ethical responsibilities as a professional, when assisting clients in a competitive market. Here are three things you’ll need to know in order to be well-prepared.

    1. Know Your Client

    Is your client a seasoned investor, with deep market knowledge and experience? Or are they a first-time buyer, relying on family for their deposit and needing high-ratio financing?

    Many of your buyer-clients will fall somewhere in between these two profiles. What are their needs? What are their resources? What is their level of sophistication and degree of reliance on you, as their agent? What can they afford?

    Considering all of these factors, have a discussion with your client about their tolerance for risk. Make sure that your client understands that before they make an offer on a home they are aware of how much they can afford to pay. Ensure that they understand the potential consequences of taking risks, before considering making a subject-free offer.

    2. Know Your Areas of Competency and Expertise

    Offering advice or opinions that are beyond your expertise, or providing services that are outside of your competency, knowledge and usual practice can put your client – and you – at risk.

    Stepping outside your area of expertise is not in the best interests of your clients and may land you in legal trouble and subject to a RECBC complaint and investigation.

    If your buyer-client is considering making a subject-free offer, you should advise them to consider seeking the advice of a mortgage broker, home inspector (for a pre-offer inspection, when possible), property insurer, lawyer or other appropriate, specialized professional before making an offer.

    3. Know the Property

    As a real estate professional you must use reasonable efforts to discover relevant facts respecting any real estate the client is considering acquiring.

    You must also disclose to the client all known material information respecting the real estate services and the real estate and the trade in real estate to which the services relate. A material fact is anything that could affect a buyer’s decision to buy.

    Here are a few areas to explore and review with your buyer-clients. This list is not exhaustive. Depending on your area of practice, the property type and the location, the matters that need exploration will change and/or expand:

    • Comparative Market Analysis
    • Title search
    • Property Disclosure Statement
    • Strata Documentation
    • Oil storage tanks
    • Septic and wells
    • Rights in favour of the government or other agencies. For example, Ministry of Transport dedications, restrictions and expropriations, Agricultural Land Reserve, Islands Trust, Heritage Conservation Act, Riparian Areas Regulation.

    Subject to any ongoing duties of confidentiality to a former client or other conflicts of interest that may arise and must be disclosed to your current buyer-client, you must disclose to your client everything that you know about the property and any circumstances about the potential sale, the seller, or other buyers/offers. This ensures that your buyer-client can make an informed decision about whether to proceed with a no-subject offer.

    Always document the material information you have gathered and the advice you have provided to your client. Keeping written records and providing copies to your clients is a prudent practice for every real estate professional.

    For more information: No-Subject Offers, Valuation & Exposure

  • Staying Safe: Practices to Reduce Risk for Real Estate Professionals

    Women looking out of window

    Earlier this year, media reports about inappropriate, threatening phone calls and text messages to real estate professionals have put the spotlight on safety for everyone. Whether you provide trading services (real estate sales), rental property or strata management services, there are basic safety practices that you can follow to help ensure that you feel secure and confident when dealing with members of the public in the course of your professional duties.

    Take Safety Seriously

    Police agencies throughout the province are investigating reports of harassing phone calls made to real estate professionals, and are coordinating across jurisdictions to ensure your safety.

    “We want people to know that this is serious, and that they must feel safe and comfortable doing their jobs. If you are contacted by someone who makes you feel uncomfortable or unsafe, do not hesitate to call 9-1-1  — will open in a new tab immediately,” said Sergeant Peter DeVries, Media Relations Officer with the RCMP, North Vancouver Detachment.

    Setting and communicating your expectations with your clients can help ensure your safety. It’s important to be aware of your surroundings at all times. If you feel unsafe, remove yourself from the situation and report it.

    Report any Threatening Situations

    “Trust your intuition and do not downplay what could be a dangerous or threatening situation,” Devries advises. “When a conversation or interaction slides into harassing or dangerous behaviour, or if something doesn’t sit right with you, it’s a good practice to take notes immediately after ending the interaction – those details can support the police in their investigation. The next person to face a similar interaction may benefit from your actions.”

    Stay Informed about Risks and Safety Practices

    The Safety Resource Kit available from the National Association of Realtors includes simple and effective tips along with reminders about key safety principles: knowledge, awareness and empowerment. Members of real estate boards may be able to access information and advice on real estate safety practices from their board.

    Other useful resources for staying safe include:

    Realtor Safety Program Resource  — will open in a new tab from the National Association of Realtors.

    Spotlight on Safety: 5 Realtor Safety Tips  — will open in a new tab from the Canadian Real Estate Association

    Realtor Safety: When a Stranger Calls  — will open in a new tab from Real Estate Magazine, February 23, 2021

  • Strata and Rental Disclosure Forms Updated, Requirements Unchanged

    Hands giving keys

    Earlier this year, RECBC released two consumer disclosure forms for use by strata managers and rental property managers, along with information resources for consumers explaining the disclosure requirements.

    The Payments and Benefits Disclosure Information for Strata Corporationsand Payments and Benefits Disclosure Information for Rental Property Owners forms replace previous forms (the “Disclosure of Remuneration: Strata Management Services” and the “Disclosure of Benefits: Rental and Strata Property Management Services”). And they include an information page clearly explaining the disclosure to your clients.

    The forms make it easier for strata and rental property managers to ensure that clients are getting the information they need. They’ll feel better informed, and better prepared to make decisions.
    Since the release of these forms, we’ve received questions from some rental property and strata managers, wondering if the forms and the requirement to make disclosures to clients about payments and benefits are new.

    While the versions of the forms we’ve introduced are new, the requirements to make these disclosures have been in place for 15 years.

    Rental property managers and strata managers have a duty to make sure their clients have the information needed to make good decisions. Part of this duty includes making required disclosures about any fees or benefits received from someone other than a client as a result of providing rental property or strata management services on their behalf. Here’s an overview of the history of the forms and the disclosure requirements.

    In 2005, the Real Estate Services Act became law and all real estate professionals were required to comply with the Real Estate Rules. Section 5-11 of the Rules required real estate professionals to disclose any remuneration they received from anyone other than their client.

    In 2006, RECBC began regulating strata management services and section 5-12 of the Rules (Benefits in relation to rental property management services and strata management services) came into force. This Rule was written specifically for the rental property and strata management industries.

    In 2010 RECBC developed three forms which strata and rental property managers could use to make these required disclosures:

    • Disclosure of Remuneration – Strata Management Services (5-11)
    • Disclosure of Remuneration – Rental Property Management Services (5-11)
    • Disclosure of Benefits – Rental/Stata Property Management Services (5-12)

    Until very recently these forms continued to be available on the RECBC website.

    Beginning in 2018, RECBC initiated a review of older mandatory and non-mandatory forms to ensure they were easy for members of the public to understand. As part of this review, the disclosure of remuneration and benefits forms were revised, to make the information more accessible for consumers.

    To reduce the number of forms that might have to be presented to a consumer, a single form covering both the required disclosure of benefits and the required disclosure of payment was created for each industry sector. These combined forms, the Payments and Benefits Disclosure Information forms, were released in early 2021.

    While not mandatory, we encourage the use of these forms in order to maintain transparency and clear communication with clients about any payments or benefits that may be received in the course of providing rental property or strata management services.

  • Administrative Penalties Expanded: New Categories, New Penalties

    Women working at desk

    On February 1, 2021, amendments to the Real Estate Rules took effect that expanded the contraventions for which RECBC can apply administrative penalties and increased the amounts of the penalties that RECBC can impose. Here are a few of the key things to know about these changes.

    Administrative Penalties help ensure minor matters can be dealt with more quickly

    RECBC can use administrative penalties in cases where a more serious sanction is required than a letter of advisement (a warning), but which don’t require formal discipline proceedings. They provide an efficient mechanism for RECBC to encourage compliance in cases where a designated contravention is unlikely to result in material harm to consumers.

    RECBC’s Administrative Penalty Guidelines help provide predictability to real estate professionals about the likely outcome of many minor contraventions, and help ensure that minor contraventions can be dealt with quickly and efficiently. See the Administrative Penalty Guidelines for more details on the contraventions that are eligible for these penalties.

    Administrative penalties protect the public

    The new administrative penalty framework is in the public interest; it allows RECBC to use administrative penalties, along with other measures, to promote compliance and reduce risks to the public.

    Recognizing that mistakes happen and that not all contraventions warrant a formal disciplinary proceeding, the expanded administrative penalties help ensure that RECBC’s response is proportionate to identified risks and other unique circumstances of each matter.

    There is a dispute process for administrative penalties The Real Estate Services Act (RESA) has specific provisions allowing a real estate professional to request reconsideration of a RECBC decision to impose an administrative penalty.

    Under section 57(4)(a) of RESA, RECBC may cancel an administrative penalty if it is satisfied that the real estate professional exercised due diligence to prevent contravention of the rule.

    The deadline to make a reconsideration request is within 14 days of the date on which the administrative penalty decision was issued.

    See the Administrative Penalty Guidelines for more information on the reconsideration process.

    Administrative Penalties over $1,000 will be published

    RECBC is committed to openness and transparency, which includes sharing information about real estate professionals and brokerages who do not comply with their legislated requirements. As part of that commitment, information about administrative penalties issued by RECBC will be published on RECBC’s website.

    Publication is intended to promote transparency and accountability and provide an educational opportunity for real estate professionals and the public.

    Learn More About Administrative Penalties

  • New Resources Coming Soon: Regulatory Information and Guidelines

    Fingerer pressing button on keyboard

    As Albert Einstein once said, “You don’t have to know everything. You just have to know where to find it”. For real estate professionals looking for guidance to help them comply with their legislated requirements, the place to find what you need to know will be RECBC’s online Knowledge Base, following the introduction later this spring of two new resources: Regulatory Information and Guidelines.

    These resources will replace the Professional Standards Manual (PSM) and Brokerage Standards Manual (BSM), which have been the key sources of regulatory information for real estate professionals for many years. However, the PSM and BSM were in need of review and updating.

    More than a year ago RECBC initiated a project to update its regulatory guidance, with the goal of making it clear, concise and consistently structured. The project, which ultimately involved consultation with legal experts, other regulatory bodies, along with key stakeholders and industry members, resulted in the development of Regulatory Information and Guidelines.

    In creating these two new resources, RECBC’s intention is to clearly separate the requirements of the regulatory framework from RECBC’s guidance on best practices.

    Here is a quick primer on what to expect from RECBC’s updated resources:

    Regulatory Information

    RECBC’s Regulatory Information provide a plain language reading of the various regulatory requirements established in legislation, including the Real Estate Services Act, Regulation and Rules. They provide real estate professionals and the public with information about regulatory requirements that impact the provision of real estate services.

    Guidelines

    Guidelines are considered by RECBC to be best practice. They provide practical considerations for adhering to the regulatory requirements that real estate professionals are expected to follow. Adhering to the guidelines will ensure that you are following best practices, complying with your regulatory requirements and prioritizing consumer protection and the public interest.

    The guidelines provide clear and concise guidance for brokerages and real estate professionals. They encourage real estate professionals to use their professional judgement in their day-to-day business practice.

    The approach of the guidelines is consistent with the style and content of RECBC’s continuing education courses.

    Each Guideline includes:

    • Purpose – a brief statement identifying the key topic and guidance
    • Practice Guidelines – information on what to consider in achieving compliance with the regulatory requirements
    • Managing Broker Considerations – specific guidance for managing brokers, related to the brokerage management and oversight responsibilities in relation to the guideline topic
    • Applicable legislation – links to the relevant sections of RESA, Regulation, Rules and Bylaws
    • Definitions – for any terms used in the guideline which are defined in RESA, Regulation, Rules or Bylaws
    • Relevant Cases – where there are applicable discipline cases, links to a selection of cases will be included.

    What About… ?

    RECBC has many other useful tools for real estate professionals — including case studies, checklists, charts, infographics, videos and interactive guides. While they won’t be incorporated into the Regulatory Information and Guidelines, in most cases those great, practical guidance tools will still be available through the Knowledge Base, and they will be linked from related Guidelines, so you’ll still be able to reference them whenever you need them.

    We’re excited to share the new Regulatory Information and Guidelines with real estate professionals this spring. Look for more information ahead on the launch of these resources.

  • Managing Broker Corner: Online Licence Surrenders Simplify Processes

    Man looking at ipad

    Online Licence Surrenders Simplify Processes

    Helping a real estate professional surrender their licence just got easier! Managing brokers can now use RECBC’s Online Portal to surrender a licence when a real estate professional transfers to another brokerage or decides to leave the industry.

    Here are our Top Three Tips for online licence surrenders.

    1. Check out the How-to Guide for Tips

    Surrendering a licence using our Online Portal takes just a few steps, and to help ensure the process is clear and easy to follow, we’ve developed a brief how-to guide, including a quick video.

    Check out the How to Surrender a Licence guide on our website.

    2. Return the Paper Licence

    Once you’ve completed the online surrender, please don’t forget to return the paper licence, if you still have one in your possession, by mail to RECBC.

    3. Inform Brokerage Administrative Staff

    Please be sure to inform your administrative staff of the changes, in case any brokerage policies or procedures may need to be updated.

    Bringing licence surrenders online is just one of the ways that we’ve increased efficiency and modernized our processes, to streamline administrative processes for managing brokers. We have also introduced electronic licensing records for individuals, moving away from the system of issuing and mailing thousands of paper licences. We know the forests are grateful, and we hope that you also appreciate the ease and speed of electronic licensing records.

    For any questions, please get in touch with us at [email protected].

    Displaying Your Brokerage or Branch Office Licence

    While RECBC is no longer mailing paper licences, it’s important to note that your brokerage or branch office licence still needs to be displayed in your office. To find and print your brokerage or branch office licence log in to the RECBC Portal  — will open in a new tab, and under “My Brokerages”, select “View Licence Certificate” to the right of the brokerage record you require. You can then print this document and display it within your office.

    Continuing Education – Act Early to Succeed

    Want to avoid the nail-biting anxiety of watching as your licence expiry date creeps ever closer and wondering whether you will be able to get your licence renewed on time? The solution is easy: complete your continuing education courses early in your licence cycle.

    With continuing education completed, you’ll avoid being disappointed if you aren’t able to enroll in a course in enough time to complete the requirements before your expiry date. And you’ll be set up for success throughout your two-year licensing period, reaping the benefits of the skills and knowledge you’ve gained in Ethics for the Real Estate Professional, Anti-Money Laundering in Real Estate, and Legal Update.

    Find out more about the courses, including how to register:

    • Ethics for the Real Estate Professional: learn valuable information about ethical decision making in real estate.
    • Legal Update: key learning points for real estate professionals to transfer into their business practices based on legal and regulatory updates, practice reminders, recent RECBC discipline cases, legal developments, Errors and Omissions reports, and more.
    • Anti-Money Laundering in Real Estate: designed to give real estate professionals the tools and knowledge they need to help prevent illicit funds from entering our real estate markets.

    Canada Revenue Agency Consumer Education Campaign

    This month, the Canada Revenue Agency (CRA) will begin a letter-writing campaign to help educate taxpayers who have recently sold property about their tax obligations.

    A random selection of consumers across BC will receive a letter from the CRA reminding them that property sellers must report the sale on their tax return, even if the sale was of a principal residence and exempt from income taxes.

    For more information about the campaign, visit the CRA’s Letter Writing Campaigns  — will open in a new tab webpage.

    When clients have questions about the tax implications of a real estate transaction that are outside your expertise as a real estate professional, RECBC recommends that you advise your clients to seek independent professional advice.

  • You Asked Us: COVID-19 Precautions and Real Estate Services

    real estate professional wearing mask

    In the year since the provincial state of emergency was declared in March 2020, RECBC’s Professional Standards Advisors have answered thousands of questions from consumers and real estate professionals about safe real estate practices to minimize the risks of exposure to COVID-19. As the situation continues to evolve, we are working to ensure that our guidance remains up to date with the most current advice from the Provincial Health Officer, workplace safety guidelines from WorkSafeBC, and other regulatory information.

    We continue to strongly recommend that real estate professionals use virtual tools wherever possible to minimize in-person contact with clients and members of the public. Open houses should not be held at this time, and any scheduled in-person showings should follow the best practices outlined in Safer Showings During BC’s Second Wave. This information has been developed in collaboration with the Office of the Superintendent of Real Estate (OSRE) and BC Real Estate Association (BCREA) to align with Provincial Health Officer orders and directives.

    Other key information resources available on the RECBC website include:

    Questions about safe practices to follow during the COVID-19 Pandemic?

    Contact RECBC’s Professional Standards Advisors at [email protected].

  • Person walking down street

    Assessing whether your client has the full authority to transact in respect of a property is a fundamental responsibility of real estate professionals. Issues in this respect can arise, for example, in matters involving trustees, powers of attorney, spouses, corporations, and where the consent of others may be required. These are matters that must be approached with considerable care and scrutiny.

    Aside from the risk of civil liability, professional discipline may result from failing to ensure that your client has the full authority to transact in respect of a property. Three recent disciplinary orders from 2020 show a few of the circumstances in which such mistakes may occur:

    Case 1: The Misunderstood Power of Attorney

    Two real estate professionals entered into a listing agreement with Client A, who owned a property as a joint tenant with their spouse. Client A mistakenly explained that they had a power of attorney that allowed them to sell the property on behalf of their spouse. This was an incorrect understanding of the power of attorney and the real estate professionals did not realize the error when they reviewed the power of attorney. In fact, Client A had provided a power of attorney to their spouse, not the other way around. As a result, Client A did not have the authority to transact on behalf of their spouse.

    After Client A entered into a contract of purchase and sale to sell the property, Client A’s lawyer requested a copy of the power of attorney and recognized that it did not provide Client A with the authority to act on behalf of their spouse. Unfortunately, Client A’s spouse did not have the capacity to sign legal documents and so their consent to the sale of the property could not be obtained. As a result, the sale collapsed.

    The real estate professionals in this matter failed to act with reasonable care and skill and in the best interest of their client. They should have recommended that their client obtain legal advice in respect of the power of attorney.

    Case Reference: Hays (Re), 2020 CanLII 63613 (BC REC)  — will open in a new tab

    Case 2:The Missed Insolvency Trustee

    A real estate professional acted on behalf of Client B, who represented that they had the authority to sell a property. As it turned out, however, an insolvency trustee had registered an interest in both Client B’s half interest in the property and in the half interest of Client B’s spouse, who was deceased. The insolvency trustee’s interests in the property were registered on title but were missed by the real estate professional.

    Client B entered into a contract of purchase and sale without the consent of the trustee, but the trustee became aware of the pending sale prior to closing. In addition to raising concerns over the lack of authority to sell the property, the trustee required that an additional term be added to the contract of purchase and sale that had not been negotiated prior to the contract being formed.

    The real estate professional was disciplined for failing to ensure that they were dealing with all persons whose authority was required to sell, and for failing to recommend that their client obtain legal or independent advice about the estate’s interest in the property.

    Case Reference: Ireland (Re), 2020 CanLII 36930 (BC REC)  — will open in a new tab

    Case 3: The Spouse That is Not on Title to the Family Home

    A real estate professional was engaged by Client C, who was involved in divorce proceedings. Client C was the sole registered owner of the property, but the spouse had filed a caveat and certificate of pending litigation on title to the property. Although a court order had granted Client C and their spouse joint conduct of sale of the property, the listing contract was signed only by Client C and it did not delineate from whom the real estate professional was to receive instructions.

    Client C entered into a contract of purchase and sale with prospective buyers, and a copy of that contract was sent to the spouse’s lawyer. The spouse’s lawyer sought to change the completion and possession dates. When these changes were presented to the prospective buyers, they made a counteroffer in which they sought to lower the sale price through an addendum. The real estate professional sent a copy of the buyers’ proposed addendum to the spouse’s legal counsel but did not obtain confirmation from the spouse’s legal counsel that the spouse approved the addendum.

    The real estate professional mistakenly believed that Client C had discussed the addendum with the spouse, when in fact that had not occurred. Before the spouse’s lawyer was able to communicate with the spouse, Client C signed the addendum to lower the sale price, and the revised contract was sent to the spouse’s lawyer.

    RECBC had issued guidance advising real estate professionals that both spouses must be involved in decisions relating to the sale of family property, even if one spouse is not on the title but lives in the family home. The real estate professional was disciplined for failing to act with reasonable care and skill when they failed to ensure that the spouse was involved in determining the sale price.

    Case Reference: Stewart (Re), 2020 CanLII 36928 (BC REC)  — will open in a new tab

  • Superintendent of Real Estate Updates

    Group of people working together

    Urgent Order Against Unlicensed Activity

    On March 11, 2021 the Superintendent of Real Estate issued an urgent order against 168 Rock Solid Homes Ltd of Vancouver, and its director Peter Ho Chiu Chu, to immediately cease providing real estate services.

    The order was made after determining that evidence supports the conclusion that Mr. Chu and 168 Rock Solid Homes Ltd were providing unlicensed rental property management services.

    Clients or tenants of Peter Ho Chiu Chu and 168 Rock Solid Homes Ltd. are asked to contact the Office of the Superintendent of Real Estate for further information by phone at 1-855-999-1883 or email at [email protected].

    Consultation on Real Estate Teams

    The Office of the Superintendent of Real Estate and the Real Estate Council of BC are working to enhance the regulation of teams. The consultation opened on February 9, 2021, and closed on April 2, 2021.

    Read the Policy Intentions Discussion Paper: Regulation of Real Estate Teams .

    The discussion paper outlines areas of focus for enhancing team regulation, including:

    1. Defining “teams” in the Real Estate Rules
    2. Requiring all teams to register with the regulator
    3. Reserving the term “team” only for use by teams; and
    4. Enhancing managing broker and brokerage control of teams

    Learn More

  • Decisions

    The following actions have been taken as a result of disciplinary hearings and Consent Orders conducted by RECBC.

    Trading Services (Sales)

    Rental Property Management Services