Report from Council Newsletter June 2004

During the past year, the Council has reported on a number of items of importance to the industry. As these are significant issues, it is worthwhile to highlight a few of them again for the benefit of all licensees. This information can be found on Council’s page on the REALTOR LinkTM website at www.realtorlink.ca

Personal Information Protection Act (PIPA) – On January 1, 2004, the PIPA came into effect in BC. PIPA regulates the way private sector organizations collect, use, keep secure and disclose personal information. PIPA defines the kind of personal information that businesses can collect from clients, customers, employees and volunteers, and sets out what can be done with that information. It provides citizens with more control over how their personal information is obtained and handled, while allowing BC businesses and agencies to collect, use and disclose information for legitimate business purposes. Further information can be found at www.mser.gov.bc.ca/foi_pop/Privacy/ default.htm or by calling the PIPA hotline at 250-356-1851

Proper Handling of Cash Deposits — The Council continues to receive complaints that licensees are not properly dealing with cash deposits. Section 16 of the Real Estate Act requires that all monies received by a licensee in respect of a real estate transaction must be immediately deposited into the employing The Year In Review agent’s trust account. The Council has recently seen situations where licensees have deposited cash deposits into their own personal accounts, then transferred these funds into their agent’s trust account, or had a bank draft, payable to the employing agent, drawn on these funds. While the intention may have been to reduce the risk of loss or theft, this is not an acceptable practice. The licensee’s account is not a trust account and is therefore not protected from attachment by creditors or by the bonding provisions of the Real Estate Act. For further information please see pages 34-35 of the Licensee Practice Manual.

New Residential Tenancy Act in Effect — The new Residential Tenancy Act, Manufactured Home Park Tenancy Act and their respective regulations came into effect on January 1, 2004. The Residential Tenancy Act applies to residential tenancies in British Columbia and most residential licences to occupy. Manufactured home park tenancies fall under the Manufactured Home Park Tenancy Act, unless the tenant rents the home and the home site from the same landlord. Licensees dealing with residential or manufactured home tenancies should familiarize themselves with the provisions of the new legislation. For further information please visit the Residential Tenancy Office website at www.pssg.gov.bc.ca/rto

Criminal Record Checks — The Council now conducts criminal record checks on all first-time licence applicants as well as reinstatement applicants prior to licence issuance. Previously, the Council conducted these sorts of checks after licence issuance. If it was later discovered that an applicant failed to disclose a pending charge or previous criminal record on his or her application, a suitability hearing or other form of disciplinary action might be necessary. Accordingly, this policy was put into place to avoid this eventuality. As a result, processing of first time and reinstatement applications may now take up to three weeks in order for Council to receive criminal record check results from its search provider.

On May 6, 2004, the provincial government introduced the Real Estate Services Act and the Real Estate Development Marketing Act into the legislature. In the first major overhaul of British Columbia’s real estate legislation in nearly half a century, these statutes are intended to replace the outdated Real Estate Act, in effect since 1958.

Real estate licensees and developers will experience less red tape while consumers will benefit from increased protection, Finance Minister Gary Collins announced in introducing two new pieces of legislation for consideration by government. While this legislation will likely not take effect until at least the beginning of next year, it is important that licensees are aware of the proposed changes.

“The real estate industry has been enjoying a banner year as economic conditions in B.C. continue to improve,” said Collins. “These changes will help to ensure that this important industry remains a vibrant part of our economy in the years to come.”

“Further, by replacing the old act, we are ensuring that people who retain the services of real estate professionals, or who purchase units in new developments from developers, are better protected, while at the same time significantly reducing unnecessary regulatory requirements and red tape.”

The Real Estate Services Act will give the Real Estate Council of British Columbia direct jurisdiction over the regulation of licensees. This will ensure that the real estate sector can more quickly respond to changes in the marketplace in order to better serve consumers. Consumers will also benefit from the creation of a special compensation fund and the introduction of a new licensing requirement for strata managers.

The Real Estate Development Marketing Act will streamline the process for developers’ marketing activities and add more flexibility and certainty, while maintaining consumer protection. As well, the Superintendent of Real Estate is provided more effective powers to enforce compliance in order to protect the interests of consumers.

Many of the elements contained in the new legislation came about as the result of extensive discussions with affected parties, including broad public consultations that were initiated by government in early 2003. Key highlights of the new legislation include the following.

The new Real Estate Services Act will:

• Update the regulatory framework which deals with the licensing of real estate agents and property managers, by:
  • Giving the Real Estate Council of British Columbia direct authority over licensing and discipline;
  • Providing the Real Estate Council with the power to make rules, and to impose administrative penalties in disciplinary actions.
• Maintain and enhance consumer protection by:
  • Introducing a new licensing requirement for strata managers;·
  • Creating a special compensation fund to protect consumers from losses incurred due to theft or fraud by real estate service providers; and
  • Enhancing the Council’s enforcement options by providing it with authority to make disciplinary orders and freeze orders in urgent circumstances.
• Provide benefits to real estate licensees by:
  • Elevating the Real Estate Council to a self-regulating organization that will enable the real estate industry to govern its own licensees;
  • Clarifying that a licensee may act in an independent contractor relationship with his or her brokerage;
  • Protecting licensee’s remuneration by requiring commissions to be kept in trust until paid out.

The new Real Estate Development Marketing Act will:

• Streamline and address inconsistencies in the current Act’s marketing requirements;
• Provide greater opportunity for pre-selling of developments;
• Reduce the regulatory burden on developers by allowing disclosure statements to be filed in all circumstances;
• Give purchasers an express right to rescind for not receiving a disclosure statement, as well as a standardized seven-day cooling-off period during which purchasers who received disclosure can rescind the purchase contract;
• Allow developers access to purchasers’ deposit monies if those monies are appropriately insured;
• Provide the Superintendent of Real Estate with the ability to impose administrative penalties and to act against a developer who fails to file a disclosure statement or to provide it to purchasers.

For further information about the Real Estate Services Act, please contact Robert O. Fawcett, Executive Officer or Larry Buttress, Manager, Industry Practice at the Real Estate Council at 604-683-9664 or toll-free 1-877- 683-9664 or email at [email protected] For further information about the Real Estate Development Marketing Act, please contact the Office of the Superintendent of Real Estate at 604-660-2947. Links to both acts may be found on Council’s website at www.recbc.ca