Report from Council Newsletter, June 2020

The Shape of Things to Come

This May saw our province transition to Phase 2 of BC’s Restart Plan, allowing us to expand our social interactions and permitting some businesses to begin reopening under enhanced protocols. New health and safety guidelines, best practices and other resources from WorkSafeBC were released for several industries to facilitate a safe return to work, including real estate services. RECBC, along with the BC Real Estate Association (BCREA) and the Office of the Superintendent of Real Estate (OSRE) participated in consultations with WorkSafeBC to review the protocols and provide feedback.

Adapting these guidelines into real estate professionals’ work is critical for the safe continuation of real estate services in the province, especially as we have now entered Phase 3 of the Restart Plan, which relies on low or declining transmission rates of COVID-19. I hope that the strong example we’ve set in BC will continue, enabling us to open further and giving consumers who may have deferred plans to buy or sell property the confidence to re-enter the real estate market.

The past few months have been marked by profound economic and social challenges. They have demanded resilience and quick adaptation from real estate industry members, and an unprecedented degree of innovation in order to continue providing services. I’ve been encouraged to hear of many examples of real estate professionals demonstrating agility and innovation, and proving once again that building and enhancing public trust is a key part of providing professional real estate services. Through collaborating with peers and sharing innovations across the industry, I’m confident that the real estate industry will adapt to this new environment while maintaining the public trust real estate professionals deserve.

RECBC is committed to helping the real estate industry transition toward the new normal by continuing to develop and provide resources to support professionals to safely work with the public. We’re pleased to have had opportunities to collaborate on recent initiatives with a range of industry associations and stakeholders, including the Professional Association of Managing Agents (PAMA), LandLordBC, the Condominium Homeowners Association (CHOA), the Vancouver Island Strata Owners Association (VISOA), the Residential Tenancy Branch and the Strata Housing Office, among others.

We are also committed to doing more to promote inclusivity and diversity – both within our organization and in the industry we regulate. The events of the past weeks have brought systemic racism into the spotlight, but the issues are not new, and we all have a responsibility to do our part to end racism and inequality. As a public sector regulator we will focus on promoting equality in all aspects of our work. This includes reviewing our policies, procedures and engagement approaches so that real estate professionals, stakeholders and members of the public are treated equally.

I am very pleased to announce that at its May meeting, the Council approved a new accommodation policy, soon to be published on the RECBC website. This policy recognizes that treating people identically is not the same as giving them equal rights and opportunities, and sets out our commitment to accommodating licensees and licence applicants in compliance with the B.C. Human Rights Code. We have also completed employee training over the past year on unconscious bias and gender-based analysis.

This is the beginning of more work ahead. I look forward to continuing to demonstrate RECBC’s commitment to inclusion and diversity in our actions as a regulator.

Elain Duvall

Chair, RECBC

RECBC is excited to announce the launch of its newest mandatory continuing education course: Ethics for the Real Estate Professional.Through a combination of online self-guided modules and a virtual classroom session led by experienced instructors, this course will help real estate professionals increase their understanding of the importance of ethical decision making in their work.

We have developed this course in response to the growing recognition among real estate professionals that there are unique challenges to providing real estate services. Ethics for the Real Estate Professionalexamines the role of ethics as it relates to:

• Honesty and Integrity
• Duties to Clients
• Conflicts of Interest
• Disclosures
• Reporting Misconduct

Participants will learn new tools for assessing risks, navigating ethical issues, and making informed decisions that they can apply in their daily business.

Quick Facts

Cost: $175
Time Required: Expect to spend approximately 5 hours completing the online self-guided modules and 3 hours in the virtual classroom
Mandatory Requirement: In order to renew a licence expiring on or after October 1, 2020, you must have completed Ethics for the Real Estate Professional in addition to the Legal Update and Anti-Money Laundering courses.

For more information and to register for the course, please visit our Ethics for the Real Estate Professional webpage, or contact [email protected] for any questions.

RECBC and the Office of the Superintendent of Real Estate (OSRE) have received numerous requests to review the regulatory requirements for real estate “teams”. The topic of teams has been raised by real estate professionals and managing brokers in consultation sessions and in correspondence to our offices. Some of the concerns we have heard about are related to the challenges of effective supervision of teams, lack of consumer awareness of teams, and disclosure requirements for team members.

There are approximately 1,200 teams currently registered with RECBC. More than 3,000 real estate professionals are members of these registered teams. These numbers reflect only those teams that have registered with RECBC for the purposes of advertising. Real estate professionals who work together with others to provide collective agency to their clients but who do not advertise as a team are not required to register with RECBC.

To explore the issues relating to teams, staff from RECBC and OSRE have created a working group to examine BC’s regulatory framework and determine if changes may be required to strengthen consumer protection and clarify the requirements for teams. Look for more information on this initiative in future issues of the Report from Council.

In the meantime, here are three important things to keep in mind if you are a member of a real estate team.

1. Only registered teams can advertise. Before you advertise with other real estate professionals as a team, ensure that your team is registered with RECBC and that your advertising and operations are compliant with the Rules and RECBC’s guidance. Need a refresher on the requirements for teams? Check out this presentation by our Professional Standards Advisors that covers the essentials.
2. A team is a designated agent. If you are a member of a team, all the members of your team are collectively considered to be the designated agent for the client. Team members can share information about clients with other team members, and they cannot separate their agency relationships. It is for this reason that individual team members cannot act on behalf of multiple clients in the same transaction.
3. Teams must be supervised. Managing brokers must ensure that they are aware of the real estate professionals in their brokerage who are acting as a team in order to ensure that adequate supervision is provided. Managing brokers should also consider developing robust brokerage policies and practices regarding the teams that they oversee in their brokerages.

Answering Your Questions about Teams

If you are unsure how to handle a team-specific issue, ask your managing broker and consult RECBC’s Knowledge Base. If you can’t find the answers you need, contact one of RECBC’s Professional Standards Advisors at [email protected] or 604-683-9664.

Providing a high level of professional real estate service to consumers requires clear, consistent and easy to access resources about regulatory requirements and best practices. That’s exactly what RECBC is committed to continuing to deliver to real estate professionals in BC, and we’re making important changes to ensure that our resources are up to date and informative, and provide the practice guidance real estate professionals need, in a format that is readable and accessible to all.

RECBC’s Professional Standards Manual and Brokerage Standards Manual are key resources that real estate professionals have relied on for many years. Surveys and informal feedback from real estate professionals have indicated that while industry members recognized these as valuable information sources, they wished the materials were easier to search, briefer, and written in plain language. Over the past several months, RECBC staff in consultation with legal and subject matter experts have initiated a project to do just that.

We have undertaken a comprehensive review and revision of all the information in the Professional Standards Manual (PSM) and Brokerage Standards Manual (BSM) to ensure it is up-to-date and inclusive of all recent related regulatory and legislative changes. Once the review is completed, we will be re-writing the content and re-issuing it in a slightly different format to make it easier to search and understand.

For almost every topic, you will be able to find two resources: a Regulatory Standards Information document, and a Practice Guideline. Why two resources? Because Regulatory Standards Information tells you what you need to know about the requirements in the rules, and Practice Guidelines tell you how to comply with the requirements. By separating the what from the how, we’ve made each component shorter, clearer, and more focused.

Regulatory Standards Information presents clear, concise, easy-to-read explanations of the requirements for real estate professionals under the Real Estate Services Act, (RESA) Rules, Regulation and other applicable legislation. This information is intended to support real estate professionals in their understanding of the standards they must meet in the delivery of real estate services.

Practice Guidelines provide a practical application of the Regulatory Standards Information and offer suggested best practice guidance to assist real estate professionals. These guidelines provide RECBC’s interpretation of RESA and other applicable legislation.

Both Regulatory Standards Information and Practice Guidelines will be easily searchable in the Knowledge Base area of the RECBC website. The launch of these new materials is planned for late 2020. Stay tuned for more updates on the progress of this project.

The redevelopment of the PSM and BSM aims to increase the standard of education and resources provided to real estate licensees. If you can’t find the answers you need on our website contact one of RECBC’s professional standards advisors at [email protected] or at 604-683-9664.

Authored by Jacqueline Shinfield

Earlier this year, proposed amendments to the regulations under the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) were published. These amendments, if implemented, will have a direct impact on persons and entities engaged in the real estate sector that are subject to the PCMLTFA.

This is the second in a series of articles summarizing the amendments affecting the real estate industry, and deals with “politically exposed persons”.

A politically exposed person (“PEP”) or a head of an international organization is a person who has been entrusted with a prominent public function that would provide that person with the ability to influence decisions, thus presenting a higher risk for potential money laundering offences such as bribery or corruption.

The PCMLTFA addresses these money laundering vulnerabilities by requiring certain regulated entities to undertake PEP determinations in respect of their client base upon the occurrence of certain events.

The PEP determination requirement will apply to real estate professionals beginning June 1, 2021.

Once in force, real estate professionals will have obligations to determine if they are dealing with a “PEP” (or a family member or close associate of a PEP) in certain circumstances, including:

• when a real estate professional enters into a business relationship with a person;
• when a real estate professional receives an amount of $100,000 or more in cash or virtual currency; and
• when a real estate professional detects a fact that constitutes reasonable grounds to suspect that a person with whom they have a business relationship is a PEP.

When a real estate professional determines that a person with whom they have a business relationship is a PEP or a family member or close associate of a PEP, they are required to, among other things:

• take reasonable measures to establish the source of the person’s wealth;
• take enhanced measures (based on risk) to verify the person’s identity — over and above those normally taken; and
• take other enhanced measures to mitigate risk including ensuring client information remains up to date and conducting more frequent ongoing monitoring.

These amendments are proposed to come into force on June 1, 2021. It is recommended that real estate professionals begin to implement the required processes in the near term.

Jacqueline Shinfield is a partner with Blake, Cassels & Graydon LLP. She has extensive experience providing advice in respect of Canada’s anti-money laundering and anti-terrorism financing legislation. Jacqueline assists regulated entities in their dealings with the Financial Transactions and Reports Analysis Centre of Canada. She is the author of RECBC’s Anti-Money Laundering in Real Estate Course.

Checklists Guide the Safe Return to Work

Businesses in BC are open for business again for the first time in months, incorporating the new physical distancing and safety measures recommended for permitted industries in WorkSafeBC’s Returning to Safe Operation – Phases 2 & 3. RECBC strongly encourages all managing brokers to review and follow WorkSafeBC’s recently published Real Estate protocols for returning to operation.

As essential services, many brokerages have continued to operate with remote staff or other modifications to their operations. RECBC appreciates the significant preparation and planning involved in resuming operations while maintaining a safe work environment for staff, your clients, and the public.

To provide a framework of policies and procedures to support brokerages to safely resume or continue business as part of B.C.’s Restart Plan, the following checklists have been prepared for your use:

• Checklist for Managing Brokers in Trading Services Brokerages: Developed by the BC Real Estate Association (BCREA), in collaboration with RECBC and the Office of the Superintendent of Real Estate (OSRE)
• Checklist for Managing Brokers in Rental Property and Strata Management Brokerages: Adapted from BCREA’s checklist and prepared in consultation with LandlordBC, the Condominium Homeowners Association (CHOA), the Professional Association of Managing Agents (PAMA), the Vancouver Island Strata Owners Association (VISOA), and RECBC’s Strata Management Advisory Services Group.

RECBC’s Professional Standards Advisors are available to answer questions by email at [email protected] or by phone at 604.683.9664, toll-free 1.877.683.9664.

Mitigate Risk

RECBC advises real estate professionals to continue to prioritize virtual/electronic options over in-person interactions including open houses, showings and client meetings, in order to protect the health and safety of British Columbians.

At the time of writing, BC’s state of emergency is still in effect and our top priority continues to be maintaining public health. BC’s Provincial Health Officer, Dr. Bonnie Henry, has led the response to the COVID-19 pandemic in part by keeping British Columbians well informed. As a result, people are rightfully concerned about services that return too quickly to operation or without proper health and safety measures in place.

Manage the reputational risks and perception issues associated with reopening haphazardly or being ill prepared by implementing the checklist considerations into your business practices. By making careful preparations for your brokerage’s return to work procedures you will help ensure successful and safe continued operations with a commitment to public safety.

Licensing Requirements for Groundwater Users

Did you know that if your client diverts and/or uses groundwater for non-domestic purposes, that since 2016, under the Water Sustainability Act they have been required to obtain a water licence and pay water fees and rentals? Until 2022 there is a transition period during which certain fees for licensing have been waived and your clients can secure their date of precedence. As of March 2022, these costs will no longer be waived.

Licensing is intended to establish the amount of water that can be used and the rights to groundwater, to reduce conflicts between surface water users and groundwater users.

You have an obligation to act in your clients’ best interest and discover relevant facts and material information which may impact your clients. Please see the New Requirements for Groundwater Users page on the Government of BC website for more information about groundwater licensing. You should advise clients to seek independent professional advice on matters outside of your expertise.

Residential Flexibility in the Agricultural Land Reserve

A policy paper released in January 2020 by the Ministry of Agriculture has proposed more residential flexibility for people living in the Agricultural Land Reserve (ALR). To support farmers and non-farmers living on ALR land, the government is considering changes that would allow both a primary residence and a small secondary residence, with approval from the local government.

In 2019 changes were made to the Agricultural Land Commission Act to better protect agricultural land for farming. The changes included limiting the size of primary residences on ALR land, in response to concerns around construction of “mega-mansions” and the loss of land for agricultural uses. Those changes also phased out a rule allowing owners to place manufactured homes on ALR land for the use of immediate family members without requiring approval from the Agricultural Land Commission.

Due to public concern, implementation of this change has been delayed until December 31, 2020 to allow for further consultation.

As a licensee, you must act in the best interest of your client. Awareness of the proposed changes to secondary dwelling requirements on ALR land, as well with those currently in effect can assist you to advise clients buying or selling ALR land. You should advise clients to seek independent professional advice on matters outside of your expertise. For further information about policy directions under consideration by the provincial government, see the Ministry of Agriculture Policy Intentions Paper.

Coming Soon: Paperless Licences

One of RECBC’s key goals over the next three years is to increase the efficiency and timeliness of our licensing processes. That’s why, later this year, we’re taking a big step forward with the planned introduction of paperless licences. This will mean less paper for brokerages to manage, as well as cost savings and efficiencies in printing and mailing. Managing brokers will also be able to surrender licences through their portal as part of this change. Look for the further details about the launch of paperless licences, along with some other exciting process improvements, in future issues of Report from Council. You can read about our commitment, and our plans, in RECBC’s current Service Plan.

Safe Return to Work Plans

After a successful transition to remote work during the initial phases of the provincial health emergency, RECBC staff members are returning to the office on a rotational basis with enhanced health and safety protocols in place. We have updated RECBC’s business continuity plan to help ensure the safety of our staff and their families, and so that we can continue to provide services to real estate professionals and members of the public while protecting against the spread of COVID-19.

We are not accepting unscheduled visitors to our offices. For enquiries about licensing, education or other matters, please contact us by phone at 604.683.9664 or toll-free at 1.877.683.9664. Or visit our Contact Us page for a listing of email addresses to get an answer to your questions.

In this issue of the You Asked Us column, we examine the requirement to disclose your agency obligations to consumers, and the impacts of the rise of virtual showings. How and when must you make the Disclosure of Representation in Trading Services and the Disclosure of Risks to Unrepresented Parties when conducting a virtual showing?

Q: Do I need to use the DORTS form if I’m using Zoom to show a property?

A: For an answer to this question, we asked Marty Douglas to weigh in. Marty is one of RECBC’s Professional Standards Advisors, who each week answer dozens of questions on a range of issues from real estate professionals and consumers. Marty is also a former real estate professional and managing broker with more than 40 years experience in the industry. He’s seen lots of change in that time, and never more than over the past several months. Here’s what he had say:

“COVID – 19 has influenced the way trades in real estate — buying, selling, renting or leasing – are carried out. Perhaps more so in viewing the real estate than in any other facet.

Since June 15, 2018, before providing trading services to a consumer, real estate professionals in BC have been required to disclose in writing the nature of the relationship they are providing. Section 5-10 of the Rules includes the following limited exceptions to this requirement: “(3)Unless a licensee solicits or receives information from a party about the party’s motivation, financial qualifications or needs in respect of real estate, a disclosure to the party is not required under subsection (1) when the licensee is only hosting an advertised open house, orproviding factual responses to general questions from the party.”

One of the first things to change about real estate during the COVID pandemic was the demise of the open house. Virtual showings came into play wherein a real estate professional, through a live video link, conducted a tour of the property, answering questions and demonstrating features.

That’s led many to wonder “When must I disclose?” and “Is a virtual showing an open house?” Does the exemption in Rule 5-10 (3)(a) ”hosting an advertised open house” apply to a virtual showing?

Open houses and showings are different. While showings are usually by appointment, one dictionary definition of an open house is “an occasion when real estate offered for sale can be viewed by prospective buyers without an appointment.”

When in doubt, go back to the Rule. 5-10 (1) Before providing trading services to or on behalf of a party to a trade in real estate, a licensee must disclose to the party … Are you providing trading services? Is it a trade in real estate? Is the consumer a party? Remember Mangan’s First Law – the big print giveth and the fine print taketh away. The definition of “trading services” includes “showing the real estate”. A “trade in real estate” includes “a prospective trade in real estate”. And a “party” – “includes a potential party.” If you qualify the consumer in any way before arranging a virtual showing it is likely that the Disclosure of Representation in Trading Services is required in advance of the showing.”

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

Trading Services (Sales)

• Jae Ryang (Jay) Kim, Representative, Coquitlam
• Michael Brendan Ireland, Representative, eXp Realty, Vancouver