Report from Council Newsletter, October/November 2018

On September 17, I was appointed by the provincial government as Chair of the Real Estate Council of BC for a two-year term. I am delighted and honoured to be appointed to this position.

I am particularly proud to be assuming the role of chair during this milestone year — RECBC’s 60^th anniversary since its creation under the Real Estate Act of 1958. Over the past 60 years, countless individuals and organizations have contributed to the growth and development of RECBC and the furtherance of its mandate to protect real estate consumers. I would like to take a moment to recognize a few of them:

• The Superintendent of Real Estate and staff have been valued partners to RECBC for many years and the collaborative working relationship that have been developed are of great benefit to industry and the public
• The Real Estate Division at UBC has over the years prepared thousands of students for practice as real estate professionals, delivering award-winning licensing courses
• The participation and support of the British Columbia Real Estate Association and its eleven member boards in promoting professionalism and ethical practice has deeply influenced the development of the real industry in BC
• Finally, the dedication and hard work of the many past members of Council and RECBC staff has been instrumental in developing and implementing the standards that guide industry members and protect BC’s real estate consumers.

In particular, I want to thank the outgoing members of Council for their commitment to guiding the organization and its licensees through a period of significant change over the past two years. I would also like to welcome the recently appointed members who joined Council on October 31. Together we will continue the work that our predecessors have begun, and help to chart a future course for the real estate industry in BC.

As a provincial regulator it is important to consult with stakeholders throughout the province, and I have been pleased to learn that an extensive RECBC stakeholder consultation process has been underway throughout the summer. These occasions provide regulators with valuable opportunities to interact directly with real estate professionals across BC and learn firsthand what is important to them.

This input, combined with other feedback we solicit, enables RECBC to more effectively protect real estate consumers and foster confidence in the regulatory framework.

In the years ahead, the public’s expectations — for real estate licensees and for regulators — will continue to change and evolve. I am confident that we will meet the challenges of the future and deliver on our mandate of consumer protection.

This year marks the 60^th anniversary of the Real Estate Council of BC since it was established by the BC Government in 1958. In the years since those early beginnings, we have achieved some significant milestones in how real estate licensees are regulated and how the interests of real estate consumers are protected. The past few years in particular have been a period of rapid change, but as the timeline below demonstrates, regulation is always evolving to meet the changing needs and expectations of the public, and to keep up with change in industry practices.

We’re looking forward to working with our co-regulator, the Office of the Superintendent of Real Estate, the provincial government and our stakeholders including real estate licensees, to chart the future of public protection for real estate consumers in BC.

Significant Moments in Real Estate Regulation: 1958 — 2018

On June 15, 2018, the Superintendent of Real Estate’s agency and disclosure rules came into effect.

These rules protect consumers by:

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

These agency and disclosure rules are intended to ensure that consumers receive better information to make informed decisions, and that licensees act with undivided loyalty in their clients’ best interests.

The Superintendent of Real Estate directed RECBC to prepare a report on the first 90 days of the implementation of the agency and disclosure rules. Throughout August and September 2018, Executive Officer Erin Seeley and senior staff met with groups of managing brokers to gather industry input for the report. At roundtable meetings held in each board region, they engaged in active dialogue with managing brokers — discussing the effects of the new rules, listening to the experiences and perspectives of managing brokers on the implementation of the rules, and to the feedback on the new disclosure forms.

Later this fall, we will also be soliciting your input through an online survey. You can expect to receive a link to a survey asking you for your thoughts about the new rules in November. All the input gathered will help shape our report and may influence how future changes are introduced and implemented.

Key themes that have emerged during the workshops with managing brokers include:

The importance of education

Managing brokers who have taken the Rule Changes: Agency and Disclosure course — and ensured their licensees take the course — report that as a result they felt better prepared to implement changes in their brokerage.

All trading services and rental property management licensees must complete the course before renewing their licence. We strongly encourage you to complete the course as soon as possible. It is the best way to make sure you are providing knowledgeable, competent services to your clients that comply with the new requirements.

Training and support

Managing brokers reported finding the information and resources from RECBC useful in training licensees at their brokerages about how to comply with the rules. Many suggested additional topics to cover, and asked for more resources, in different formats. Videos, PowerPoints and recorded presentations that managing brokers can use in their brokerages were among the resources requested.

You also told us that you’d like us to focus more on the positive benefits of compliance and less on substantive risk. We’ve listened to your feedback and we’ll be incorporating it into our planning for new communications tools and approaches in 2019.

Changes to the forms

We received many suggestions for making the forms shorter, faster to complete, and easier to explain to consumers. We are carefully considering all the feedback we’ve heard, and plan to develop updated versions of the forms that will be introduced in 2019. As part of the process of developing the updated forms, we will be conducting additional testing and consultation with licensees and consumers.

We will also develop and introduce new specialized versions of the disclosure forms that better meet the needs of licensed rental property managers and rental consumers.

Challenges and unintended consequences

Managing brokers, particularly in smaller communities and rural areas reported a rise in the numbers of unrepresented buyers. While this has not been supported yet by data, it is a potential consequence that we take seriously.

Additionally, managing brokers reported that the rules changes have added substantially to the administrative burden of managing a brokerage and introduced practical challenges to providing real estate services in communities with limited numbers of licensees. We also heard from commercial managing brokers that the disclosure and dual agency rules do not reflect their longstanding business practices.

As we evaluate the effects of the changes to agency and disclosure requirements in the post-implementation period, it is both useful and important to reflect on the intent of these rules. Above all, the rules were developed to foster a more professional and ethical real estate industry in BC, with better protection for consumers. The changes to the rules regarding agency have resulted in a renewed focus on every licensee’s fundamental duties to clients: undivided loyalty, confidentiality and the avoidance of conflicts of interests.

A clear understanding of agency — your duties and responsibilities, your client’s duties and responsibilities — is essential for good practice as a real estate licensee. In the next several issues of Report from Council, noted real estate lawyer Bruce Woolley will explore aspects of agency, from the basics to more in-depth examinations of how agency affects the activities of teams, conflicts of interest, making referrals, sharing revenue, and more. Whether you are an experienced licensee looking for a refresher on agency or a new licensee still establishing your practices, these articles will be essential reading. Look for one in each issue of Report from Council through 2019.

Agency Basics

A good understanding of the basics of agency relationships can help licensees to avoid inadvertent breaches of their duties to their principal, that could end up as the subject of a lawsuit or an RECBC discipline proceeding.

Who’s Who in Agency Relationships

• An agent is a person who is given permission to act on behalf of another person.
• The principal is the person for whom the agent acts.

Agent Duties

Sometimes licensees may wonder, “What am I authorized to do as an agent? ”

To answer that, you’ll need to consider:

1. What is in the agency agreement. This could be a multiple listing agreement or an exclusive buyer’s agency agreement. Those agreements set out in detail what the licensee is authorized to do, and what duties the licensee and the licensee’s related brokerage owe to the principal.
2. What is customary for real estate agents. Agents can do what is customary in the profession and what is reasonably necessary to carry out the licensee’s duties, even if the customs and the acts reasonably necessary are not set out in the agency agreement. However, if the agency agreement does not allow a customary duty, then the agent must abide by the terms of the agency agreement.

Real estate agents have special legal duties known as fiduciary duties. The fiduciary duties include:

• the duty to avoid conflicts of interest,
• the duty of full disclosure and
• the duty of confidentiality.

These are duties of loyalty — the highest duties at law. It is very important to understand that the interests of the principal (the beneficiary of the duties) are dependent on the agent’s actions. As an agent with fiduciary duties, you are an advocate for your principal, not just a facilitator of the transaction. We will discuss the basics of fiduciary duties in further articles, as well as the concept of informed consent.

The agency relationship

Entering into an agency relationship is an important step for the principal. The principal must fully understand what the agency relationship involves, and the duties the agent owes to the principal.

If you intend to deal with a consumer as an unrepresented party, you must make this absolutely clear as soon as possible. We’ll discuss the disclosure obligations to clients (principals) and unrepresented parties in upcoming articles.

More Information is available in the Professional Standards Manual:

• Agency: Nature of the Relationship
• How an Agency Relationship is Created
• Documenting the Agency Relationship
• Agency Disclosure for Rental Property Managers

Rule Changes: Agency and Disclosure is a self-paced online course that is now mandatory for all trading services and rental property management licensees. So far, approximately 42% of licensees have completed the course*, are you one of them?

If not, here are four great reasons to register for the course today:

1. It’s the Professional Thing to Do: The course was developed by the UBC Sauder School of Business in collaboration with RECBC to help you understand and comply with the changes effective from June 15, 2018. By completing the course, you’ll show your commitment to professionalism and to providing skilled and knowledgeable services to consumers.
2. It’s part of your Relicensing Education Program requirements. You’ll need to show proof that you have completed the Rule Changes: Agency and Disclosure course when you apply to renew your licence (in addition to Legal Update). No proof of course completion = no application processed.Don’t run the risk of delays in your licence renewal process: if you are licensed for either trading services or rental property management, make sure you have attached proof that you’ve completed a Legal Update course AND the Rule Changes: Agency and Disclosure course.
3. You’ll learn important regulatory information. Completing the course is the best way to ensure that you know how to comply with the new disclosure and agency requirements. After taking the course, you’ll have an enhanced understanding of the changes, and how to inform your clients about the required disclosures.
4. It takes just a few hours to complete. That’s right — most licensees find they can complete the course in less than six hours. And you have three days from the time you begin the course to complete all the components. It’s all online, so you can complete it at a time and place convenient to you.

* as of October 25th.

Each upcoming issue of the Report from Council will feature articles or new resources to meet the needs of managing brokers. To make them easy to find, we’ll be adding each new article and resource to the Managing Broker Toolkit that you can access in the Licensee Knowledge Base.

In this issue: a reminder that trading services and rental property management licensees must complete both the Legal Update course and the Rule Changes: Agency and Disclosure course before applying for licence renewal. Read on for tips to help make sure that licensees at your brokerage have completed all the required regulatory education before they submit a licence renewal application.

Practice Tips

• Encourage all trading services and rental property management licensees at your brokerage to complete the Rule Changes: Agency and Disclosure course as soon as possible. A clear understanding of the new agency and disclosure requirements is a great way for your licensees to demonstrate their value to prospective clients. If your brokerage is only licensed for strata management services, this new education requirement does not apply.
• Remind licensees at your brokerage to allow enough time to complete all the required education before their licence expiry date. Because of recent changes to the format of Legal Update courses, we recommend that licensees register for this course at least 3 months in advance of their licence expiry date.
• Before you certify a licence renewal application of any licensee (whether online or on paper) at your brokerage, check to make sure that they have completed all the required education and have attached proof of course completion. For trading services and rental property management licensees, that means Legal Update and Rule Changes: Agency and Disclosure. Without that proof, the renewal application cannot be processed.
• Complete the required courses yourself, so that you can support your licensees by answering any questions they may have. Our records indicate that many managing brokers have yet to complete the Rule Changes: Agency and Disclosure course — if you are one of them, don’t delay, register today! Over the next few weeks we will be conducting an email campaign targeting managing brokers who haven’t yet completed the course.
• Make sure you understand and are complying with your record-keeping requirements. Do you have policies and procedures in place at your brokerage to ensure that all disclosure forms are being retained? At your next brokerage inspection, RECBC auditors will ask to see proof that your brokerage has been in compliance since June 15, 2018 with the requirement for trading services and rental management brokerages to retain the new disclosure forms.

If our records indicate that the managing broker and/or licensees at a brokerage have not yet completed the Rule Changes: Agency and Disclosure course, this risk factor may prompt an additional inspection.

At its September 2018 meeting, the Council approved changes to RECBC’s publication policy, and heard updates on initiatives including a series of consultations held over the summer with managing brokers and a planned consumer awareness campaign.

See the Council Meetings page for minutes of past 2018 Council meetings and a schedule of upcoming meetings.

RECBC’s newly redeveloped trading services Legal Update course has been honoured with the ARELLO 2018 Continuing Education Award. The award recognizes the Legal Update course as an outstanding continuing education program that contributes to the real estate industry and promotes public protection.

Legal Update is a mandatory relicensing course that is completed in two parts; a self-paced online component followed by a full-day classroom session. Licensees must successfully complete the online component before attending the classroom session. In presenting the award, ARELLO noted that “the platform used for the online component allows RECBC to deliver a multi-modal learning experience that includes interactivity, narration, videos, and quizzes, all within a seamless fully-responsive course interface that supports all device sizes and types.”

As part of our ongoing efforts to be transparent to the public and licensees about how we regulate, RECBC will begin publishing more hearing decisions, as well as summaries of the administrative penalties we impose.

At its September 2018 meeting, the Council approved the publication of:

• redacted special compensation hearing decisions
• redacted qualification hearing decisions, and
• anonymized summaries of administrative penalties.

We will continue to protect individuals’ privacy rights by redacting sensitive or personal information in accordance with our Publication Policy. Summaries of administrative penalties will be anonymous.

Administrative Penalties

The Council has the ability to impose administrative penalties for certain minor violations of the Real Estate Services Act and Rules. To help inform licensees about the kinds of infractions that can result in an administrative penalty, in 2019 we will begin publishing quarterly summaries of the penalties that we issue, including the amount of the penalty and the rule violation. These summaries will be anonymous — no identifying information will be included.

Special Compensation Fund Hearing Decisions

When consumers suffer a loss due to the actions of a real estate licensee, they can apply for compensation from the Real Estate Compensation Fund. Decisions resulting from a Special Compensation Fund hearing will be posted on RECBC’s website for a period of five years from the date of the hearing, and then removed.

Qualification Hearing Decisions

Decisions resulting from a qualification hearing will be posted on RECBC’s website for a period of five years from the date of the hearing, and then removed. In cases where a successful applicant has conditions applied to their licence, a link from the licensee search results page to the qualification hearing decision will appear for the duration of the period the licence conditions remain in effect.

Any restrictions on publication and redaction of sensitive or personal information will be in accordance with RECBC’s Publication Policy.

Changes to RECBC’s website to allow for publication of anonymized qualification and special compensation decisions will be launched in the coming weeks. Look for an announcement in the next issue of the Report from Council.

Questions?

Email [email protected] to find out more about the decisions we publish.

We are pleased to announce that on October 22, six new members were appointed by the provincial government to the Real Estate Council of BC. As well, five members were re-appointed, for terms of varying lengths. The Council members, whose terms began on October 31, bring with them a range of expertise in industry, policy and governance best practices, along with a variety of professional skills, including: community planning, communications, regulation, human resources, finance, and local government.

These appointments are in addition to the recent appointments of five new members over the summer and fall. There are 16 members, under the leadership of chair Elain Duvall.

The makeup of the RECBC Council reflects the diversity of our province and includes:

• Ten women and six men
• Four real estate licensees or former licensees
• Three practicing lawyers
• Twelve members from Metro Vancouver/the Fraser Valley and four members from other parts of BC

Learn more about Council members on the Real Estate Council Members page.

On October 16, the BC Government introduced legislation to tackle speculation in BC’s housing markets. Once approved, the annual tax will be paid by owners of residential properties in specific regions of BC.

The tax includes exemptions for British Columbians’ principal residences, rented properties, and special circumstances including major home renovations and difficult life events such as divorce. The legislation also has exemptions in place to broadly protect the development of land to support the province’s growing housing supply.

For residential properties where the tax applies, the rate will vary depending on the owner’s tax residency and whether the owner is a Canadian citizen or permanent resident, or a member of a satellite family.

The Council recommends that licensees advise their clients to seek independent professional advice to determine if a property may be subject to the speculation and vacancy tax.

Learn more on the BC government’s website.

Want to know how many licensed real estate professionals there are in BC? There’s an easy way to find out — check out our new Statistics page on the RECBC website. Along with information about the numbers of licensees and brokerages, you’ll find useful statistics on:

• RECBC disciplinary outcomes
• Complaints and anonymous tips
• Questions from consumers and licensees
• Licensing education entrants

The statistics page will be updated quarterly with the most current information.

The British Columbia Law Institute’s Strata Property Law Project Committee has published a Consultation Paper on Insurance Issues for Stratas. The consultation paper proposes options for reforming how the Strata Property Act governs legal issues relating to insurance for strata corporations. Members of the public are invited to give their feedback on the consultation paper, until December 15 2018.

For more information, see:

• Consultation Paper on Insurance Issues for Stratas
• Online consultation survey

Since the August 2018 Report from Council newsletter, the following actions have been taken as a result of disciplinary hearings and Consent Orders conducted by the Council.

• Richard Stephen Hamer-Jackson, Representative, RE/MAX Kelowna, Rick Hamer-Jackson Personal Real Estate Corporation, Kelowna
• Klaus Dieter Vogel, Representative, Royal LePage 100 Mile Realty, Lone Butte
• Diane Marilyn Cober, Representative, RE/MAX 100, 100 Mile House
• Kai Ning (Karen) Zhao, Representative, Royal Pacific Riverside Realty Ltd., Karen Zhao Personal Real Estate Corporation, Richmond
• Anthony Boos, Managing Broker, Royal LePage Cascade Realty, Dawson Creek
• Karen Boos, Representative, Royal LePage Cascade Realty, Dawson Creek
• Baltej (TJ) Singh Samra, Representative, RE/MAX Colonial Pacific Realty, Pulbinder (Paul) Singh Samra, Representative, RE/MAX Blueprint Realty, Paul Samra Personal Real Estate Corporation, RE/MAX Blueprint Realty, and Brenda Chung Ying Lee, Representative, Century 21 Supreme Realty Inc.
• Sardara Singh Boyal, Representative, Royal LePage Global Force Realty, Shari Boyal Personal Real Estate Corporation
• Rajwinder Kaur Gill, Representative, Homelife Benchmark Realty Corp., Raj Gill Personal Real Estate Corporation
• Hao (Landon) Yan, Representative, RLK Realty dba Royal LePage Kelowna
• LIABILITY DECISION: Trevor William Maxwell Inglis
• Gurvinder Singh Brar, Gurvinder Brar Personal Real Estate Corporation, Representative, Century 21 Coastal Realty Ltd., Surrey