Report from Council Newsletter, Summer 2019

Report from Council
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  • In this issue of the Report from Council newsletter there is so much to share about new partnerships, new plans and reports, and new commitments to providing the services that educate and inform real estate licensees and protect the public. Here is an overview of some of the key initiatives we’ve been working on recently:

    New Anti-Money-Laundering Partnership

    I am very proud to announce that RECBC has become the first provincial real estate regulator in Canada to partner with FINTRAC, the federal financial intelligence unit, to fight money laundering and terrorist financing. We have signed an information sharing agreement with FINTRAC that will enable us to share data and monitor trends and emerging risks in BC’s real estate markets.

    We are also looking forward to working with FINTRAC to provide more education for real estate licensees, to help ensure that all licensees in BC have a good understanding of when and how to comply with FINTRAC reporting requirements. We all have a role to play in making sure that BC’s real estate markets are no longer attractive to money launderers. Read more about this new partnership, and stay tuned for further information in the months ahead.

    New Service Plan Commitments

    Earlier this year RECBC published its 2019-2022 Service Plan, which outlines our goals for the next three years, and the ways in which we will measure our progress in achieving them. As a crown agency, RECBC is required to publish a Service Plan every year, and I encourage each of you to read it.

    One key goal for RECBC in the years ahead is to achieve service excellence. For real estate licensees and members of the public, that will mean less time waiting for the outcome of investigations. We are committed to reducing the average length of time that it takes to complete an investigation, and so we are working hard to streamline our investigative processes and resolve disciplinary cases as efficiently as possible. I’m looking forward to sharing more about our progress in this important area over the coming year.

    New Data

    Being transparent about our work is important to us, and so four times a year we update our Statistics page with new data about the number of complaints and anonymous tips we have received, the disciplinary actions we’ve taken, the brokerage audits we’ve conducted, and more. Numbers for our fourth quarter have now been added to the page, giving you an overview of trends for the past year.

    New Report on Rules Implementation

    Since new rules on agency and disclosure came into effect last June, we’ve been monitoring their introduction and impacts, to assess whether there is more that RECBC can do to help real estate licensees understand how to comply with the requirements. We’ve been talking — and listening — in a number of ways: through brokerage audits, through our Professional Standards Advisory services for licensees and the public, at meetings with groups of managing brokers across the province during our Listening Tour in the summer and fall of 2018, and through a survey of all licensees conducted this past winter.

    You can read about everything we’ve heard in Making Changes: A Review of RECBC’s Implementation of Agency and Disclosure Rules. In this report, now available on our website, we outline our commitment to:

    • introduce streamlined versions of the mandatory disclosure forms
    • develop new information resources for real estate licensees and consumers, to help them understand the rules of agency and the services to expect from real estate professionals in BC, and
    • industry and stakeholder engagement in any future rule implementation processes.

    We will continue to monitor the impacts of the agency and disclosure rules, and we welcome your feedback about the findings in the Making Changes report. You can send us your comments at [email protected].

  • On October 17, 2018 the production and use of cannabis was legalized across Canada. The introduction of the Cannabis Act is meant to protect the public and keep profits from sales of cannabis out of the pockets of criminals and organized crime. The new legislation is also expected to have an impact on real estate transactions and services.

    To help BC real estate licensees understand how legalization of cannabis may affect real estate services — including residential sales, commercial transactions, and rental property management — RECBC hosted two free Professional Matters webinars for managing brokers in January 2019. The webinars, featuring real estate lawyers Herman Li and Neil Davie from Vancouver law firm Norton Rose Fulbright and RECBC’s Professional Standards Advisor Marty Douglas, are available on RECBC’s website, along with an FAQ with responses to questions posed after the webinars.

    Don’t have time to listen to the full webinar? Here are key takeaways that will help you to be more informed about the impacts of cannabis legalization on real estate services:

    Under the new legislation, adults can legally grow up to four cannabis plants in one dwelling. This raises some unique concerns for tenants: if the tenancy agreement was entered into before October 17, 2018 the agreement will prohibit growing cannabis plants.

    Cannabis, Material Latent Defects and Disclosure Requirements for Buyers Agents

    Moisture that is produced from growing cannabis plants in a residential property can cause lasting damage such as mold and spores in the walls, ceilings and floors, and can impact air quality. Licensees must make reasonable inquires into the condition of a property that their clients are interested in. Any information arising from such inquires, positive or negative must be disclosed if it relates to a material defect.

    Failure to make reasonable efforts to discover relevant facts, and failure to disclose information, can be grounds for negligent or fraudulent misrepresentation claims or professional misconduct.

    Acting for Sellers

    A seller’s licensee who knows of a material latent defect and conceals or makes other misrepresentations may become liable to the buyer for damages suffered as a result. Licensees must disclose defects in a property from cannabis cultivation that meet the definition of a material latent defect (a defect that “renders the real estate dangerous, unfit for habitation, unfit for the purpose for which a party is acquiring it, would involve great expense to repair, or is required to be remedied under the order of a local government or authority”).

    • Best practice tip: have a frank conversation with your client to find out if there has been any cultivation of cannabis on the property. The safest approach may be to disclose it in order to avoid future problems with the transaction.
    Cannabis and Strata Management Services

    Strata corporations can take steps to restrict the consumption and growing of cannabis by either creating a new bylaw or rule, or by amending existing tobacco bylaws/rules to include cannabis.

    However, any restrictions imposed on cannabis without an exception for medicinal purposes could be subjected to challenges under the human rights legislation and may be found unenforceable.

    More Information
  • For many licensees, the time may come when they decide they need to take a temporary leave from practicing real estate. The reasons may vary: a new baby, a personal health issue, a family member who requires care.

    RECBC has policies that allow licensees to take a temporary break from licensing in these circumstances:

    Parental Leave

    RECBC’s parental leave policy allows either parent to take a leave of up to 18 months that may begin up to 12 weeks prior to the expected date of birth and may be taken anytime up to 18 months following the birth or adoption of a child.

    Compassionate Care Leave

    Leaves of up to 28 weeks are available for licensees who must take time away from work to care for a gravely ill family member.

    Medical Leave

    A medical leave of up to one year is available to licensees.

    Here are 5 tips for licensees considering taking a leave:

    1. Read up — or ask us. Make sure you understand RECBC’s leave policies and the process for applying for leave. You can read about them in RECBC’s Education and Licensing Guidelines. If you have questions, contact our Education and Licensing Department at [email protected].
    2. Talk to your managing broker. If you wish to take a leave, you must surrender your licence to RECBC for the duration of the leave. You will need to ask your managing broker to send your licence to us, indicating the reason on the reverse of the licence. Once your managing broker has returned your licence to RECBC, you can no longer provide any real estate services.
    3. Put it in writing. To receive a leave from RECBC, you must submit a written request to our Education Department. For a medical leave, you will need to include supporting documentation, including letters from the medical professionals involved in your treatment. For a parental leave, you must submit your child’s birth certificate or proof of adoption. Compassionate care leave requests must be accompanied by a medical certificate
    4. Apply for relicensing promptly. On or before the end date of your leave, you must apply for relicensing in order to resume providing real estate services.
    5. Keep current for your return. Before returning from a long leave, catch up on anything you may have missed by completing a Legal Update course in your practice area, and reviewing RECBC resources. Being informed and up to date will increase your confidence level, and help ensure that you are ready to provide a high level of professional service.
    More Information

    See RECBC’s Education and Licensing Guidelines for further information about:

  • 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 this series of articles, noted real estate lawyer Bruce Woolley explores how agency affects the activities of teams, conflicts of interest, making referrals, sharing remuneration, and more. Whether you are an experienced licensee looking for a refresher on agency or a new licensee still establishing your practices, these articles are essential reading.

    As a real estate licensee, you are a “fiduciary”: a person in a position of trust. Fiduciaries have many duties, including the duty to avoid conflicts of interest. So what exactly is a conflict of interest?

    In the case of Galambos v Perez (2009) the Supreme Court of Canada had this to say about conflicts of interest:

    A situation of conflict of interest occurs when there is a ‘substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s own interest or by the lawyer’s duties to another current client, a former client, or a third person.”

    This definition applies to all fiduciaries — whether lawyers or real estate licensees.

    One of the most common conflicts of interest is where a licensee’s clients’ interests conflict with each other. This could arise where a licensee has been acting for two different buyers and now both buyers are interested in the same property. It could also arise where a licensee has a listing for a seller, and one of the licensee’s buyer clients becomes interested in the listed property.

    The Rules now provide for what licensees should do if they find themselves and their clients in these situations.

    Sections 5-16 and 5-17 of the Rules address the issue of conflicts of interest respecting existing clients by restricting dual agency to very limited circumstances (where a property is in a remote location, underserved by licensees, and where it is impracticable for the parties to find separate licensees). If all three of these conditions are met, the licensee can follow the provisions of section 5-17 of the Rules.

    In circumstances where these conditions are not met, the licensee must address that conflict of interest by following the procedures set out in section 5-17 of the Rules. Basically, the licensee must either stop providing trading services to any client in the trade, or represent only one client in the trade by obtaining the appropriate agreement described in that section.

    The provisions set out in sections 5-16 through 5-18 of the Rules are very similar to the rules governing lawyers. A lawyer must not represent opposing parties in a dispute — much like the restriction on dual agency for a real estate licensee whose clients have different interests. The principles are the same for all fiduciaries: you cannot ride two horses at the same time!

    Learn more about managing conflicts of interest with these resources on RECBC’s Licensee Knowledge Base:

  • In this series of short articles, real estate lawyer Bruce Woolley considers “conditions precedent” clauses, often referred to as “subject-to” clauses. Does a contract exist before a subject to clause is removed? What should be considered when drafting a clause? What do you need to know about satisfying or waiving subject to clauses? Learn the answers to these and other questions in the Subject-to Series.

    Many people are under the impression that real estate contracts with subject-to clauses are not binding until the subjects are removed. Some also believe that a subject-to clause is like a “get out of jail free” card for a buyer who changes his or her mind about a property and that the buyer doesn’t need to try to satisfy the condition. Not so — and here’s why.

    Imagine that your buyer has made a valid offer, one that contains all of the essential terms (property, price and parties) and those terms and any other essential terms are clearly and sufficiently set out. Now, imagine that the seller has accepted the offer in the time frame and in the manner set out in the offer (see section 24 of the standard residential contract of purchase and sale). Finally, imagine that your buyer’s offer includes this subject-to clause: “Subject to the Buyer being able to arrange satisfactory financing on or before May 29, 2019.”

    Is there a contract in effect before the condition is removed or waived? And does the buyer have any obligations during the subject removal period?

    The answer to both these questions is: yes.

    The Supreme Court of Canada has clearly stated in the Dynamic Transport case that a conditional contract is a binding contract, but the obligations of the party that benefits are contingent upon satisfaction or waiver of the condition. In other words, the buyer cannot simply sit back and do nothing, wait for the subject removal date and then say, “I was unable to remove the condition.” The party benefitting — in our case the buyer — must act in good faith and use best efforts to do what is necessary to remove the condition so that the contract can be performed.

    Buyers who think they can use a “subject to” clause as a tool to keep a property off the market while they make up their minds, assuming that they need not do anything during the time period of the condition, are wrong. They are taking a risk, and a prudent licensee should advise their clients of this.

    Buyers who fail to do anything and then fail to remove the subject to clause may find themselves being asked questions by the seller’s lawyer such as “give me a list of all of the financial institutions you visited to inquire about possible financing.” Ultimately, the buyers may find themselves in court, defendants in a lawsuit.

    This was the case in a landmark decision of the BC Court of Appeal in 1988 — Griffin v Martens1. The contract contained the clause “subject to purchaser being able to arrange satisfactory financing on or before Friday, May 31, 1985.” The purchaser alleged he could not get financing within the time limit. But the Court found that the purchaser did not use best efforts and act reasonably, terms implied into the conditional contract by the Court. That means the purchaser had to look for financing, and if reasonable financing were offered, take the financing. The vendor was successful in suing the purchaser for damages.

    1 Recently distinguished in certain circumstances in Gordon Nelson Inc. v Cameron.

  • Managing brokers looking for professional and regulatory information to share with licensees at their brokerages have new resources available to them: packaged presentations from RECBC’s Professional Matters webinar series.

    The Professional Matters webinar series is designed to support managing brokers by addressing regulatory changes and practice issues in today’s real estate industry. Each webinar features an informative presentation followed by a question and answer period giving participants an opportunity to hear from RECBC’s Professional Standards Advisors, other staff members, or invited guests.

    You can find recorded versions of all the Professional Matters webinars on our website, along with supplementary resources, including FAQs with additional information, handouts and slide presentations that you can deliver to licensees at your brokerage.

    Webinar topics have included an overview of the impacts on real estate services of the legalization of cannabis, an in-depth examination of RECBC’s advertising requirements, agency and advertising requirements as they apply to teams, and a review of the services that can be provided with a rental property licence and those that can be provided with a trading services licence.

    Check out these new resources added to your Managing Broker Toolkit:

    Upcoming Professional Matters webinars will focus on:

    • Mandatory Disclosures
    • RECBC Investigations
    • Audits

    Register online and tune in to an upcoming webinar to learn more about regulatory requirements and best practices. It is a great way to ensure you maintain the expertise and awareness that real estate licensees at your brokerage rely upon.

    Providing these resources is part of RECBC’s commitment to support managing brokers in fulfilling their important role in training and supervising their licensees, providing competent services to consumers, and upholding standards of ethical behaviour.

  • The Real Estate Council of BC meets eight times each year. Meetings are open to the public, and minutes are posted on the RECBC website. Key issues and decisions from recent Council meetings include:

    Updates to Parental Leave

    RECBC has updated its Education & Licensing Policies on parental leaves, allowing up to eighteen months of parental leave. This may begin as early as 12 weeks before the expected date of birth and may be taken at any time up to eighteen months following the birth or adoption of a child. This update aligns RECBC’s policies in accordance with federal legislation changes.

    Real estate representatives who wish to take a parental leave must surrender their licence and submit a written request for parental leave to RECBC. Further information is available in the Education & Licensing Policies.

    Bylaw Amendments

    Recent amendments to RECBC’s bylaws include updates to deal with appointment of pre-hearing conference panel members, to adjourn discipline hearings efficiently, to ensure payment for decision-writing by discipline panel members and for written hearings. These amendments are intended to increase efficiency in hearing procedures while providing reasonable compensation for panel members.

    Bylaws updated are:

    • 3-6(1) [Code of conduct for council members]
    • 3-7(1)(g) [Council committees]
    • 3-8 [Remuneration and expenses for council committee and advisory group members]
    • 5-1 [Pre-hearing conference]
    • 5-2 [Adjournment of hearing]
    Updated Sanction Guidelines

    RECBC’s Sanction Guidelines assist discipline committees in determining appropriate penalties and remedial measures, in the circumstances of individual cases, for licensees who have been found liable of professional misconduct. They also help the public and other stakeholders to understand the basis for penalties and remedial orders

    Updates to the Sanction Guidelines have been made to reflect the potential application of penalties under the penalty regime in effect from September 30, 2016. The Sanctions Guidelines are available on Decisions section of the RECBC website.

    We’ve expanded our online resources for real estate consumers, to help members of the public become better informed about the process of buying, selling, renting or leasing real estate, the services to expect from a licensed real estate professional, and the role of the Real Estate Council of BC.

    Real estate consumers visiting the RECBC website can now choose to:

    • Learn about real estate transactions and services, either by reading one of our brochures and guides — such as Buying a Home in BC or Selling a Home in BC — or by checking out our quick tips and fact sheets on a variety of key topics, our FAQs, and our resource directory to other important real estate information sources.
    • Find information about a licensed real estate professional or real estate brokerage, using our Licensee Search tools.
    • Get Help — by contacting an RECBC Professional Standards Advisor to ask a question, reading a recent consumer advisory notice, or filing a complaint or anonymous tip.

    Looking for recent discipline decisions on the RECBC website? You can now find the results you need more easily, thanks to new search tools introduced on the RECBC website.

    Visit the Decisions page to try out the expanded search capabilities now available. Search for a decision by year, by licence category (either trading services, rental property management, or strata management), by keyword, or by case type. Types of cases that will now be posted on the RECBC website include Qualification Hearing decisions and Special Compensation Hearing decisions, in addition to Discipline Hearing decisions and consent orders.

    For more information about the kinds of decisions and orders that RECBC publishes, and the length of publication, see our Publication Policy on Hearings, Alternative Complaint Dispositions and Licence Conditions, available on the RECBC Policy Statements section of our website.

    To let us know what you think about these changes, send us your feedback to [email protected].

  • 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

    Strata Management Services

  • Updates are coming to mandatory consumer disclosure forms introduced in June 2018.

    Following engagement with real estate licensees across the province and with consumers, RECBC has determined that making updates to the Disclosure of Representation in Trading Services, Disclosure of Risks to Unrepresented Parties, and Disclosure to Sellers of Expected Remuneration will promote clarity, enhance the ability of licensees to comply with the disclosure requirements, and contribute to increased consumer protection.

    Engagement with licensees about these mandatory disclosure forms has included:

    • Listening sessions with representative managing brokers from each of the eleven real estate boards across BC
    • A survey of licensees conducted for RECBC by a third-party market research firm in January 2019.
    • Consultations with RECBC advisory groups and other industry stakeholder groups.

    We’re developing updates to the three forms that will be made available in fall 2019. The forms will available on WEBForms and from the RECBC website as part of an enhanced Licensee Toolkit of resources to support licensees to present the forms effectively to real estate consumers.

    Key changes will include:

    • shorter, more concise consumer information, to reduce paper use and increase clarity for real estate consumers
    • ability to use the Disclosure to Sellers of Expected Remuneration form to record counter-offers, to reduce the need for a new form to record each counter-offer from a buyer.

    Further information about the updates, and additional resources to support licensees to use the updated disclosure forms effectively with real estate consumers will be forthcoming.

  • On May 9, 2019 the Ministry of Finance’s Expert Panel on Money Laundering led by Maureen Maloney released its final report and recommendations to address money laundering in BC’s real estate markets. The report, Combatting Money Laundering in BC Real Estate, was released along with the remaining chapters of Peter German’s review into money laundering in real estate, luxury cars and horse racing. It is estimated that $5 billion was laundered through the real estate market in B.C. in 2018.

    As both reports make clear, money laundering is a complex problem that requires action and cooperation between regulators, law enforcement and government at many levels. Earlier this spring RECBC became the first provincial real estate regulator in Canada to partner with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to share information related to risk factors for money laundering. We’re committed to working with FINTRAC to provide more education and information for real estate professionals in BC to make sure that real estate professionals understand when to report, how to report, and the consequences of not reporting suspicious transactions.

    Our goal is to ensure a strong, safe real estate marketplace in BC, where consumers can have confidence in the advice and services of licensed real estate professionals.

    As a provincial regulator with a mandate to protect the public interest by regulating the conduct of real estate professionals under the Real Estate Services Act, RECBC welcomes the recommendations in these reports to strengthen protection for real estate consumers. We look forward to working with Government to achieve its commitment to tackling money laundering in real estate.

    Key recommendations with impacts for the regulation of real estate in BC from the Expert Panel on Money Laundering report include:

    Recommendation 6

    The BC government should implement the recommendations of the Real Estate Regulatory Structure Review report (2018).

    Recommendation 7

    The BC Minister of Finance should take the steps necessary to place the onus for compliance with the Real Estate Services Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act directly on individual real estate licensees.

    Recommendation 8

    The BC Minister of Finance should take the steps necessary to:

    • require that real estate developers be licensed under a regulatory regime designed specifically for that segment of the real estate industry within the Real Estate Services Act;
    • eliminate the exemption for salespeople who are employees of developers; and
    • consider whether appraisers and home inspectors should also be licensed under the Real Estate Services Act.

    Recommendation 15

    The BC Minister of Finance should suggest to her federal counterpart that the Proceeds of Crime (Money Laundering) and Terrorist Financing Act be amended to require reporting entities in the real estate sector to conduct know-your-customer due diligence on beneficial ownership, as is required for several other types of reporting entities, and that the disclosure threshold for a beneficial ownership interest held by an individual be reduced from 25 percent to 10 percent.

    Recommendation 22

    The BC government should specifically add anti-money laundering to the mandates of relevant BC regulators, including the Real Estate Council of BC, the Office of the Superintendent of Real Estate, FICOM, the BC Securities Commission, the Society of Notaries Public of BC, the Law Society of BC and the Chartered Professional Accountants of BC.

    Learn More

    Read the Expert Panel on Money Laundering in Real Estate’s full report:

    https://news.gov.bc.ca/files/Combatting_Money_Laundering_Report.pdf

    Read Peter German’s report:

    https://news.gov.bc.ca/files/Dirty_Money_Report_Part_2.pdf

    Read about RECBC’s partnership with FINTRAC:

    /2019/04/new-partnership-to-combat-money-laundering/