Contact Us Licensee Login

New Provincial Rules for Contract Assignments

 

As of May 16, 2016, new provincial rules relating to the assignment of real estate contracts are in force. The provincial government has amended the Real Estate Services Regulation, and these new requirements apply in all transactions where a real estate licensee is acting for the seller and/or the prospective buyer of real estate.

To find out more about contract assignments and the effects of the new regulations, check out the questions and answers in our FAQ below.

Whenever you are unsure about the actions of a licensee, you can contact the Council to discuss your concerns. Get in touch with us.


 

Contract Assignment FAQ

Show/Hide Answer Open All 

Show/Hide AnswerWhat is a contract assignment?

A contract assignment occurs when a buyer transfers the contract to buy property to someone else before the completion date. The buyer can transfer the contract for any price, even for a higher price than they paid for the property.

Show/Hide AnswerAre contract assignments legal?

Yes. Real estate contracts are assignable under the law unless the contract expressly forbids it. Section 36 of the Law and Equity Act provides that the seller’s consent to the assignment is not required, provided that notice in writing of the assignment is given to the seller.

Show/Hide AnswerWhy has the government issued new requirements relating to contract assignments?

The new regulations that come into force on May 16 are designed to prevent situations in which a buyer purchases a property, only to reassign the contract at a higher price before the closing date without the seller’s knowledge. On March 18, 2016, the Premier announced that the Province would put new rules in place to require the seller’s consent for any contract assignment and to mandate that any profit from an assignment be returned to the homeowner.

The new regulations require that standards terms be included by default in any offer to purchase real estate, unless the client instructs otherwise. These requirements are intended to protect sellers’ interests and deter potential licensee misconduct in relation to contract assignments.

Show/Hide AnswerWhat do the new provincial requirements relating to assignments mean for me?

Whenever real estate licensees are preparing a proposed contract for the purchase and sale of real estate (an “offer”), they must now include the following terms (the “Standard Assignment Terms”) unless their client instructs them otherwise:

  • this contract must not be assigned without the written consent of the seller; and
  • the seller is entitled to any profit resulting from an assignment of the contract by the buyer or any subsequent assignee.

The standard Contract of Purchase and Sale that is used in most residential real estate transactions has been revised to include these terms and is available to real estate licensees.

When a client instructs a real estate licensee not to include the Standard Assignment Terms in an offer, the licensee must then take certain steps to ensure the seller is informed and consents. See the next two FAQ questions for more details on these steps.

Show/Hide AnswerI am a buyer. How will these changes impact me?

If you have instructed your real estate licensee not to include one or both of the Standard Assignment Terms, your licensee must notify the seller’s licensee (or the seller, if the seller is unrepresented).

The notice must be provided using the Council’s form entitled Notice to Seller Regarding Assignment Terms, which is now available on the Council’s Forms page, under the subheading “Disclosure Forms”. The Notice to Seller Regarding Assignment Terms form must be provided to the seller or the seller’s licensee at the same time the offer is presented. The seller may choose to accept, reject, or counter your offer.

If your licensee presents an offer to the sellers containing the Standard Assignment Terms, and it is accepted, this means that you can only assign the contract with the seller’s consent, and if you return any profit from the assignment to the seller. It does not prevent you from selling the property after the closing date of the transaction.

The changes to the rules about assignments only apply to real estate transactions in which a real estate licensee is acting for either sellers or buyers.

  • For more information about real estate transactions, check out the Council’s online consumer guide to Buying a Home in BC.

Show/Hide AnswerI am a seller. How will these changes affect me?

If a licensee acting for a buyer presents an offer to you that does not include one or both of the Standard Assignment Terms, your licensee must:

   1. Ensure that you are provided with the Notice to Seller Regarding Assignment Terms form and advised that the offer is missing the Standard Assignment Term(s); and

   2. Inform you

  • Whether the contract may be assigned, and
  • If the contract may be assigned, (1) about any conditions in the contract on the right of assignment of the contract, and (2) about your entitlement under the contract to any profit resulting from an assignment of the contract, if applicable.

If a buyer’s licensee presents an offer that does include the Standard Assignment Terms, and you accept the offer, this means that if the buyer decides to assign the contract they must get your consent to the assignment, and they must pay you any profits from the assignment.

The changes to the rules about assignments only apply to real estate transactions in which a real estate licensee is acting for either sellers or buyers.

  • For more information about real estate transactions, check out the Council’s online consumer guide, Selling a Home in BC.

Show/Hide AnswerHow will the new requirements affect transactions now in progress?

The new requirements will not apply to transactions where a Contract of Purchase of Sale has been fully executed by all parties prior to May 16, 2016 (the date the Regulations came into force).

An offer that has been presented but not accepted in writing by all parties prior to May 16, 2016 will need to be brought into compliance with the new requirements.

Show/Hide AnswerDo the new requirements apply to sales by buyers after closing?

The new requirements will not impact a buyer who takes title to a property and then re-lists it or transfers title for a higher price, as that scenario does not involve the assignment of a Contract of Purchase and Sale.

Show/Hide AnswerIf neither the buyer or the seller is working with a licensee, does the regulation apply?

No. The changes to the rules about assignments only apply to real estate transactions in which a real estate licensee is acting for either sellers or buyers.

 

Show/Hide AnswerAre there exceptions to the new requirements?

The new requirements apply in all transactions involving a licensee, except where the contract is for the sale of a development unit by a developer, as those terms are defined in section 1 of the Real Estate Development Marketing Act. This means that if you are buying a condo in a new development, these changes will likely not affect you.

Show/Hide AnswerHow will the Council make sure that the new rules are being followed?

The Council regularly conducts inspections of brokerages throughout British Columbia to ensure that brokerages have proper controls in place to protect trust monies and to test for compliance with the other requirements of the Real Estate Services Act, the Regulation, the Rules and Bylaws. The inspection includes, for example, a review of:

  • the brokerage’s books and records;
  • written disclosures that are required to be made; and
  • service agreements entered into by the brokerage.

The Council is enacting new rules that will require all real estate licensees to submit copies of the Notice to Seller Regarding Assignment Terms form to their brokerage, and for brokerages to retain copies of the forms. The Council conducts regular periodic audits of brokerages, and our auditors will review the forms to monitor licensees and brokerages’ compliance with the new rules. If our auditors find evidence of non-compliance, we can initiate an investigation that can lead to professional discipline against a licensee or brokerage.

Following the proposed amendment to the Rules, the Council will include a review of notification forms held at the brokerage as part of its Office and Records Inspection program. The Council’s auditors will review the notification forms held by brokerages to ensure that licensees and brokerages are complying with the requirements, and in cases where there are findings of non-compliance the Council will take appropriate disciplinary action.

If you are unsure about the actions of a licensee representing you, contact the Council at info@recbc.ca to discuss your concerns.