February 2014 Report from Council Newsletter

Licensees with questions about designated agency now have fresh resources at hand: new and expanded content on agency relationships, including designated agency, has just been published in the Council’s online Professional Standards Manual (PSM) and Brokerage Standards Manual (BSM).

For over a year, trading services licensees across BC have been working under the new system of designated agency, introduced by the British Columbia Real Estate Association and its member boards on July 1, 2012. As a result, the Council amended its Rules effective July 1, 2013, substantially changing section 3-3, and adding sections 3-3.1 and 3-3.2, to reflect the new practice of designated agency.

Now, after careful monitoring and extensive consultation with managing brokers from across the province, as well as with representatives from a number of stakeholder organizations, the Council is making complete information available online to guide licensees through many of the practical questions that can arise in relation to designated agency.

Topics covered include:

• Supervision under Designated Agency — what are the brokerage’s responsibilities?
• Maintaining confidential information — how to protect client information
• Documenting the Agency Relationship — disclosing the nature of representation

While real estate boards throughout BC have incorporated designated agency into all of their standard forms, thus making designated agency the ‘default’ relationship for those licensees participating in their local MLS® who enter into written service agreements with their clients, the Council continues to recognize that other forms of relationships may exist. Information in the PSM and BSM helps licensees to understand the differences between these relationships and the responsibilities of licensees and brokerages depending on the nature of the relationship. Both manuals are fully searchable using the Council’s new keyword search function.

Look for more information about designated agency in upcoming issues of the Report from Council.

For Further Information:

• Find revised and new material in the Agency section of the Professional Standards Manual
• Newly added sections of the Brokerage Standards Manual can be viewed at: Managing Broker Duties: Supervision
• General Brokerage Procedures: Protection of Client Information

Other Council publications with newly updated information about designated agency include:

• Selling a Home in British Columbia
• Buying a Home in British Columbia

Welcome to 2014. It’s a new year and this Report from Council has new resources to announce for licensees. It’s always an exciting and busy time when we start a fresh page on the calendar and in this issue of the Report from Council we are pleased to announce additions to both the Professional Standards Manual (PSM) and Brokerage Standards Manual (BSM) with several key information resources on the topic of designated agency. Following the provincial introduction of designated agency by the British Columbia Real Estate Association in July 2012, and the amendment of the Council Rules in July 2013 to reflect the new practice, the Council has been engaged in consultations with managing brokers and other stakeholders from across the province, developing practice standards to guide licensees. The results added to the PSM and BSM this year will provide welcome guidance for licensees on many of the practical questions that can arise in relation to designated agency.

For the Council, each February is a time of new beginnings as we start preparing for our annual elections for Council members. Council elections are held in May and the Council is currently seeking nominations to fill several positions. I encourage licensees to take a few minutes to review the nomination information that you will find in this newsletter.

Council members who are elected for two year terms play a very important role in upholding the licence law for individuals and brokerages engaged in real estate sales, rental property management and strata management in our province. I ask each of you to think carefully about whether you know a suitably qualified candidate, and if so, consider nominating that person to serve on the Council in one of the districts where elections will be held.

Regarding the discipline decisions that are published in the Report from Council, we can see that more than half of the trading services disciplinary decisions originate in the brokerage’s failure to file an Accountant’s Report with the Council. Each brokerage must submit an Accountant’s Report annually, within 120 days after the end of each fiscal year end of the brokerage or face disciplinary action. The Council has recently added new information to the instructions for the Accountant’s Report, making the process of filling out these reports clearer and simpler for accountants. The Report, along with the amended instructions, is available on the Council’s website.

On behalf of Council members and staff, I wish you a happy and prosperous 2014.

Marshall Cowe,

Chair

The Council office will be closed:

• Friday, April 18, 2014 (Good Friday)
• Monday, April 21, 2014 (Easter Monday)

Under BC’s Strata Property Act (SPA), strata corporations are required to have a depreciation report completed by a “qualified person.” But who is qualified?

According to Section 6.2 of the Strata Property Regulation, a “qualified person” means “any person who has the knowledge and expertise to understand the individual components, scope and complexity of the strata corporation’s common property, common assets and those parts of a strata lot or limited common property, or both, that the strata corporation is responsible to maintain or repair.”

Some licensees, who may either have experience in this area or a relevant professional designation, consider themselves qualified, and have prepared, or are planning to prepare depreciation reports.

However, licensees should take note: neither the Council nor the Office of the Superintendent of Real Estate considers that the preparation of a depreciation report falls under the definition of strata management services found in section 1 of the Real Estate Services Act (RESA). This means that a person who is licensed to provide strata management services is not qualified to prepare depreciation reports solely by virtue of being licensed under RESA.

Issues to Consider

Licensees who are considering preparing depreciation reports need to consider a number of factors before they make the decision to provide a strata corporation with this service:

1. Am I insured?

In the May 2012 issue of the “Risk Report,” the Real Estate Errors and Omissions Insurance Corporation advised licensees that:

“Licensees preparing the Depreciation Reports required by the Strata Property Act will not have coverage under the Indemnity Plan for this service. The Insurance Corporation’s view is that the preparation of such reports is not the provision of Real Estate Services and thus falls outside of coverage provided in the Indemnity Plan. Preparing Depreciation Reports is a highly specialized service and does not require a real estate licence. Licensees offering this service to clients should purchase separate coverage from an appropriate insurer. It is good practice for strata managers to expressly advise strata corporations to hire only service providers who are properly insured.”

2. Have I made the requireddisclosures?

Licensees preparing depreciation reports should disclose to their clients in writing that although they are licensed, they are not acting as a licensee in this case, so they are not regulated under RESA in relation to this service. This means the client is not entitled to the protections applicable under RESA they would normally expect when dealing with a licensee.

As well, section 5-12 of the Council Rules requires licensees who anticipate receiving a benefit (remuneration) from an expenditure made by or on behalf of the principal to disclose this to the client and to their brokerage before the benefit is accepted.

3. Has my remuneration been keptseparate from Brokerage TrustAccounts?

Brokerages must be aware that as the preparation of depreciation reports is not a real estate service, remuneration received for preparing the depreciation report should not be deposited in a brokerage trust account with any other money received in relation to the provision of real estate services.

4. Do I need a contract?

While the provision of a depreciation report is not a real estate service, so there is no requirement for a written service agreement, it may still be advisable to ensure that there is a contract in place that outlines the services provided for the provision of the depreciation report. This will help ensure that both parties have a clear understanding of the services provided and the contractual relationship.

Learn More About Depreciation Reports

The Strata Property Act requires strata corporations to obtain a depreciation report every three years, unless a strata corporation holds an annual ¾ vote to waive the requirement, or has four or fewer strata lots. Strata corporations that existed on December 14, 2011 were required to obtain a depreciation report by December 14, 2013. Newer strata corporations must obtain a depreciation report within 6 months following the date of their second Annual General Meeting (or the last date that they would have been required to hold their second AGM if there was a waiver of the meeting).

Find complete information about requirements for Depreciation Reports.

Li Qiang is a licensee with XYZ Brokerage Ltd. Li Qiang owns a strata lot in EPS9999 and he’s recently been elected to the strata council (subject to the provisions of section 9-3 of the Council Rules exemption that allows a licensee to provide real estate services to their own strata corporation). Brokerage XYZ provides strata management services to EPS9999, through strata manager Richard Steven Timmins, licensed with XYZ.

Who, if anyone, is in a conflict of interest in this scenario? To find out, licensees can now turn to the Professional Standards Manual (PSM). The Council has recently added the above scenario, along with a further five new conflict of interest scenarios, to the PSM. All six scenarios specifically focus on the issues that can arise for licensees providing strata management services.

Occasionally, strata management licensees and their related brokerage may provide strata management services for a strata corporation in which they are an owner or in which another employee of the brokerage is an owner, or there may be some other association between the brokerage and the strata corporation.

In some instances, these brokerages or these licensees may be in a conflict of interest. However, it’s not always the case-even if on first glance it appears that there is a conflict of interest. The scenarios explored in the PSM are intended to assist licensees to understand where there is or isn’t a conflict of interest, to assess their current or future actions when providing strata management services, and to take appropriate steps to ensure they are in compliance with the Real Estate Services Act.

Explore all six of the conflict of interest scenarios.

February 2014

TO: ALL REAL ESTATE LICENSEES

RE: NOTICE OF ELECTION-REAL ESTATE COUNCIL MEMBER NOMINATIONS

The term of office for the following Council members expires on June 30, 2014. The Real Estate Council of BC is seeking nominations

from licensees wishing to stand for election in these Districts.

Managing Broker/Associate Broker Members

• In District #1 (County of Vancouver), the term of William R. Binnie expires.
• In District #1 (County of Vancouver), the term of William B. Phillips expires.
• In District #3 (County of Nanaimo) the term of Susan G. McGougan expires.
• In District #4 (County of Westminster North of the Fraser River) the term of Marshall J. Cowe expires.
• In District #5 (County of Westminster South of the Fraser) the term of David Rishel expires.

Representative Members

In Districts #2, #3, #6 and #7 (Combined counties of Victoria, Nanaimo, Yale, Kootenay, Cariboo & Prince Rupert) the term of Subhadra Ghose expires.

There will be no election for a managing broker/associate broker in Districts #2, #6 and #7 (Counties of Victoria, Yale, and the combined

counties of Kootenay, Cariboo and Prince Rupert), no election for a representative member in Districts #1, #4 and #5 (Counties of

Vancouver and Westminster) and no election for a rental property/strata management member.

About the Council

The Council is comprised of 16 members. Three are public members appointed by the provincial government. The remaining 13 members are elected by their peers for two-year terms. Of these elected members, nine are managing brokers or associate brokers, three are representatives and one is the rental property management/strata management representative. Council members represent all eight counties in the province by way of Districts pursuant to section 76 of the Real Estate Services Act (RESA).

Nomination and Election Process

When nominating a candidate for election, remember:

• Only individuals licensed at the managing broker or associate broker level may nominate brokers. Only managing brokers or associate brokers may nominate other managing brokers or associate brokers as candidates.
• Only individuals licensed at the representative level may nominate representatives.
• Only individuals licensed to provide rental property management services and/or strata management services may nominate a rental property/strata management candidate.

Pursuant to section 2-3 of the Real Estate Services Act General Bylaws, every licensee receives this Notice of Election and a nomination form. Licensees who wish to be a candidate or to nominate a candidate in their District must use the attached nomination form. Candidates nominated for election for a District must be licensed at a location in that District.

Nominations must be received at the Council office not later than 4:30 p.m. on Monday, April 7, 2014. It would assist in the preparation of the election material if nominations could be returned as soon as possible. Voting papers, together with a biographical summary of each candidate, will be mailed to all licensees (where elections are being held) in mid-April and must be received in the Council office not later than Tuesday, May 13, 2014. The ballots will be counted on Wednesday, May 14, 2014.

Please see below for detailed information on the roles and responsibilities of Council members.

Yours truly,

Robert O. Fawcett

Executive Officer

Since the December 2013 Report from Council newsletter, the following actions have been taken as a result of disciplinary hearings and Consent Orders conducted by the Council.

Trading Services

• James David Hallworth
• Brent Stephen Roberts
• Ricky Chen
• Mona Heung Radelet and Highland West Properties Ltd.
• John David Mccarthy and High Country Realty Ltd. dba Re/Max Invermere
• Richard Charles Petersen and Action Realty (1991) Inc. dba Re/Max Action Realty
• Lani Jo Weaver and Eco Realty Inc.
• Rosemarie (Rosie) Colterman
• Carmelita Mary Chan dba CREIA Real Estate Services
• Peter Clayton Dupuis and S&P Real Estate Corp.

Rental Property Management Services

• Neville Raymond Devir

Strata Management Services

• Pacifica First Management Ltd.
• Thomas Chiu
• Leslie Ann Brock

• Tariq Altaf Kassam