The Superintendent of Real Estate has introduced rules that will change the way a real estate professional provides services to consumers.
What’s has changed?
Five new defined terms have been added to the Rules:
- co-operating brokerage: a brokerage that provides trading services to or on behalf of a buyer in respect of a trade in real estate
- designated agent: one or more licensees designated by the licensee’s or licensees’ related brokerage as the exclusive licensee or licensees, of all of the licensees related to that brokerage, to provide real estate services to a client of the brokerage in respect of a trade in real estate
- dual agency: the representation, in respect of a trade in real estate, by the brokerage of the following:
(a) both the seller and the buyer as clients;
(b) both the lessor and the lessee as clients;
(c) both the assignor and the assignee as clients;
(d) 2 or more buyers, lessees or assignees, as the case may be, as clients who have conflicting interests in respect of the trade in real estate
- listing brokerage: a brokerage that provides trading services to or on behalf of a seller in respect of a trade in real estate
- unrepresented party: in respect of a trade in real estate, a party to the trade in real estate who is not a client of a licensee for the trade in real estate
These new definitions standardize the terms introduced by the new Rules dealing with dual agency, representation disclosures, and licensee remuneration.
A list of the contraventions of the Real Estate Services Act for which the Real Estate Council can issue administrative penalties has been added to the Rules.
In his consultation on the proposed Rules, the Superintendent commented that,
“As part of their discipline procedures, the Real Estate Council of British Columbia (the Council) may impose administrative penalties on licensees when they contravene designated rules. The list of rules subject to administrative penalties was previously designated by the Real Estate Services Act (RESA) Regulation. This change is a housekeeping matter and inserts the list of designated contraventions into the rules.”
The Superintendent has added a paragraph to the section of the Rules dealing with written service agreements. The new wording will:
“require listing agreements that provide for remuneration to be shared by a listing brokerage with a cooperating brokerage to include a standard term for specifying how much remuneration will be paid to the listing brokerage and the cooperating brokerage and a standard term specifying the amount of remuneration payable where there is no cooperating brokerage to the transaction.”
Licensees must make a disclosure to consumers about whether or not the licensee will represent the party as a client, before providing any trading services except for two exempted activities: hosting an open house or providing factual responses to general questions. The disclosure must be made in writing in a form approved by RECBC.
The Superintendent commented in the Consultation report — will open in a new tab on the proposed Rules that,
“Licensees may host open houses and provide general factual responses to consumers without providing this disclosure, unless a licensee receives or solicits confidential information from the party as part of these activities.”
Licensees must make a disclosure to consumers before working with them as unrepresented parties when the licensee is already representing a client to a trade in real estate. The disclosure must include a description of the risks to the unrepresented party, the limited assistance that the licensee may provide to the unrepresented party, along with a recommendation that the unrepresented party seek independent professional advice or representation.
In his comments on the rule in the Consultation — will open in a new tab report, the Superintendent stated that,
“This disclosure will inform consumers of the limited assistance that a licensee may provide to an unrepresented party as well as encourage consumers to seek independent professional advice.”
Licensees must make a disclosure to their seller clients about the payment their brokerage can expect to receive for every offer that is presented. The disclosure helps ensure that sellers are fully informed of the expected remuneration that the brokerage(s) will receive if the seller accepts that offer. The disclosure must include how the commission will be shared with a co-operating brokerage, if any, and must inform the seller of any other remuneration the licensee will receive or expects to receive as a result of the trade.
Dual agency — when a licensee represents two or more parties with competing interests in a trade in real estate, such as both buyer and seller, or two or more competing buyers — is prohibited, except in rare circumstances. See Use of Dual Agency Exemption for more information on these circumstances.