Application Of RESA

Published on 3 February, 2020

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RESA applies to all real estate services that a licensee provides. Section 2 RESA provides:

Section 2 means that the requirements of RESA, including the Real Estate Services Regulation and Rules, apply whenever a licensee provides real estate services, even if the licensee is providing the services on his or her own behalf, without expectation of remuneration, or if the provision of the services would be otherwise exempted.

As an example, under the former Real Estate Act, it was not uncommon for a real estate licensee to act on his or her own behalf to sell or rent his or her own property. It was also not uncommon for a licensee to work as an employee of a developer to market the developer’s property while also holding a real estate licence. The work carried out on behalf of a developer would be carried out pursuant to an exemption from the need for licensing.

However, as a result of section 2, all aspects of RESA, other than in the limited exceptions noted below, apply to the provision of real estate services by a licensee. Provisions, such as the requirement that a licensee may only receive remuneration in relation to real estate services from the brokerage to which he or she is licensed, would prevent a licensee from receiving remuneration from a developer. Provisions that require that all advertisements must include the name of a brokerage, prevent a licensee from advertising on behalf of a developer, or, on a licensee’s own behalf, to sell his or her own real estate. All such advertisements must include the name of the brokerage with which the licensee is engaged.

Real estate services are defined to be rental property management, strata management, and trading services. Trading services includes the activities most often associated with the listing and selling of real estate. Whenever a licensee is carrying out any activity that is related to rental property management, strata management, or the listing and selling of real estate, the licensee must consider the requirements of RESA and ensure that all aspects of the Act are met.Another very common situation is where a licensee offers for rent real estate that the licensee or the licensee’s spouse or family partner owns. Renting out a property is a provision of real estate services. In order to avoid a situation where all such property had to be rented through the related brokerage of the licensee, an exemption was created to permit licensees to offer their own property or their spouse’s or family partner’s property without triggering the application of RESA.

Exemptions for Rental Real Estate Owned by a Licensee

When offering their own real estate for rent, without an exemption, section 2 of RESA would require that the licensee comply with all of the provisions of RESA. However, sections 9-1 and 9-2 of the Rules create an exemption from the application of RESA in limited circumstances.

Under section 9-1 of the Rules, licensees who provide rental property management services on their own behalf in relation to their own real estate, are exempted from RESA, the Regulations, and the Rules if the licensee:

  • provides the services in the licensee’s own name and not in the name of his or her related brokerage;

  • does not indicate the name, address, or telephone number of his or her related brokerage in any advertising in respect of the rental property;
  • discloses to each potential tenant before the prospective tenant enters into a tenancy agreement that the licensee is licensed but is not acting under, and is not regulated under RESA in relation to this transaction; and
  • discloses in writing to the managing broker of the related brokerage that the licensee will be providing rental property management services on his or her own behalf in relation to his or her own real estate.

The disclosure to the tenant does not have to be in writing; however, a prudent licensee will ensure that the disclosure is in writing and that a copy is retained by the licensee.

Section 9-2 of the Rules permits a licensee to manage rental real estate owned by the licensee’s spouse, family partner, son, daughter, or parent without being required to comply with the provisions of RESA.  Section 9-2 of the Rules also permit a licensee to manage rental real estate owned by a partnership if the partners are any combination of the licensee, and the licensee’s spouse, family partner, son, daughter, or parent. Additionally, the licensee is permitted to manage rental real estate owned by a corporation if the shareholders are limited to the licensee, or the licensee’s spouse, family partner, son, daughter, or parent without the need to comply, except as follows.

When managing rental real estate outside of RESA for a family member, partnership or corporation, in addition to complying with the provisions noted above, the licensee must provide the rental property management services without remuneration. Additionally, the licensee must advise the family member, corporation, or partnership, in writing, that the licensee is not acting as a licensee and is not regulated under RESA in relation to this transaction and provide a copy of the written disclosure to the managing broker of the related brokerage. If the licensee is managing rental real estate owned by a corporation, and the licensee is the only shareholder of the corporation, the licensee must provide written notice to the licensee’s managing broker that the licensee will be providing rental property management services to or on behalf of that corporation.

The exemptions permitted in sections 9-1 and 9-2 of the Rules are limited to rental property management. As a result, the purchase and sale of real estate may not be conducted without complying with RESA.

Exemptions for Strata Management Services

Strata management services are broadly defined under RESA and include exercising the delegated powers and duties of the strata corporation. In most cases, strata council members can be considered to be providing strata management services to their strata corporation. As a result of section 2 of RESA, without an exemption, a licensee who was elected to a strata council would be considered to be providing strata management services and would be required to comply with all aspects of RESA, including holding a licence that permits the licensee to conduct strata management services.

Under section 9-3 of the Rules, a licensee may provide strata management services to a maximum of two strata corporations in which the licensee owns a strata lot without the need to comply with RESA, the Real Estate Services Regulation, and the Rules, if the licensee:

  • discloses in writing to the strata corporation before providing services that the licensee is licensed but is not acting as a licensee, that the licensee is not regulated by RESA, and that the strata corporation is not entitled to the same protections under RESA as are strata corporations that deal with licensees that are not exempted;

  • provides a copy of the written disclosure to the managing broker;
  • does not have sole signing authority for the withdrawal or expenditure of any strata corporation funds;
  • does not receive or expect to receive remuneration for providing the strata management services; and
  • promptly delivers to the strata corporation any strata fees, contributions, levies, or other amounts levied by or due to the strata corporation.

Licensees should note that RECBC is permitted to take disciplinary action against a licensee who fails to promptly deliver strata corporation funds to the strata corporation.

Section 9-3 of the Rules effectively permits a licensee to be elected to the strata council of, or to provide strata management services to, a strata corporation in which the licensee owns a strata lot. The exemption permitted by section 9-3 of the Rules is limited to strata management services. As a result, all other activities for which a licence is required, such as the provision of rental property management services or activities related to the purchase and sale of real estate, may not be conducted without complying with RESA.

Guidelines for Personal Offices

Section 4-3 of the Rules details the requirements related to licensees having personal offices outside of the location of their related brokerage.

Licensees may:

  • Have a personal office in their home; however, no sign may be placed outside this office that indicates that real estate services are provided from that office.

  • Have a personal office located in a commercial space. Where the personal office is located in a commercial space, the licensee may have a personal sign posted outside the commercial space office and on the building directory, if applicable (e.g., Joe Smith Personal Office).
  • Have a secretary or other unlicensed staff who may work at the personal office, but who may not engage in any activity requiring a real estate licence.

Licensees may not:

  • Answer the phone in the name of their related brokerage (e.g., Bigfoot Realty).

  • Have a sign outside of their personal office displaying the name of their related brokerage.
  • Indicate their personal office address on advertising, business cards, letterhead, etc. (‘‘advertisements”).

Where advertisements contain an office address, that address must be of the office to which the licensee is licensed. Advertisements may include the licensee’s personal phone number(s).

Licensees must also ensure that they:

  • Provide their related brokerage in a timely manner with all documentation received related to real estate services they are providing (Section 3-2 of the Rules).

  • Immediately deliver all funds received in respect of a trade in real estate or any real estate service to their related brokerage for deposit into trust (Section 27 of RESA).