Report from Council Newsletter Spring 2020

Published on 7 May, 2020

Professional reading computer
  • Message from the Chair

    Elain Duvall

    Elain Duvall, Chair of RECBC

    British Columbians have shown true resilience while adhering to the self-isolation and physical distancing orders from government under the provincial emergency. Our regular routines have been up-ended  as we have adjusted to a new world of remote work, leaving behind any semblance of business-as-usual during the COVID-19 pandemic. The same is true for BC’s real estate professionals, who have had to adapt their business practices to deal with situations that were unforeseen just a few weeks ago.  

     

    There is no question that this is a time of unprecedented challenge for the real estate industry. However, in the midst of this disruption, I’m encouraged by the steps so many real estate professionals have taken to comply with health orders and protect the public. From conducting virtual showings, using technology to facilitate services with clients in need, to finding alternatives to in-person strata council AGMs, the real estate industry has demonstrated its ability to innovate in order to provide essential real estate services to British Columbians. 

     

    Recognizing the significant impacts of the COVID-19 crisis on brokerages, RECBC and the Office of the Superintendent of Real Estate temporarily extended the deadlines for Accountants Reports to allow additional time for brokerages as they deal with the challenges of the current environment. This means that brokerages with filings due between March 1 and April 30 will have until June 1, 2020 to file their reports with RECBC.  

     

    As the COVID-19 situation continues to develop, it’s important that the public maintain their trust in real estate professionals. That’s why RECBC is doing everything it can to ensure that our regulatory work continues during this crisis. When I wrote my last message to licensed real estate professionals, in the February issue of the Report from Council , BC had just over five confirmed cases of COVID-19. Just one month later, as the crisis escalated, RECBC’s entire office – over 100 staff — were able to successfully transition to remote work while maintaining all licensing, audit, education, and investigation services.  

    We are working to ensure that all real estate professionals have the information they need to safely navigate real estate transactions and services with their clients during the provincial state of emergency. We are adding information to our COVID-19 and Real Estate pages frequently, and I encourage you to visit that section of our website for the latest updates, along with useful checklists, recorded webinars and resources for consumers.  

    In this issue of Report from Council you will find an overview of our recent communications to licensed professionals during the crisis and links to key information sources that can assist you to continue to provide essential services. You will also find reports on our regulatory activities that continue during this crisis –including information about the development of a new continuing education course on ethics, and updated guidance along with two revised forms for use with consumers: Disclosure of Risks Associated with Dual Agency and Agreement on Conflict of Interest Between Clients. 

    In the weeks and months to come, RECBC will continue to look for opportunities to engage and collaborate across the sector to bring professionals and consumers timely, relevant, and important information about real estate services during the pandemic. We welcome your feedback on how the current situation is affecting you and real estate consumers in your communities. You can get in touch with us at [email protected] 

  • Updated Forms and Guidance Materials Launching

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    Since mandatory consumer disclosure forms were first introduced in June 2018, RECBC has heard from real estate professionals asking if the forms could be streamlined to make them simpler to use and explain with clients and consumers. We’ve listened to your feedback, and in September 2019 we introduced shorter, clearer versions of three mandatory forms – the Disclosure of Representation in Trading Services, Disclosure of Risks to Unrepresented Parties, and Disclosure to Sellers of Expected Remuneration.  

    Now, RECBC and the Office of the Superintendent of Real Estate (OSRE) are pleased to advise real estate professionals that we are launching updated versions of the Disclosure of Risks Associated with Dual Agency form, and the Agreement Regarding Conflict of Interest Between Clients.

    Both updated forms include information pages for consumers with language that is clear, direct and to the point. We have also developed online guides to the revised forms, introducing you to what’s new and notable on each form, and new regulatory guidance materials to help you understand when and how to use the forms. 

    Transition Period 

    There will be a three-month transition period until July 31, 2020, during which real estate professionals may use either the original or the revised versions of the forms with consumers. After July 31, 2020 the revised versions of the forms must be used exclusively. 

    Regulatory Guidance on Exemption for Dual Agency and Addressing Conflicts 

    RECBC and OSRE have worked together to develop updated regulatory guidance materials on assessing and addressing conflicts of interest. These include new Practice Guidelines, along with a flow diagram that real estate professionals can use to assess how to deal with conflicts of interest between clients given the particular circumstances of their transaction. The flow diagram is available as a one-page printable pdf, and as an interactive online tool.  

    Under the Real Estate Rules, real estate professionals in BC are prohibited from representing two or more clients with conflicting interests in the same transaction, except in limited circumstances: where the real estate is in a remote location that is underserved by real estate professionals and it is impracticable for the parties to be provided trading services by different licensees. 

    In these circumstances, providing limited representation to each client (known as dual agency) is permitted with use of the Disclosure of Risks Associated with Dual Agency form and the clients’ informed consent. RECBC’s Practice Guideline includes important regulatory information about the use of the exemption for dual agency, and the new flow diagram features questions that real estate professionals can ask themselves to help assess whether the circumstances of a transaction may require the use of the exemption. 

    When a conflict of interest between clients occurs and the circumstances do not allow for the use of the dual agency exemption, real estate professionals may, in some circumstances, use the Agreement Regarding Conflicts of Interest Between Clients form. With the informed consent of both clients, the real estate professional may continue to represent one client and release the other client.

    RECBC’s Practice Guideline includes an examination of risks that real estate professionals should consider, including the significant professional risks of continuing to provide real estate services to a released client as an unrepresented party.   

    Find the Forms and Resources 

    The updated versions of both forms are now available in English and French, as well as in Simplified and Traditional Chinese, Persian and Punjabi, on the RECBC website and on WEBForms.   

    Review Before You Use 

    Read through the Practice Guidelines and the updated forms carefully before using them with a consumer to make sure you understand how to complete the forms correctly. Our online interactive guides include handy definitions of key terms and point out the significant changes on each page.  

    Answers To Your Questions 

    RECBC’s Professional Standards Advisors are available to answer questions about the mandatory consumer disclosure forms and other practice issues. Get in touch with a Professional Standards Advisor by email at [email protected] 

  • COVID-19 and Real Estate

    Women working remotely
     

    RECBC’s COVID-19 and Real Estate pages are a useful source of information for real estate professionals and consumers with questions about how real estate services and transactions have been impacted by the public health emergency. Whether you are providing trading services, rental property management or strata management services, we have recommendations and information for you to apply to situations you may encounter in these unprecedented times. Here is an overview of the information we’ve added recently:  

    Extension to Late Renewal Period 

    RECBC recognizes the impacts the COVID-19 health emergency has had on real estate professionals and the real estate industry throughout BC. To support real estate professionals who are experiencing business and financial challenges, we are temporarily extending the late renewal period for real estate licences from 90 to 180 days. Learn more about this extension with our quick questions and answers.  

    Joint BCREA-RECBC information page 

    We have collaborated with BCREA on a fact sheet about what it means for real estate professionals to be recognized as essential service providers in the public health emergency, and considerations for managing your professional risk. Download the fact sheet to learn more

    Consumer information Consider linking to RECBC’s COVID-19 for Real Estate Consumers webpage from your brokerage website so your clients can easily access the consumer information. If you have suggestions for additions or improvements that would support you in discussions with your clients, please let us know. You can send us your suggestions at [email protected]  — will open in a new tab.  

    Managing Broker Resources 

    Outreach to Support Brokerages 

    To support brokerages during this difficult time, and to help ensure the continuation of effective consumer protection, RECBC has initiated an audit outreach program. Our auditors are reaching out to contact brokerages by phone to learn about how you may have adapted procedures to deal with the circumstances of the pandemic and ensure that you continue to meet your requirements under the Real Estate Services Act. Learn more about the Audit Outreach Program.  

    Webinars: Real Estate during a Public Health Emergency 

    RECBC’s Professional Standards Advisors hosted three webinars for managing brokers in the early weeks following the declaration of BC’s public health emergency. Each webinar focuses on the challenges facing brokerages in one of the three licensing categories, and includes questions and answers with RECBC Professional Standards Advisors and experts from the British Columbia Real Estate Association, Residential Tenancy Branch, Condominium Home Owners Association, and more.  Find the webinars on our COVID-19 and Real Estate webpages

    RECBC will continue to regularly update our COVID-19 and Real Estate webpage as new information becomes available.

  • Ethics Course Launching Spring 2020

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    RECBC is pleased to announce that this spring will see the launch of a new mandatory continuing education course: Ethics for the Real Estate Professional.  

    “Real estate professionals face ethical dilemmas every day, so understanding how to navigate them is imperative,” said RECBC CEO, Erin Seeley. “I am pleased that RECBC has been able to create timely, relevant education that equips real estate professionals with a solid grounding in their ethical obligations and practical tools for ethical decision-making. With this new training, real estate professionals will learn best practices for making good decisions in challenging situations.” 

    Students in the course will learn the difference between ethical duties and compliance-based obligations, why ethics matter and how to use ethical decision-making skills in various scenarios. Ethics for the Real Estate Professional includes a self-paced online learning component with five modules that students must complete: 

    • Honesty and Integrity 
    • Duties to Clients 
    • Conflicts of Interest 
    • Disclosures 
    • Reporting Misconduct 

    After completing the online modules, students will participate in a half-day virtual classroom session led by an instructor. During these virtual classroom sessions, students will engage in discussions, small-group work and interactive scenarios for ethical decision-making.  

     “We’ve designed the course to provide real estate professionals with a strong framework to address ethical situations,” said RECBC’s Vice President of Education, Pamela Skinner. “After completing the course, real estate professionals will be able to recognize and manage situations that could result in conflicts or potential conflicts given their professional and legal obligations to consumers.” 

    Registration for Ethics for Real Estate Professionals will open in spring 2020. Watch for further announcements about course costs and how to register. 

  • Transparency Registers Postponed

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    The effective date for private companies in BC to begin maintaining a beneficial ownership register has been postponed from May 1 to October 1, 2020. Real estate brokerages and personal real estate corporations  are among the corporations that will be required to create and maintain a “transparency register” to comply with amendments to the Business Corporations Act that come into force on October 1, 2020.   

    Listing Beneficial Owners 

    Beginning in October, corporations including brokerages and personal real estate corporations are required under the Business Corporations Act to list their beneficial owners in a transparency register at the company’s corporate records office. The records setting out beneficial ownership must be made available, upon request, to law enforcement, tax authorities, and certain regulators.  

    So, who are beneficial owners? Defined by the Financial Action Task Force (FATF), a beneficial owner is: “the natural person(s) who ultimately owns or controls a legal entity and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.” The legislation refers to beneficial owners as “significant individuals” and establishes criteria and tests that BC private companies are to use when identifying their significant individuals.  

    Failure to comply with these measures can result in enforcement action and penalties. Companies may be fined up to $100,000, individuals (shareholders, directors, officers) may be fined up to $50,000.  

    Transparency and the Fight Against Money Laundering 

    The updated legislation is part of the provincial government’s commitment to end hidden ownership of companies in British Columbia. The new measures aimed at identifying individuals who own and control BC private companies will support government’s ongoing efforts to combat money laundering.  

    As highlighted in the 2019 report by the Expert Panel on Money Laundering in BC Real Estate, the ultimate goal of money laundering is to make the proceeds of crime appear to be from legitimate sources.  Corporate transparency registers will mean that criminals can no longer avoid being identified as the true owner of funds that enter BC’s finanical systems. The amendments to the Business Corporations Act bring BC into compliance with recommendations by the Financial Action Task Force  — will open in a new tab (FATF) to increase beneficial ownership transparency of corporate bodies.  

    Learn More 

    The Government of British Columbia has created a website  — will open in a new tab with guidance on creating a Transparency Register and on how to decide who qualifies as a “significant individual”. 

  • Changes to PCMLTFA Regulations for Real Estate

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    Authored by Jacqueline Shinfield 

    On February 15, 2020, the Department of Finance published a further set of proposed amendments to the regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (“PCMLTFA”). These new proposed amendments, if implemented, will have a direct impact on persons and entities engaged in the real estate sector that are subject to the PCMLTFA. 

    This is the first in a series of articles that will summarize the material amendments affecting the real estate industry. 

    Changes To The Business Relationship And Ongoing Monitoring Standards 

    The proposed amendments make changes to what constitutes a “business relationship”.  In that respect, under the current regulations if you are a real estate broker or real estate sales representative you are deemed to enter into a business relationship once you have conducted two or more transactions or activities for which you are required to verify the identity of an individual or confirm the existence of the entity under the Regulations. 

    From a practical perspective, this means that in most circumstances, a “business relationship” will be constituted when a real estate professional deals with a client for the second time. However, the proposed amendments now define a “business relationship” for a real estate professional to be constituted  the first time that a real estate professional is required to verify the identity of their client under the Regulations. 

    As such, once a real estate professional engages in any transaction that requires identity verification, they will be deemed to have entered into a “business relationship” with that client. 

    As a result of having a “business relationship” a real estate professional will be required to risk rate each of its clients.  They will also be required to engage in ongoing monitoring of their client relationships on a periodic basis.  

    Ongoing monitoring is defined in the Regulations to mean the monitoring of a business relationship for the purpose of: 

    • detecting suspicious transactions 

    • keeping certain client information up to date; 

    • reassessing a client’s risk rating; and 

    • determining whether the transactions and activities about a client are consistent with the information that a real estate professional has about them. 

    In respect of the duration of the requirement for ongoing monitoring, once a transaction that triggers the business relationship occurs, ongoing monitoring is required for a five year period from that date. 

    Jacqueline Shinfield is a partner with Blake, Cassels & Graydon LLP.  She has extensive experience providing advice in respect of Canada’s anti-money laundering and anti-terrorism financing legislation. Jacqueline assists regulated entities in their dealings with the Financial Transactions and Reports Analysis Centre of Canada. She is the author of RECBC’s Anti-Money Laundering in Real Estate Course. 

  • Updates to FINTRAC reporting guidance

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    Due to the recent outbreak of COVID-19, FINTRAC understands that businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated regulations, may face challenges in meeting their obligations in situations where staff may be reduced or unavailable to do their regular work.  

    During these challenging times, FINTRAC is committed to working with businesses to increase their awareness and understanding of their compliance obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. As had been previously communicated to reporting entities, this includes providing guidance well in advance of new regulations coming into force, as established by the Department of Finance Canada, to give businesses ample time to adjust. 

    As well, FINTRAC is committed to taking a reasonable and flexible approach with respect to the implementation of recent regulatory amendments. Once the COVID-19 situation normalizes and compliance activities resume, FINTRAC will consider the impact of associated challenges when assessing reporting entities’ compliance with the obligations identified in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTA) and associated regulations. 

    FINTRAC has updated its guidance on What is a suspicious transaction report  — will open in a new tab? and Reporting suspicious transactions to FINTRAC  — will open in a new tab. The updated guidance reflects amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations (the Regulations) that come into force June 1, 2020, and the feedback received from the businesses consulted. 

    The change to the Regulations concerns the timeline to submit a Suspicious Transaction Report. Currently, businesses have 30 days from the day they detect a fact providing reasonable grounds to suspect a suspicious transaction to report it. As of June 1, they will need to submit a report as soon as practicable after they have completed the measures that allow them to establish reasonable grounds to suspect a suspicious transaction. 

    The change should not significantly alter businesses’ current practices leading to the submission of suspicious transaction reports, as the new requirement gives them enough time to conduct a full assessment and to fill out a Suspicious Transaction Report. 

    Please direct questions to [email protected]  — will open in a new tab 

  • Launch of New PTT Return Delayed

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    The BC Ministry of Finance has delayed the launch of a new Property Transfer Tax (PTT) return originally planned for April 20, 2020. For more information and to stay informed about a new launch date, visit the ministry’s Information for Legal Professionals on Filing Property Transfer Tax  — will open in a new tab webpage.   

    The new PTT return, which will align with LTSA’s new Web Filing  — will open in a new tab, combines three forms into one (Property Transfer Tax Return — FIN 530, Additional Property Transfer Tax Return — FIN 532, Property Transfer Tax Calculator for Residential Property Over $3,000,000 — FIN 536).   

    Features of LTSA Web Filing 

    • Dynamic entry 
    • Auto-populated information 
    • All-in-one calculations 
    • Built-in help 
    • Drag and drop attachments 
    • Summary breakdown of calculations 

    If you have questions 

  • You Asked Us: Conflicts of Interest

    person standing behind words conflict of interest

    In each issue of the Report from Council newsletter we explore a question related to a common practice concern for real estate professionals. This month, we look at risks and issues to consider when the interests of clients come into conflict. 

    Q: I have two clients with conflicting interests, and since the property is not in a remote area the exemption to the prohibition on dual agency does not apply to the transaction. Are there things I should consider before using the Agreement Regarding Conflict of Interest between Clients?

    A: Real estate professionals are required to take reasonable steps to avoid conflicts of interest.  It is recommended that early on in your relationship with your clients, you discuss your brokerage’s policies on addressing and resolving potential and actual conflicts of interest. This helps ensure that your clients will know what to expect if a conflict arises. You have two options for resolving most conflicts of interest between clients:

    • Option 1: Determine whether you can continue acting for one client and refer the other client for independent representation. This may only be done if both clients agree in writing using the Agreement Regarding Conflict of Interest between Clients. 
    • Option 2: Stop acting for both clients. 

    In determining which option to select, ask yourself:  if you continue to represent one party in the transaction,  can you uphold your duties to your remaining client and at the same time ensure that you do not violate the confidentiality of the released client?

    Circumstances may arise where licensees must release both clients because they have significant material information available to them which could potentially jeopardize the position of one or both clients.

    In a situation where a licensee must release one or both clients, licensees should offer to draw on their professional networks to assist their now former client(s) to find independent representation.

    Q: My clients have signed the Agreement Regarding Conflict of Interest between Clients and the released client has decided to be unrepresented in the transaction. Can I work with the released client as an unrepresented party?

    A: When you release a client after signing the Agreement Regarding Conflict of Interest Between Clients, you must give the released client a Disclosure of Representation in Trading Services form and a Disclosure of Risks to Unrepresented Parties form. You must encourage the released client to seek independent professional advice and explain the limited services that you can now provide to them as a non-client. 

    You should also consider the serious risks involved in working with a released client as an unrepresented party. 

    If anything goes wrong in the transaction, the released client may allege that:

    • you conducted yourself as though you were still the released client’s agent 
    • you shared the released client’s confidential information with the continuing client, or 
    • you did not ensure the released client had enough information to make an informed decision when you were still representing them. 

    Alternatively, if your continuing client is dissatisfied at the end of the transaction, they may allege that you conducted yourself as though you were still the released client’s agent, or that you shared their confidential information with the released client. 

    Questions? 

    RECBC’s Professional Standards Advisors have answers! Contact an advisor at [email protected]  for information and resources to help resolve real estate practice issues.

  • Decisions

     The following actions have been taken as a result of disciplinary hearings and Consent Orders conducted by RECBC. 

    Trading Services (Sales)