October 2013 Report from Council Newsletter

The Council regularly conducts inspections of brokerage offices throughout British Columbia. The main purpose of these inspections is to ensure that brokerages have proper controls in place to protect trust monies. The inspection also tests for compliance with the other requirements of The Real Estate Services Act (RESA), the Regulation, the Council Rules and the General Bylaws. Typically it will include a review of the brokerage’s books and records, written disclosures required under the Council Rules, and service agreements entered into by brokerage licensees. Many brokerages also find it a useful opportunity to obtain practice advice from the Council staff member who conducts the inspection.

These inspections confirm that a significant majority of brokerages are, with the exception of minor technical issues, operating in accordance with the legislation; however, the Council’s inspections are thorough, and issues do arise that require remedial action by the brokerage, or which lead to discipline proceedings. The most common issues in this regard that do not relate specifically to the operation of trust accounts are as follows.

Licensees providing real estate services for which they are not licensed

The most common example of this is when licensees provide rental property management services when they are only licensed to provide trading services.

Licensees providing real estate services separate from their brokerage

Licensees are only permitted to provide real estate services in the name of and on behalf of their related brokerage. An example of this improper conduct would be if a licensee provides rental property management services outside of their brokerage, thinking that they are simply doing a favour for a client. Even if a licensee is not paid for these services, they must be provided under the supervision of the brokerage.

Accepting remuneration from someone other than their related brokerage

Licensees may only be paid by their related brokerage for the real estate services they provide.

Unlicensed staff providing services for which a licence is required

There are many useful administrative services that an unlicensed person is able to provide on behalf of a brokerage, or to assist a licensee. However, an unlicensed person must not provide any services which require them to be licensed. The Council has developed guidelines that identify what an unlicensed person may and may not do. There are guidelines for trading services, rental property management services, and strata management services, and all may be found by searching ‘unlicensed assistants’ in the Professional Standards Manual.

Licensees providing real estate services after their licence has expired, or prior to it being transferred to a new brokerage

Licensees must renew their licence at least 30 days prior to its expiry. This will ensure they do not inadvertently become unlicensed. Should they for whatever reason allow their licence to expire, they must not provide any real estate services until they have again become licensed. Similarly, if a licensee is transferring their licence from one brokerage to another, they must not provide any real estate services in the name of the new brokerage until they have confirmed that their licence has successfully been transferred to it.

Deposits not being turned into the brokerage promptly

Licensees must promptly deliver to their brokerage any monies received during the course of providing real estate services. These are trust funds and the brokerage in turn has a responsibility to promptly, upon receipt, deposit them into a trust account for safe keeping.

Clients not being advised that deposits have not been received in accordance with the terms of a contract

When a deposit is not received within the time frame required by a contract, licensees must immediately notify their managing broker, who in turn must ensure that all parties to the contract are immediately notified. This procedure also applies when a deposit cheque is not honoured i.e. returned as NSF.

Proper disclosures are not being made and/or a copy of the disclosure is not maintained

RESA and, in particular, the Council Rules require a variety of disclosures (e.g. Disclosure of Interest in Trade, Disclosure of Remuneration, Disclosure of material latent defects, etc.), and licensees must provide a copy of these disclosure documents to their brokerage, which in turn is required to keep a copy.

Service agreements are not in place

Licensees are required to enter into written service agreements with sellers, landlords, and strata corporation/section clients unless those clients have waived this requirement.

Service agreements do not contain all of the required content

Section 5-1 of the Council Rules specifies certain content which must be included in service agreements. ‘Standard’ form service agreements typically do include all required content, but licensees who customize their service agreements to meet the needs of their clients should review section 5-1 to ensure these content requirements continue to be met.

Changes to service agreements have not been made in writing

Whenever a term or condition of a written service agreement has been modified, this change must be in writing and signed by all parties. For example, if a licensee and client have agreed to change the scope of services, or the remuneration to be paid for the services, these changes must be agreed to in writing because they modify the original agreement.

Advertising

The two most common advertising issues are, firstly, that advertising does not properly identify licensees (e.g. the full name of the brokerage, or the proper licensee name of the individual or personal real estate corporation), and secondly, that advertising contains false or misleading information. This false or misleading information is typically related to the real estate being advertised (e.g. incorrect lot size) or the real estate services being provided (e.g. promoting services that are not actually provided). The Council has recently published new advertising guidelines that licensees will find useful to ensure their advertising meets the requirements of the Council Rules.

Further information regarding the Council’s office inspection program may be found in the Brokerage Standards Manual. If you have any questions please forward them by email to [email protected].

The seasons may be changing but the Real Estate Council of BC’s commitment to protecting the public interest is unwavering — and our efforts have not gone unnoticed! Last month the Association of Real Estate License Law Officials (ARELLO) recognized the Council with an award for the new Broker’s Business Planning and Financial Management Licencing Course. To learn more about this recognition, please read the story here.

The Council filed its 2013 Annual Report with the Ministry of Finance September 30th and shared a link with all licensees. While this tool is a regulatory formality, the process provides for an opportunity to reflect on efforts and successes the past year and consider ways in which the industry can, going forward, continue to evolve in the best interests of consumers. What I know for certain is that collaboration with all stakeholders — be they internal between staff and Council members, external with licensees, the public and other interested parties, or in partnership with course providers — results in a high performing, closely monitored, self-regulated industry in BC. If you’ve not yet read the Annual Report, please follow this link.

You will learn that we have just passed the one-year anniversary of the introduction of designated agency in BC and the Council and the British Columbia Real Estate Association have received feedback from managing brokers directly. Thank you to those of you who met with us on October 16th. We will be sure to report any recommendations that result from the review.

In addition to our continued focus on monitoring, enforcement and continuous improvement, we remind all licensees of the requirement that you not provide real estate services separate from your brokerage. Finally, I draw your attention to the update regarding the Relicensing Education Program. Please remember if your licence is due for renewal in 2015 or later, you must comply with the requirement to complete a Legal Update course.

Wishing all of you a busy fall season.

Marshall Cowe,

Chair

The Council office will be closed on Monday, November 11, 2013 for Remembrance Day.

The Association of Real Estate License Law Officials (ARELLO), an international organization comprised of agencies which regulate real estate licensees, recently awarded the Council its Pre-Licensing Education Program Award for the new Broker’s Business Planning & Financial Management Licensing Course.

The course was launched on July 1, 2012 and is now the required course for those wishing to become licensed as managing brokers or associate brokers. It focuses on public protection, business planning, financial management, human resources management, and leadership. The course is another quality product resulting from the Council’s long time partnership with the UBC Sauder School of Business. Further, extensive input received from licensee focus groups helped to guide and refine content. More details regarding the course are available here.

This is not the first time the Council and UBC have collaborated on award winning education. In 2006, ARELLO awarded the Council its Pre-Licensing Education Program Award for the Strata Management Licensing Course.

Other ARELLO awards that have been presented to the Council include:

• 2004 Communication — Website Category
• 2004 Education -Miscellaneous Category — Buying a Home and Selling a Home brochures
• 2006 Education — Miscellaneous Category — Licensee Practice Manual (6th Edition)
• 2007 Education — Post Licencing Category — Agency Fundamentals: “The National Perspective” Course

The Agency Fundamentals course was also a collaborative effort; for that course the collaboration was with the British Columbia Real Estate Association.

The province-wide implementation of designated agency for trading services licensees took place commencing July 1, 2012. With more than a year of experience now, the Council is pleased to report that designated agency seems to have been introduced with generally favourable results.

As with any new system, some practice questions and issues have arisen. The Council is hosting a meeting of managing brokers selected from around the province, as well as representatives of the British Columbia Real Estate Association, which took the lead role in the implementation, to discuss these questions and issues. That meeting took place in Vancouver on October 16, 2013. To date, the following topics have been identified for discussion:

• Disclosure of remuneration — what needs to be disclosed in in-house transactions?
• How are brokerages dealing with the responsibility to maintain confidential information? How does this affect trade record sheets, particularly for in-house transactions?
• Potential confusion about designated agency vs. dual agency in in-house transactions.
• Open houses and vacation relief.
• Designated agency and teams.
• The new Council Rules (sections 3-3, 3-3.1, and 3-3.2) which came into effect July 1, 2013.

Input received from this meeting will assist the Council with finalizing information related to designated agency that is being prepared for inclusion in the Professional Standards Manual and the Brokerage Standards Manual.

Licensees with questions about designated agency may forward them to [email protected]

Form B (Information Certificate) Changes effective January 1, 2014

Further to the article published in the February 2012 edition of the Report from Council, strata management licensees and their related brokerages are reminded that the Strata Property Regulations for Form B’s (the Information Certificate) were changed and will be brought into force effective January 1, 2014. This new regulation is available online here. Further information is available at the Strata Property Act website.

Form B Changes

From January 1, 2014, all strata corporations will be required to identify on the Form B (Information Certificate) the allocation of storage lockers and parking stalls to a strata lot. The Form B will be revised to take these changes into account.

In order to ensure that the strata corporation’s records are correct, licensees who are contracted to sign and provide Form B’s on behalf of their strata corporation clients should bring this to their client’s attention.

The Council is aware that some licensees who hold a licence to provide two or more services (e.g. trading services and rental property management services) mistakenly believe that they may provide rental management services (or strata management services, as the case may be) independent of their related brokerage.

In addition, some licensees mistakenly believe that, because they hold a higher level of licence (i.e. associate broker or managing broker level), they may provide real estate services outside of their related brokerage.

While it is true that licensees may have other jobs or sources of income unrelated to real estate services which do not have to be performed in the name of their related brokerage, the Council reminds all licensees that section 7(3) of the Real Estate Services Act states:

(3) A managing broker, associate broker or representative

(a) must not provide real estate services other than on behalf of the brokerage in relation to which they are licensed, and

(b) is not entitled to and must not accept remuneration in relation to real estate services from any person other than the brokerage in relation to which they are licensed.

Licensees with questions can contact the Council office at 604-683-9664, toll-free 1-877-683-9664 or email [email protected]

An email containing a link to the Council’s 2013 Annual Report was recently sent to all licensees. The report, which can be viewed here contains a review of the highlights of a very busy year for the Council. While including necessary comparative statistics and the audited financial statements, it also contains a number of articles that demonstrate the value which arises from consultation and, where appropriate, collaboration with a variety of stakeholder groups.

The Council recognizes that self-regulation is a privilege and works diligently to properly exercise the authority it has been given. You are encouraged to review the Annual Report and provide any comments or questions to [email protected].

The Council’s Relicensing Education Program (REP) now requires that all licensees complete one Legal Update course during each two year licence period in order to renew a licence. This requirement applies to all licensees who renew a licence in 2015 and thereafter.

What that means is, if your licence has a renewal date in 2015 or after, sometime during the preceding two years, you need to have taken a Legal Update course. For example:

• If you have renewed your licence sometime in 2013, you will need to complete a Legal Update course before your licence renewal date in 2015.
• The same applies to someone who renews a licence in 2014. You will need to complete a Legal Update course before your licence renewal date in 2016. You are not required to complete a Legal Update to renew your licence in 2014!
• During every two-year licence period thereafter you will need to complete one Legal Update course in order to renew your licence.

The Council has worked with course providers including the British Columbia Real Estate Association (BCREA) and the Professional Association of Managing Agents (PAMA), with sponsorship from the Real Estate Errors & Omissions Insurance Corporation, to develop the following Legal Update courses specific to licensee practice areas.

For trading services licensees:

Residential: Real Estate E&O Insurance Legal Update

Commercial: Real Estate E&O Insurance Commercial Legal Update

For rental property management licensees:

Real Estate E&O Insurance Legal Update for Rental Managers

For strata management licensees:

Real Estate E&O Insurance Legal Update for Strata Managers

You may complete your REP course in the classroom or online. Trading services courses are offered through your local real estate board and the rental property management/strata management courses are available through PAMA. In addition, BCREA and PAMA have worked with the Real Estate Division (RED) at UBC’s Sauder School of Business to provide the courses online for those licensees who wish to complete the course at their convenience.

For course schedules and to register for courses, please contact your local real estate board, PAMA, or go online to the Licensing Course section of the Real Estate Division’s website at www.realestate.ubc.ca. Please note, when registering for the online courses, licensees will be asked to provide their seven-digit RED student ID number, six-digit licence number (and board membership number if applicable).

Frequently Asked Questions:

Q: I’m licensed for trading and rental. Do I have to take two Legal Update courses?

A: Only one (1) Legal Update course needs to be completed regardless of how many services under RESA you are licensed to provide so long as it is completed during the two-year licence issuance period.

Q: When do I need to take my course?

A: Sometime during your two-year licence issuance period and before your renewal date. You can check your licence renewal date online at www.recbc.ca. Select Licensee Info, then select Licensee Search, following which you can insert your name. Your details will then be listed, including your licence expiry date. The Council urges you to complete your requirement at the earliest possible date in order to avoid any possible delay in renewing your licence. Classroom sessions fill up quickly and the online courses take a few days to complete.

Q: Can you tell me whether or not I’ve completed my Legal Update course already?

A: No, the Council is not a course provider. It does not have access to course records and, as a result, Council staff is unable to confirm continuing education course history.

Q: I’m a member of a real estate board. Does that mean I have to complete two continuing education programs?

A: Yes; however, if you are a member of a real estate board, you will satisfy your REP requirement by completing your PDP mandatory Category ‘A’ course (see: New A-B-C Accreditation Model).

Should you have any further questions or concerns regarding your REP requirement, please contact the Council’s Education Department at [email protected] or by calling the Council office at 604-683-9664, toll-free 1-877-683-9664.

• Smrat (Sam) Sharma

Since the August 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

• Smrat (Sam) Sharma
• Ranjit Singh Sidhu and Natinderjit Singh Dhaliwal
• Min Kuan
• Azita Nouri
• Alexis Joli Palkowski
• Ping Chen
• Manyee Lui
• Macdonald Realty Okanagan South Ltd. and James Ashley Henry
• Irina Noviska
• Gerhard Berger, Ingrid Elisabet Berger, Geoffrey Lloyd
• Paramjit (Parm) Singh Rai
• Pacific Quorum Properties Inc.
• Timothy John Slater and Tim Slater Personal Real Estate Corporation
• Daniel Charles Pippin, Princeton Realty Ltd. dba Century 21-Princeton Realty
• Michael Lester Roney, dba MLR Real Estate Services
• Esther Choi Ngor Cheng and T & E Realty Ltd.

Rental Property Management Services

• Wing Wang Tam

Strata Management Services

• Ernie Joseph Monaghan

The Office of the Superintendent of Real Estate at the Financial Institutions Commission (FICOM) has advised that a new consent order in relation to unlicensed real estate services has been posted to the FICOM website at www.fic.gov.bc.ca/pdf/enforcement/restate/resa20130906.pdf. Orders include the payment of $20,000 in administrative penalties and investigative costs, that the offering and provision of unlicensed services cease, and that any trust moneys held by unlicensed service providers be placed in trust.