A series of events and conditions over the last few years have sparked a review of the real estate industry in B.C. and its system of self regulation. With escalating property prices making headlines both locally and globally, allegations of questionable practices in the industry, and public scrutiny over the entire real estate industry in B.C., the Real Estate Council of British Columbia commissioned an independent review to examine the current state of the industry. The Special Advisory Group has come back to the Real Estate Council and B.C. Government with 28 recommendations to clean up the industry and protect public interest.
What is the Real Estate Council of B.C.?
The real estate industry in B.C. is currently self-regulated by the Real Estate Council of B.C. and is made up of 16 members with three of those appointed by the provincial government. The responsibilities of the Real Estate Council are broad and include administering the Real Estate Trading Services Act, maintaining and advancing the skill, competency and knowledge of licensees, and upholding and protecting the public interest in relation to the conduct and integrity of licensees. The Council also upholds and enforces a series of rules which guide the legal responsibilities of licensees.
Allegations that the Real Estate Council has been operating light handily to violations of the Act and rules has sparked concern from the public ultimately resulting in the independent assessment of the industry. Conditions of B.C.’s real estate market, namely the prolonged escalation of prices resulting in questionable practices by real estate licensees were also drivers of the independent review. Increased public concern about licensees failing to make full disclosure with regards to assignment of contracts, licensees putting their own interests first, and licensees failing to comply with government tax laws and anti-money laundering reporting requirements were further catalysts.
Of the 28 recommendations suggested by the advisory group here were some of the key recommendations that are likely to be implemented:
- The end of dual agency in the real estate industry. Currently real estate licensees are able to represent both the buyer and the seller if proper disclosure is made. The new recommendation suggests an end to dual agency, stating that a lesser form of agency provided to one of the two parties is not in alignment with an agent’s fiduciary duties.
- To ensure all contract assignments (by licensees and non-licensees) have approval by the seller, allowing the buyer to assign the contract of purchase and sale.
- A more stringent suitability assessment be applied to prospective licensees, preventing ‘at-risk’ individuals from becoming licensed.
- Greater responsibility placed on Managing Brokers to report licensee misconduct, and explicit duties for licensees to report Managing Broker misconduct
- The creation of a confidential reporting system or ‘whistle-blower’ program to provide confidentiality for licensees, brokers and the public who wish to report suspicious and fraudulent activities in the industry.
- An increase in the maximum disciplinary penalties to $250,000 for individual licensees and $500,000 for brokerages.
- An amendment to the Act requiring 50% of the Real Estate Council be non-industry members and an increase in the Superintendent of Real Estate’s oversight of the industry.
Want to know more? Here is the full report from the special advisory group.
The report is now with the Real Estate Council and the B.C. Government to make further decisions and implement some or all of the recommendations. B.C. Premier Christy Clark has announced the government will be ending the industry’s self regulation in order to protect consumers. The Real Estate Council says it agrees with the recommendations and has put together a committee to consider the implementation. The adoption of the recommendations and changes to the industry plus a number of other measures yet to be announced by the government aim to increase housing supply, help first-time home buyers, and make the dream of home-ownership within reach to B.C.’s middle class.
If you have any questions about the proposed changes to the real estate industry contact Dave Burch, your Whistler real estate expert.