AGENCY DISCLOSURE IN BRITISH COLUMBIA

"A fully informed consumer is a better protected consumer”.

Disclosures Relating to the Relationship with the Consumer

before providing any trading services to a consumer, the licensee must obtain the “informed consent” of that consumer

Three ways a licensee may provide trading services to a consumer

1. In a sole agency relationship: where the licensee represents the consumer as a “client” and does not represent any other party to that trade in real estate.

2. In a “no agency” relationship: may provide limited trading services outside of an agency relationship (i.e., no agency) to a consumer, with the consumer being known as an “unrepresented party”

-A licensee in a no agency relationship with an unrepresented party may also be in a sole agency relationship with another party to that trade in real estate

3. In a dual agency relationship: where the licensee represents each party as a “client”

Section 54 of the Rules – Disclosure of Representation in Trading Services

-Rules require that the consumer be fully informed, before they agree to any relationship with a licensee, about how the licensee will be providing trading services to them

- licensees must now use BCFSA’s approved form, known as the Disclosure of Representation in Trading Services form (cannot alter or change):

→ key purpose: to explain to the consumer the difference between being a client (represented by a licensee in a sole agency relationship) and being an unrepresented party, or non-client, in a trade in real estate.

→ includes information about the Home Buyer Rescission Period under the Property Law Act

→ requires the licensee to indicate whether or not they will represent the consumer as a client.

→ ends with an optional Acknowledgement section that the consumer can complete.

-The requirement to provide the Disclosure of Representation in Trading Services form is triggered whenever trading services are being provided to a party to a trade in real estate

-as long as the licensee does not solicit or receive information from the consumer about their motivation, financial qualifications or needs in respect of real estate, the licensee does not have to provide the form

Section 55 of the Rules – Disclosure of Risks to Unrepresented Parties

-it requires the licensee to provide an additional disclosure form to the unrepresented party if:

• the licensee is providing trading services to the unrepresented party; and

• the licensee is also representing a client in the same trade in real estate.

- cannot alter or change

→ three key purposes:

1. To advise unrepresented parties of the risks of dealing with a licensee who is also acting for a client in the trade in real estate. ( anything the unrepresented party tells the licensee will be passed onto their client.)

2. To advise unrepresented parties on the limited trading services that the licensee can offer them.

3. To encourage unrepresented parties to obtain independent representation in respect of the trade in real estate.

-contains an optional Acknowledgment section that the consumer can complete.

Sections 54 and 55 of the Rules – Disclosure for Residential Tenancies

-when acting for a landlord who is seeking to rent their residential premises to an unrepresented tenant

-implifies and combines the disclosures under sections 54 and 55 and is tailored specifically for residential tenants so that they understand the role of the licensee who is acting for the landlord, making it clear to the tenant that the licensee is acting in the best interests of the landlord only.

-also provides information to tenants on where they can get advice about renting.

Section 64 of the Rules – Dual Agency in Under-Served Remote Location

-before providing any trading services to the parties, the licensee practicing dual agency must make a disclosure to each of the parties in the dual agency relationship.

-Disclosure of Risks Associated with Dual Agency form

-provides the consumer with information about the concept of dual agency, how dual agency differs from sole agency, the risks of dual agency, and the options available if they do not wish to work with the licensee in a dual agency relationship

-also contains two checklists: a mandatory checklist for the licensee to complete that confirms that the licensee provided the form to the consumer and explained its contents, and an optional checklist for the consumer.

-the licensee’s managing broker must sign the form and include an explanation of how each of the three elements necessary to provide dual agency (i.e., remote location, underserved by licensees, impractical for consumers to be provided trading services by different licensees) is met.

-Once the Disclosure of Risks Associated with Dual Agency form has been provided to each party, if they both wish to proceed in a dual agency relationship, the licensee must enter into a written dual agency agreement with each party

-after entering into a written dual agency agreement with each party, the licensee’s brokerage must provide copies of the Disclosure of Risks Associated with Dual Agency forms to BCFSA.

Section 65 of the Rules – Conflicts of Interest When Acting for Multiple Clients

Agreement Regarding Conflict of Interest Between Clients:

-is not a disclosure but rather a written agreement; will require the licensee to have an open and honest conversation with each of the clients affected;

-not a document that a licensee provides to a client simply seeking a quick signature and an acknowledgement of receipt. The Agreement

Disclosures Relating to Remuneration for the Agent

-RESA defines remuneration as “any form of remuneration, including any commission, fee, gain or reward, whether the remuneration is received, or is to be received, directly or indirectly

-The consumer should both know and understand who will be paying their licensee and how much.

Section 56 of the Rules – Disclosure of Remuneration

-in the real estate sales industry in British Columbia, it is common for the licensee acting for the seller to split their commission with the licensee acting for the buyer

-a licensee may receive remuneration from other third parties as a result of acting as an agent for the client,

-Section 56 of the Rules requires that a disclosure be made promptly to the client if a licensee receives or anticipates receiving, directly or indirectly, remuneration, other than remuneration paid directly by the client, as a result of the licensee:

1. providing real estate services to or on behalf of the client; or

2. recommending to the client, or recommending the client to, a home inspector, mortgage broker, notary public, lawyer or savings institution, or any other person providing real estate related products or services.

-not a mandatory form; contains an Acknowledgement section for the client to sign

Section 57 of the Rules – Disclosure to Sellers of Expected Remuneration

-in addition to the listing agreement, when an offer to acquire real estate is presented to a seller by the seller’s licensee, that licensee must make a disclosure to the seller that states:

1. the amount of remuneration to be paid by the seller to the listing brokerage;

2. the remuneration to be paid by the listing brokerage to the cooperating brokerage, if applicable;

3. the remuneration to be retained by the listing brokerage; and

4. any remuneration that the licensee receives or anticipates receiving from anyone other than the client as a result of the licensee providing real estate services to or on behalf of the seller
-Disclosure to Sellers of Expected Remuneration (Payment) form → BCFSA; cannot alter or change.

Section 53 of the Rules – Disclosure of Interest in Trade

A licensee must make a disclosure of interest in trade to the other party (buyer, seller, renter, or landlord) in the transaction, before the agreement is entered into, in the following two cases:

1. The licensee or an associate of the licensee is directly or indirectly acquiring real estate.

2. The licensee or an associate of the licensee is disposing of real estate.

-An example of an indirect acquisition would be a situation where a third party purchases real estate with the intention of reselling the real estate to the licensee or the licensee’s associate

-In the case of associates, the disclosure is only required where the licensee is providing real estate services to the associate. E.g., if a spouse of a licensee is buying or selling real estate without any involvement of the licensee, no disclosure is required

-disclosure is not required if:

• the rental real estate is being acquired by the licensee, or the licensee’s spouse or family partner, with the intention that it will be used for personal residential purposes;

• the lease is for a term not exceeding one year (and any provisions for renewal do not extend the total lease period beyond one year); and

• the lease or agreement does not contain an option to purchase or a right of first refusal.

- requires the licensee to disclose:

• in the case of a sale, the amount of remuneration or other money that is anticipated to be received by the licensee, any associate of the licensee, or another buyer or tenant; and

• in the case of both a sale or lease, whether the real estate is for personal, rental or other use, or is to be resold or sublet (and the terms of that resale or sublease).

-a licensee’s mandatory insurance policy will not provide coverage when the licensee is purchasing property for themselves.

Section 57.1 of the Rules – Home Buyer Rescission Period Disclosure

-This form must be completed and given to buyers and sellers of residential real property at the following times:

• For buyers’ licensees, the disclosure must be made to the buyer when the licensee prepares an offer to acquire residential real property on behalf of the buyer; and

• For seller’s licensees, the disclosure must be made to the seller when the licensee presents an offer to acquire residential real property to the seller.

-this discloser can be made in two ways:

1. First, licensees can use BCFSA’s Disclosure of the Buyer’s Right of Rescission form.

2. Second, if the licensee is using the standard form Contract of Purchase and Sale from BCREA, the required disclosure is contained within the contract itself

Section 59 of the Rules – Disclosure of Material Latent Defects

-Section 59 states that a licensee providing trading services to a client who is disposing of real estate must disclose in writing to all other parties to the trade any material latent defect in the real estate that is known to the licensee

-before any agreement for the acquisition or disposition of the real estate is entered into and separate from any agreement giving effect to a trade in real estate.

- cannot be fulfilled through disclosure within the contract of purchase and sale

-not required by the licensee if the party entitled to the disclosure has already received written disclosure of the material latent defect from the client who is disposing of the real estate.

Section 8.2 of the Regulation – Notice Relating to Contract Assignments

-Section 8.2 requires that standard terms be included by default in any offer to purchase real estate prepared by the licensee, unless the buyer instructs otherwise.

-to provide notification and protection to sellers in situations where a buyer purchases a property only to assign the contract to a new buyer at a higher price, without the seller’s knowledge.

-unless instructed in writing by the party to whom or on whose behalf the licensee is providing trading services, a licensee must include the following terms in the offer presented to the other party for consideration (the “Standard Assignment Terms”):

1. this contract must not be assigned without the written consent of the seller; and

2. the seller is entitled to any profit resulting from an assignment of the contract by the buyer or any subsequent assignee.

-a licensee acting for a buyer must provide notice to the seller if the offer does not contain the Standard Assignment Terms

-Notice to Seller Regarding Assignment Terms form (the “Notice Form”),

- must be provided at the same time the offer is presented to either the seller’s licensee or the seller