Here's my April PROPERTY LINES article. The survey period is over now, but you can still provide your feedback to the OSRE at RealEstate@gov.bc.ca , your local MLA and Minister of Finance Carol JamesFIN.email@example.com .
In my last article, I asked you to watch out for the 30 day consultation period with regard to changes to the Office of the Superintendent of Real Estate’s (OSRE) new amendments to the Real Estate Rules. Indications were that the consultation period would begin April 3, with 30 days to consult and plenty of time for those avid readers of this column to prepare their feedback.
However, the OSRE announced the consultation period on March 21, 2018, so you’ve only got a couple of weeks to provide your feedback! The consultation period ends April 20, 2018 at 6 p.m. The OSRE has provided an online survey at this link: https://www.surveymonkey.com/r/OSRE2018-1
The survey does have unlimited opportunity for you to make comments with each question, so you can provide as much feedback as you like.
The first three questions are about English Language Proficiency, Professional Upgrading and Disclosure of Remuneration. The English Language Proficiency (ELP) applies to individuals seeking to become real estate licensees. It is reasonable that all real estate licensees be proficient in English, since our contracts are only prepared in English. Likewise with professional upgrading. There are already requirements in place for professional upgrading. This section formalizes the OSRE’s ability to impose training for significant changes, such as the ones being proposed.
If you’ve bought a property in the last several years, you will be familiar with the current ‘Disclosure of Remuneration’ form. This discloses to the Buyer the amount of commission offered by the Seller to the Buyer’s agent, as agreed to in the Listing Contract. The new rule will require this to be done in numerical form (not expressed as a percentage is most often the case now). The new requirement will call for disclosure at the time of listing, with every offer and with every counter offer, on a separate approved form which must be completed for every offer and counter offer presented. This is extremely environmentally unfriendly and redundant. In our current brisk market, this will result in many additional pieces of paper. Also, the commission the Seller agrees to pay to their agent is nobody’s business but the Seller’s and the Seller’s Agent. The new rule would release personal and contractual information to the Buyer and the Buyer’s Agent, in my opinion.
The final question asks for your opinions about how licensees are required to handle ‘conflict of interest’. This is the heart of the matter, and closely connected to the new rule against Dual Agency. This survey does not contain a question about Dual Agency, so if you have something to say about that, you’ll need to use the opportunity provided in this question. The OSRE has declared Dual Agency in the Province of British Columbia to be illegal effective June 15, 2018. This means, one agent cannot represent both the Buyer and the Seller. So, if you list your property with your favourite agent, the one you know has great connections and is very likely to find you a buyer, that agent cannot represent the Buyer. The agent might think about preparing an offer with the Buyer as an Unrepresented Party. But the liability issues will be so great, that is highly inadvisable. So that agent will be required to refer that Buyer to another agent., even if that Buyer wants to work with your agent. What if the Buyer is a past client of the agent and is insisting that the agent represent the Buyer? Your agent will be required to consult with both parties, and obtain permission from both Buyer and Seller, for the agent to continue to represent one or the other party. If the Buyer and Seller cannot agree, the agent must step away from representing either party, and refer both parties to other individual agents. This is called ‘double recusal’. Whether you are the Buyer or the Seller, you will lose the opportunity to have the agent you chose, the agent you trust, to represent you.
Why can’t the agent become a mediator, and negotiate the transaction? In BC, all agents, by law, have agency relationships with their clients, meaning they have fiduciary duties to their clients. Fiduciary duty means that the agent must act with only the client’s best interests in mind, even to the exclusion of the agent’s own interests. If the agent is attempting to represent two separate parties, a conflict can arise between one party’s interests over the other. Under our current Dual Agency situation, these fiduciary duties are ‘limited’ and the agent must act impartially with regard to the two parties, and further must not disclose any confidential information, particularly with regard to either parties price, terms of motivation. This system has worked very well. It seems to me, if agents can be trusted to put their client’s interests ahead of their own, we should also be trusted to act impartially between two clients.
The real issue is with those agents that do not follow the rules and regulations. With proper and full disclosure, and acknowledgement by all parties, dual agency worked. Yes, there were some unscrupulous agents who did not follow the rules. They should be penalized, and ultimately have their licenses revoked if they do not learn from their mistakes. But instead, those agents who do their best to follow the rules are being punished for the misdeeds of others. And the public is losing out on the opportunity to have their agent of choice put their transaction together.
Janet Scotland is Managing Broker and Co-Owner of CENTURY 21 Arbutus Realty with offices in Campbell River, Gold River and Courtenay, BC