B.C. Real Estate Council fires warning off to licensees

Public confidence in industry ‘shaken’ following series of media revelations

B.C.’s Real Estate Council has notified all licensees that the public has lost confidence in the industry and realtors “must always act in the best interests of the client” according to a memo obtained by the Sunday Province.

The Feb. 12 notification from Council Chair Marylou Leslie is titled Attention All Licensees and comes after Premier Christy Clark’s government asked the council to investigate allegations reported in The Province and other media about alleged realtor frauds, self-dealing, money laundering and obscuring of offshore buyer identities.

A focus of the council’s probe will be to investigate whether assignment clauses in sales contracts are being misused by realtors for personal gain.

The practice has raised concerns that provincial and federal taxes are being dodged while Vancouver’s housing market is pushed into a speculative frenzy by insider investors who are trading homes like highly liquid stock options.

As The Province first reported, NDP MLA David Eby complained to the council Jan. 4 that realtors were abusing assignment clauses and also helping clients dodge taxes by using extra-long closing periods so that homes could be traded on paper by intermediary buyers without titles actually changing hands. Once a title changes hands, property transfer tax is triggered, under B.C. law.

Initially, the council rejected Eby’s concerns, but media reports appeared to pressure Victoria into action.

However, when NDP MLAs grilled Finance Minister Mike de Jong in a legislature debate last week, de Jong seemed to make light of assignment clause property flipping. He said the purpose of assignments is to allow investors to sell property if the housing market falls, and B.C.’s hot housing market indicates that people want to migrate to B.C.

In her Feb. 12 message, Leslie — of Macdonald Realty Ltd. in Surrey — cites media reports and appears to point to concerns of realtors enriching themselves in property deals rather than serving their clients’ interests.

“As licensees in B.C., I’m sure that you are all aware of the recent media reports about the actions of some licensees in the Lower Mainland,” the message states. “These actions by a few licensees have shaken public confidence in the real estate industry.”

Leslie writes that while the council’s advisory group probes allegations concerning abuse of assignment clauses for the benefit of realtors, the council will “vigorously investigate complaints and discipline licensees who fail in their duties to clients.”

Leslie encourages realtors to report colleagues they believe are acting illegally and to encourage consumers to make complaints. Finally, she reminds licensees of obligations that should be obvious.

“Always keep your clients fully informed,” Leslie writes.

“Carefully explain your duties as their representative and what they should expect from you … always advise clients to seek independent advice on any matters that you are not qualified to advise them on, such as legal or taxation questions.”