Larger fines recommended to rein in real estate cheats
An independent panel investigating misconduct by B.C. real estate agents is calling for stiffer fines to a maximum of $250,000 for individuals and $500,000 for brokerages. The current maximums are $10,000 and $20,000, respectively.
“These will be applied for when individual agents or firms do not treat a consumer fairly,” Carolyn Rogers, B.C.’s superintendent of real estate and panel leader, told a Tuesday morning news briefing that released a long-awaited report.
Critics, however, zeroed in on the problem of continuing to allow the Real Estate Council of B.C., which oversees the industry, to be selfregulated, which it has been since 2005. NDP housing critic David Eby said the council already had the tools to fine and pull the licences of unscrupulous agents.
To date, fines and suspensions have been rare. Most disputes are settled through consent orders, where an agent admits misconduct and proposes a settlement. In 2014-15, the council received 536 complaints and issued 88 consent orders.
There was only one disciplinary hearing, which happens when agents don’t admit misconduct, and just two qualification hearings. The numbers going back to 2012 are about the same with actual hearings in the single-digits.
“There is a culture of protecting realtors instead of protecting the public that needs to change,” Eby said.
Tuesday’s announcement follows widespread outcry over unsavoury practices — including so-called shadow flipping and double-ended deals — that take advantage of buyers and sellers in an “unprecedented” hot market for an agent’s own gain.
Fines for administrative infractions such as late filing or breaches in record-keeping will be raised from $1,000 to $50,000.
In addition, the report calls for the “disgorging” of any gains fraudulently obtained by an agent to be returned to a client in a process that would involve the courts, said Rogers.
Critics and experts, mindful of the immense commissions and bonuses made by agents in a single deal, have been pushing for agents found guilty of fraud to pay back any money instead of merely facing a maximum fine.
The 64-page report — months in the making — contains 28 main recommendations. Of these, 21 were directed to the Real Estate Council, a self-regulating organization, and seven to the government.
Currently, there is a blurring of responsibilities and reporting lines that has hampered whistleblowing. Public complaints about agents often get taken to B.C.’s private real estate boards because they run and control access to the proprietary Multiple Listing Service, a database that holds information essential for any agent conducting business.
Some of these, including the Greater Vancouver real estate board, have, in recent months, increased their maximum fines. But their investigations or disciplinary decisions remain private, so it has not been possible to see how they have been handled, if at all, in some cases.
The report calls for the council to be the single regulator of licensed and unlicensed real estate services.
Rogers said the panel’s focus was “on improving the regulatory regime. … We did not spend many hours debating if self-regulation should exist. … We focused on how to make it better.”
To this end, it says the council should increase the number of its publicly appointed members who are not members of the real estate industry from three out of 17 to 50 per cent.
The report also calls for an end to the practice of dual agency, whereby an agent acts for both a buyer and a seller in the same transaction.
In general, Rogers said that rules on such practices exist, but they are “too abstract” and “spread all over the place,” making it difficult for the public and agents to understand what is to be expected. Key to this, she said, is that important consumer information is currently being developed by the industry instead of the council. As well, “more needs to be done by the council to deter aggressive marketing on vulnerable consumers,” said Rogers.
The report also calls for purchase offers to be retained at brokerages in order for consumers in multiple- offer situations to have confidence that prices are not being falsely bid up by real estate agents.
It also recommends that new rules on the assigning of sales contracts be extended beyond just requiring a seller’s consent to covering “all forms of contract for trades in real estate.”
The panel “is concerned that (if these new) contract assignment requirements apply only to transactions facilitated” by agents, there may be “the unintended consequence of driving the practice of ‘shadow flipping’ to an unregulated part of the market, for example, ‘for sale by owner’ business enterprises.”
Eby said: “It is an incredibly damning report into a failed regulator. ... The recommendations themselves are just that. And no member of the public should take confidence from the fact that recommendations have been made.”
Port Coquitlam Coun. Brad West, who has voiced concerns, in particular about brokerages that have been placed under strict conditions by the council and yet continue to aggressively market their services in his community, said: “The attention now turns to the provincial government. They have some important decisions to make.”
In the meantime, the Real Estate Council’s first step has been to appoint one of its members, David Peerless, a senior owner of Vancouver-based Dexter Associates Realty since 1989, to take the panel’s recommendations and begin implementing them.