Proposed new rules address problems in real estate industry
Agents would be unable to represent both buyer and seller in transaction
B.C. real estate agents will be generally banned from acting as dual agents for both buyers and sellers under tough new rules drafted by the Office of the Superintendent of Real Estate and obtained by Postmedia News.
The draft rules were based on recommendations from the report of an independent advisory group released in June 2016 to address problems in B.C.’s real estate industry.
Those problems included some realtors putting their own interests ahead of clients, some not abiding by rules around reporting requirements to prevent money laundering, and realtors failing to disclose assignment of contracts (known as shadow flipping). The draft rules will be provided to realtors and the public, with superintendent Michael Noseworthy open to feedback over the next month.
Changes to rules, under the Real Estate Services Act, would be effective on Jan. 15.
The key rule change has to do with dual agency — where a realtor acts for both the buyer and seller of a property, or for several potential buyers.
The proposed rule states “a brokerage must not engage in dual agency.”
An exception to the rule would be if the deal occurs in a remote area with limited access to realtors.
The other key change is around disclosure of commission sharing. Currently, a realtor must disclose how much commission they will earn on a sale.
But under the new rules, the realtor must also say how, if at all, that commission will be shared with another realtor.
That seller could then use that information to renegotiate the contract with their realtor before signing the deal. B.C.’s real estate industry, which has had unprecedented growth over the past decade, is governed by the Office of the Superintendent of Real Estate and the Real Estate Council of B.C.
The realtors’ trade organization is the B.C. Real Estate Association.