The ban on B.C. real estate agents practising "dual agency" – representing both a buyer and a seller in a real estate transaction – comes into force Friday June 15, along with other strict regulatory changes.
The practice also includes agents representing two or more buyers vying for the same property, or rental agents representing both a landlord and a tenant. The ban on dual agency aims to avoid conflicts of interest when the agent is working on behalf of their client.
The new rules also may require agents to stop representing a client if other possible conflicts of interest occur. For example, if a potential buyer makes an offer on a property listed by an agent who has previously represented that buyer, the agent may have a conflict of interest and be required to refer the listing to another agent. This conflict could mean the listing agent potentially has confidential information about both the seller and the buyer.
Darlene Hyde, CEO of the British Columbia Real Estate Association, said in a statement, “The new rules governing real estate practices mark a significant shift in how REALTORS® in B.C. work with their clients. It’s important that consumers know what to expect when the changes come into effect.”
Realtors will also be required to let their clients know exactly how much commission they will receive, each time an offer is received on a listing. This means that in multiple-offer situations, with every offer that comes in to the seller, the agent will have to submit a disclosure form detailing how much commission they would receive were the offer accepted. This form will also have to include how the commission would be split with the buyer’s agent, plus any other payments the agent expects to receive.
Hyde added, “Since the new rules were finalized six weeks ago, BCREA has been hard at work to update our Applied Practice Courses for new licensees, continuing education courses and nearly two dozen standard legal forms that have been impacted by the changes. We stand behind a strong regulatory regime, informed and knowledgeable customers and professional REALTORS®.”
Not all agents have been as supportive, with some calling for adjustments to the rule changes when they were announced in February, which resulted in the Office of the Superintendent of Real Estate postponing implementation from March 15 to June 15.
Residential agents have expressed confusion over which of their team members they are allowed to refer a listing to, should they have to recuse themselves over a conflict of interest.
“Everyone is so confused," said Matt Kerr, an agent with Re/Max Real Estate Services in Vancouver, back in February. "I have also heard that there has to be a physical wall in the office between you and any agent you recommend to a former client. It is bizarre.”
The new rules are particularly onerous in smaller markets, where longtime agents may have worked with many local buyers, said Sunshine Coast real estate agent Gordon Clayton of Re/Max Oceanview Realty in Sechelt.
Commercial real estate agents are also particularly concerned because the legislation would prohibit an agent from selling a property to a potential buyer with whom they have had dealings in the past.
That wouldn’t work in the tight-knit commercial real estate market, Ron Emerson, a veteran commercial real estate agent with Cushman & Wakefield in Vancouver, said in February.
He said that, unlike the housing market, commercial real estate involves a much smaller group of buyers and sellers, and agents often deal with the same parties repeatedly.
“Imagine how that would work for a company like Beedie Development Corp., as an example,” he said. “Everyone has worked with them at some point because they are one of the largest landlords in Metro Vancouver and the Fraser Valley. It just doesn’t make sense.”
However, the rules have not been amended to exclude commercial transactions or those serving niche markets since those complaints were made. The RECBC website makes it clear: “The Real Estate Services Act and the new rules do not distinguish between residential and commercial real estate transactions.”
It adds, “Regardless of whether you specialize in marinas, ranch lands, mobile homes, supermarkets or other kinds of specialty properties or niche markets, the agency and disclosure rules will apply to the services you provide.”
With files from Frank O’Brien