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Spotting Financial Abuse of Elders and Other Vulnerable People in Real Estate
Seniors aged 65 years or older make up 18 per cent of the population in Canada and that number will continue to grow, according to Statistics Canada. As licensees, it’s important to know how to spot the signs of elder financial abuse and to exercise due diligence as you engage with clients who may be vulnerable.
What Is Financial Abuse?
Financial abuse is the misuse, misappropriation, or exploitation of a vulnerable individual’s funds and assets without that person’s knowledge and full consent. Vulnerable people can include seniors, or people living with memory impairment, dementia, or other cognitive difficulties.
Some common scenarios of financial abuse relating to real estate include pressure from family members or trusted individuals for a vulnerable individual to:
- Make down payments for a home;
- Co-sign or serve as guarantor for loans;
- Use house title as collateral; or
- Take out a ‘reverse mortgage’ to provide funds.
Because the perpetrator of financial abuse is often a trusted person to the older individual, such as a family member, caregiver, or a friend, financial abuse often goes unreported. Financial abuse is often accompanied by other forms of abuse like emotional abuse, physical abuse, or denial of rights.
Your Duty to Report Misconduct
Licensees are required to report potential misconduct in your brokerage to your managing broker. The Duty to Report extends to conduct by other licensees and unlicensed individuals working at your brokerage. For more information, see the Licensee Obligation to Report Misconduct Guidelines.
If you believe someone in your brokerage or another brokerage is not acting in the best interest of their client and is committing financial abuse against a senior client, you may also wish to contact the B.C. Government’s Seniors Abuse and Information Line (“SAIL”).
SAIL is a confidential information line for elder abuse prevention. You can contact them between 8:00 a.m. and 8:00 p.m. daily, excluding holidays, by calling toll-free 1-866-437-1940 or 604-437-1940 in the Lower Mainland.
Putting Due Diligence into Practice When There Is Power of Attorney
Licensees with clients who are elderly or appear to be living with cognitive issues that may affect their decision-making abilities should practice due diligence.
Licensees should ask their client whether anybody holds power of attorney or has been appointed as a legal representative or substitute decision-maker on their behalf. If there is one, make sure you obtain a true copy of the power of attorney, representation agreement, or advance directive for their file, and read the document to confirm you are dealing with the person who has the legal authority to deal with the property.
If there is no family member or other individual who has legal authority to act on a client’s behalf, licensees should ensure that the person obtains independent legal or professional advice before entering any real estate transaction. The Public Guardian and Trustee of British Columbia provides resources to help vulnerable adults access support.
Know the Legislation Around Adult Incapacity
The Adult Guardianship and Planning Statutes Amendment Act (Bill 29) came into force in 2011, creating a framework for the appointment and authority of guardians, and defining three distinct types of guardians for individuals who are unable to make decisions about their financial, legal, medical, or personal affairs because of mental illness, a head injury, a degenerative disease, or other disability.
The amendments also included updates to the Representation Agreement Act, which sets out parameters of how, when, and by whom decisions about an adult’s financial affairs, and other matters, will be made if they become incapable of making decisions independently.
Licensees should take time to understand the legislation relating to guardianship and representation for adults who are incapable of independent decision-making in property and financial affairs.
Financial abuse of seniors and vulnerable adults is a serious issue that you may encounter in your profession. Understanding what it is, what it looks like, and what you should do if you come across it as a licensee is important to preventing financial abuse in British Columbia.
