Strengthening Real Estate Teams Regulation

squircle icon

Overview

Real estate teams (“teams”) are a popular option for B.C. consumers who are buying, selling or leasing real estate. Teams offer consumers the expertise of a group of real estate licensees working together to provide real estate services to clients. However, as the number of teams grow across B.C., the lack of explicit regulation of this business practice is contributing to confusion among licensees and consumers about the duties owed by licensees to clients, leading to increased risk for real estate consumers.

This has prompted BC Financial Services Authority (“BCFSA”) to seek to improve consumer protection by clarifying the role and duties of teams and team members through proposed amendments to the Real Estate Services Rules (“Rules”).

BCFSA is inviting feedback from consumers and licensees on the proposed amendments, through an online feedback form. The consultation is open until April 24, 2022.

Proposed Real Estate Services Rules Amendments

BCFSA is proposing to amend the Rules by:

  • defining a real estate team;
  • requiring all teams to register with BCFSA;
  • specifying that team members must provide trading services through their team only; and
  • requiring team members to clearly identify their team name in all advertising.

For more detail on the proposed amendments, please check out our annotated Rules package and FAQs.

What Are Real Estate Teams?

Teams are groups of licensees who collectively provide trading services to clients, often under a joint name. Teams may also include unlicensed members (e.g., administrative staff).

Why Are New Rules Needed for Teams?

Despite the popularity of teams, there is a lack of regulation and guidance regarding this prevalent business practice, which poses risks to consumers. Both consumers and licensees have expressed confusion about the duties owed to clients by team members.

BCFSA regularly receives complaints and inquiries about teams and team members. These complaints involve matters such as undisclosed teams, allegations of dual agency by members of the same team, conflicts of interest, non-compliant advertising, and other matters.

Feedback from licensees in earlier consultations on real estate regulation has indicated they are supportive of more guidance in the regulatory framework about teams, improvements related to the creation of teams, and greater overall regulation of teams.

Anticipated Effects of the Proposed Rules

The proposed amendments seek to strengthen the regulatory framework for teams to better protect consumers by clarifying existing requirements and practices within the Rules and corresponding regulatory guidelines.

BCFSA anticipates that the proposed Rules will:

  • lead to an improved understanding by licensees of the regulatory requirements for team members;
  • enhance BCFSA’s ability to regulate real estate teams in the province, by requiring all teams to register with BCFSA; and
  • improve consumer protection, by requiring increased clarity in advertising for real estate teams and disclosure to clients.

BCFSA also expects that the proposed Rules will lead to an improved understanding by consumers of the services they should expect to receive when working with a team, how their confidential information will be treated when working with a team, and how teams operate to represent their interests.

Further, the proposed Rules will impact teams that currently operate under a registration exemption and those that do not meet the proposed definition of a team, including teams with only one licensed member, and unregistered teams that do not advertise under a joint name. These groups will be provided with an opportunity to come into voluntary compliance with the Rules through an extended implementation timeframe.

Timeline

The consultation on the proposed Rules will close on April 24, 2022. BCFSA will provide a report summarizing the comments received and any changes to the proposed Rules as a result of feedback from the consultation.

BCFSA anticipates that the Minister of Finance will decide on the proposed Rules this summer. If the Minister consents to the proposed Rules without conditions, they will likely come into force on January 1, 2023.

Background: Existing Requirements for Real Estate Teams

Currently, the only reference to teams in the regulatory framework appears in section 40 (5) of the Rules which states, “If the superintendent approves a team name for a group of related licensees, real estate advertising may also identify the group by that team name.”

Teams who advertise under a joint or team name must first register with BCFSA. There is a registration exemption for teams with the same surname who are engaged by the same brokerage; such teams may advertise under their family name (e.g., The Bloggs).