Information on co-brokering

Co-brokering requirements

Licensees providing mortgage services have obligations under the Mortgage Services Act (MSA), Mortgage Services Regulation (Regulation), and Mortgage Services Rules (Rules) related to co-brokering. Licensees are permitted to co-broker mortgage transactions if they comply with the requirements described below.

Understanding co-brokering

The term “co-brokering” may be used in different ways within the mortgage services industry; however, the MSA Rules uses the term “co-brokering” for a particular context. For the purposes of the MSA, co-brokering is when two licensees from either the same brokerage or different brokerages work together on the same side of a mortgage or mortgage transaction to provide services to a common client. Licensees are permitted to co-broker a mortgage transaction with a person outside of B.C., if that other person is authorized under the laws of their jurisdiction, to provide mortgage services.

Co-brokering is different from a referral, where licensees receive or pay remuneration for passing along or obtaining contact information for potential clients (with the explicit consent of the client). In a referral, the potential client contact information could come from, or be passed on to, other licensed mortgage brokers, as well as notary publics, lawyers, savings institutions, real estate licensees, or another exempted person who provides products/services related to mortgage services. Referrals do not involve any other activity associated with dealing in mortgages (also known as originating or arranging mortgages).

Co-brokering is also different from a mortgage services team. Under the MSA, a team requires formal registration with BCFSA and must meet certain criteria to register. A group of two or more licensees is considered a team if it does any of the following while dealing or trading in mortgages:

• Represent themselves to the public as a single entity (other than a brokerage) 
• Regularly act as designated agents of the same client 
• Regularly work together in a manner that creates implied agency with the same party 

More information on mortgage services teams and mortgage referrals can be found on BCFSA’s Mortgage Services Knowledge Base.

Responsibility for compliance

If a licensee co-brokers a mortgage transaction with another licensee, both licensees are responsible for ensuring that that mortgage transaction complies with the MSA, Regulations, and Rules, and any other applicable legislation. This includes ensuring the licensees comply with disclosure and record keeping requirements, including providing clear disclosure of representation. Both licensees in a co‐brokering arrangement are also equally liable for the mortgage transaction and will share regulatory responsibility for compliance issues, including ensuring that all duties to clients are met. Importantly, licensees cannot co-broker a mortgage with an unlicensed individual unless that individual is exempted from the requirement to be licensed and/or otherwise authorized to perform mortgage services. More information on duties to clients can be found on BCFSA’s Mortgage Services Knowledge Base.

Records and record keeping

If a licensee co-brokers a mortgage or mortgage transaction, the related mortgage brokerage(s) must prepare and retain a record in a form approved by the Superintendent that contains the information required by the Superintendent. More information on co-brokering record keeping requirements can be found on BCFSA’s Mortgage Services Knowledge Base.

As with any other mortgage transaction, licensees engaging in a co‑brokering transaction must ensure that all required records are maintained. While a co‑brokering transaction is carried out by licensees working together to provide mortgage services to a common client, the obligation to maintain records rests with each licensee’s brokerage. Accordingly, each brokerage must maintain the records required under the Rules in respect of its licensees. If the co-brokering licensees are both engaged by the same brokerage, it is acceptable for only one set of records to be maintained and retained.

Similarly, in a co-brokered transaction, both involved mortgage brokerages are responsible for securely storing all relevant records related to their co-brokered services and maintaining mortgage records for at least seven (7) years after the last transaction in respect of the mortgage.

More information on broader record keeping requirements can be found on BCFSA’s Mortgage Services Knowledge Base.

Applicable Section of Mortgage Services Act, its Regulations, or the Mortgage Services Rules

MSA Rules

s. 60 [Co-brokering with unlicensed person prohibited]

s. 61 [Responsibility for compliance]

s. 105 [Records related to co-brokering]