Personal Real Estate Corporation

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Personal real estate corporations allow real estate professionals to access the business advantages of incorporation, including better planning of income and tax streams. Personal real estate corporations are similar to options available to other professionals, such as dentists, accountants, and lawyers. 

We recommend that you get professional accounting and legal advice before establishing a personal real estate corporation. 

Is It Right for You? 

Real estate professionals thinking about becoming licensed through a personal real estate corporation are strongly encouraged to carefully read the following information, especially the Real Estate Services Regulation affecting Personal Real Estate Corporations. They should also discuss the matter with their managing broker. 

There are additional reporting requirements for personal real estate corporations as well as additional costs associated with licensing. 

  • Important: Make sure you get independent professional accounting and legal advice before applying for licensing as a personal real estate corporation, to make sure that it is the right choice for you. 

Allowable Activities 

One of the issues that is of importance for real estate professionals who are considering establishing and licensing a personal real estate corporation is what type of activities will be allowed to be undertaken by a personal real estate corporation. BCFSA has developed the following policy to guide real estate professionals in this regard: 

Policy Regarding ancillary services of personal real estate corporations. Under section 10.6(1)(e) of the Regulation, a personal real estate corporation may not “conduct any business other than the provision of real estate services and ancillary services directly associated with the provision of real estate services”. In general, dictionary definitions and judicial consideration agree that the term “ancillary” describes something that is secondary to, and supportive of, a primary entity. 

Accordingly, a personal real estate corporation is restricted to providing real estate services and those services which are subordinate to, and exist to support, real estate services. A personal real estate corporation cannot provide services whose primary purpose is not to facilitate or further the provision of real estate services. To put it another way, a personal real estate corporation may not conduct a business which can be conducted on a standalone basis. For these reasons, a personal real estate corporation may not, for example: 

  • Trade in stocks or bonds, other than modest trading in stocks and bonds that constitute a capital gain (as opposed to income from business) and not so extensive that it is regarded as the business of the personal real estate corporation
  • Hold real estate beyond that required by the personal real estate corporation for the provision of real estate services; or 
  • Engage in the business of real estate development

If real estate professionals have specific questions or concerns about the allowable activities of a personal real estate corporation, they should obtain independent accounting and/or legal advice. 

Choosing a Name 

Section 10.3 of the Real Estate Services Regulation requires that the legal name of a personal real estate corporation must include both, but nothing other than: 

  • The legal name, a recognizable short form of the legal name, or the licensee name of the controlling individual; and 
  • The term “personal real estate corporation”. 

For example, take a controlling individual whose legal name is Robert Smith, and whose licensee name is Bob Smith. The legal name of a personal real estate corporation, whose controlling individual is Robert Smith, can be one of the following: 

  • Robert Smith Personal Real Estate Corporation (legal name + the term “personal real estate corporation”); 
  • Rob Smith (or Bob Smith) Personal Real Estate Corporation (recognizable short form + the term “personal real estate corporation”); or 
  • Bob Smith Personal Real Estate Corporation (licensee name of the controlling individual as registered with BCFSA + the term “personal real estate corporation”). 

Another example is if Jie Wu uses the name Jeffrey Wu for advertising purposes and has registered this as his licensee name with BCFSA. If he then wishes to license a personal real estate corporation, he must choose whether to license his personal real estate corporation under the name Jeffrey Wu Personal Real Estate Corporation or Jie Wu Personal Real Estate Corporation. If he registers the personal real estate corporation name as Jie Wu Personal Real Estate Corporation, he would then no longer be able to advertise using the name Jeffrey Wu as all advertising must be in the licensee name of Jie Wu Personal Real Estate Corporation. 

Advertising 

Advertising of personal real estate corporations must comply with BCFSA’s advertising requirements. 

Please see the Personal Real Estate Corporation Guidelines to learn more about acceptable forms of advertising for personal real estate corporations. 

Remuneration 

If a real estate professional decides that the personal real estate corporation model works for their particular situation, then the manner in which remuneration is paid changes. Under the personal real estate corporation model, the remuneration for providing real estate services flows from the brokerage to the personal real estate corporation, not the controlling individual (real estate professional). 

Remuneration may then be paid to the controlling individual from the personal real estate corporation if all of the requirements of section 10.6 of the Real Estate Services Regulation are met. 

In situations where real estate professionals have formed teams, the distribution of remuneration must be done by the brokerage; that is, the licensed team members (or their respective personal real estate corporations) must be paid separately by the brokerage, not by one of the team member’s personal real estate corporations. 

Exemptions 

Sections 94, 95, and 96 of the Rules allow real estate professionals to provide certain real estate services without the legislation applying to them in respect to those services. These include providing rental property management services with respect to rental property that the real estate professional owns, or that is owned by the real estate professional’s family, and providing strata management services with respect to a strata corporation in which the real estate professional is an owner of a strata lot. 

These exemptions are not available to personal real estate corporations. If a personal real estate corporation owns rental real estate in its name, the personal real estate corporation may only provide rental property management services with respect to that real estate through the brokerage with which the personal real estate corporation is engaged. 

Closing a Brokerage 

Real estate professionals wishing to surrender the license of their existing brokerage, such as a mini-franchise, and license themselves in conjunction with a personal real estate corporation, will need to follow the guidelines for Surrender of a Brokerage license set out in BCFSA’s Education and Licensing Guidelines. Additionally, they must submit the requirements for Making Application for a personal real estate corporation and a controlling individual as noted in the Making Application for a Personal Real Estate Corporation section below. 

Please note that it may not be efficient or effective to use the same corporation that was licensed as an existing brokerage for your personal real estate corporation. This corporation may not have the appropriate attributes or be able to make required amendments, such as a change of name, to correspond with the timing of licensing as a personal real estate corporation. Therefore, it is suggested that you use a separate corporation for personal real estate corporation licensing or that you seek the advice of your accountant and/or lawyer to determine if using the same corporation would be possible. 

Applying 

Both the personal real estate corporation and the controlling individual must be licensed. Therefore, there are two licenses to be maintained once the personal real estate corporation license is issued. 

This means that you are responsible to renew both your license and the personal real estate corporation license every two years, and for paying two sets of licensing fees and Errors and Omissions (“E&O”) fees. 

To apply for a license for a personal real estate corporation, please complete and submit the required form. 

If you are currently licensed and your wish to register a personal real estate corporation, please follow these steps: 

  1. Ensure the personal real estate corporation is incorporated with the Registrar of Companies before you apply for licensing with BCFSA. 
  2. Submit an Application for Personal Real Estate Corporation form
  3. Submit the appropriate fees for the personal real estate corporation based on the Pro-rated fee table for Personal Real Estate Corporations. Please note that the expiry date of the personal real estate corporation license must match the expiry date of the controlling individual’s license. Therefore, the fees for a personal real estate corporation will be pro-rated depending on the number of months between the personal real estate corporation license issue date and the controlling individual’s license expiry date. Fees are charged for full months only. 
  4. In order to calculate the fees required for a personal real estate corporation, determine what the expiry date is for the controlling individual’s license. This can be found on the license certificate or by using the Find a Professional Search. Then calculate the number of full months between the date of submission of the personal real estate corporation application and the expiry date of the controlling individual’s license. For example, if the application is submitted on January 8, 2010 and it will expire on November 29, 2010 (which would be the expiry date of the controlling individual’s license), the fees would be calculated from January 8 – November 8 (10 months). There is no payment required for the partial month between November 8 and November 29. If you are applying for a full two-year license, the fees will be for 24 months. Please note that if application processing is delayed due to deficiencies and the fee amounts are affected, the amounts will be recalculated prior to license issuance. 
  5. Submit a fee of $50.00 for the amendment of the controlling individual’s license (VISA, MasterCard, money order, or cheque made payable to “BC Financial Services Authority”). 
  6. Return the controlling individual’s existing license certificate, if a paper license was issued, for amendment. If the above requirements are being sent to BCFSA by fax or email, please ensure the original license certificate is immediately following by mail. 

If the controlling individual is making any other type of application at the time they are applying for a personal real estate corporation license, (such as a transfer, renewal, category change, relicense or reinstatement) steps 2 and 3 must be submitted in conjunction with the requirements for the individual license amendment. 

As a real estate professional with a personal real estate corporation, if you apply to change anything on your license, you must also apply to make the same change on the personal real estate corporation license. For example, if you apply to transfer your license to another brokerage, you must also apply to transfer your personal real estate corporation license at the same time. 

Licensing application fees for a personal real estate corporation are the same as for the license of the controlling individual. The only exception is for a first time personal real estate corporation license, which may require pro-rated fees. 

Renewing 

The controlling individual license and the personal real estate corporation license both expire on the same date, and both must be renewed at the same time. 

Real estate professionals will receive an email from BCFSA approximately eight weeks before their license expiry date notifying them that their license renewal application is due. The email includes instructions for applying online to renewing their license. 

As part of the online license renewal application, real estate professionals with a personal real estate corporation will be prompted to apply to renew their individual license, and the personal real estate corporation license. 

Payment for both license renewals must be submitted along with the completed application. The renewal fee for a personal real estate corporation is the same as that required for the renewal of the controlling individual’s license. 

Terminating 

If you no longer wish to be licensed as a personal real estate corporation, follow these steps to terminate the license: 

  1. Inform your managing broker that you would like to terminate the personal real estate corporation license. Complete the Surrender of a Personal Real Estate Corporation license form and submit it to the BCFSA office with a fee of $50 for your individual license amendment. If you still have a paper licence, please have your managing broker return both the personal real estate corporation license and your individual license certificates to BCFSA to complete the surrender process. 
  2. Your record will be amended in the Real Estate Portal and Find a Professional Search to reflect that you are now licensed without a personal real estate corporation.

    To find out about the legal requirements for dissolving a corporation, visit the BC Corporate Registry

References 

Please carefully review section 10 of the Real Estate Services Regulation as it contains important information concerning personal real estate corporations. 

Please carefully review the following sections of the Rules as they contain important information concerning personal real estate corporations. 

Frequently Asked Questions 

  • Yes. There is no restrictive definition of child in the Regulation. 

  • Yes. Pursuant to section 10.3(e) of the Regulation, each non-voting share can be legally and beneficially owned by an affiliated person of the controlling shareholder which includes another corporation as referred to above. 

  • Yes. The shares of this corporation, according to the definition of affiliated person can be beneficially owned by the spouse and children through a trust.

  • No. Section 10.2 of the Regulation states that a personal real estate corporation may be licensed as a managing broker, associate broker or representative. It does not include a sole proprietor or brokerage.

  • Yes. There are no restrictions against a personal real estate corporation from paying money it receives from real estate services to an affiliated person as defined in the Regulation. 

  • Yes. There are no restrictions with respect to an affiliated person of a personal real estate corporation from investing in real estate or other investments. Only the Personal Real Estate Corporation is restricted and must only conduct business by providing real estate services. 

  • No. There can only be one licensee as the controlling individual who owns the voting shares. Therefore, the spouse who is also the licensee would have to incorporate their own personal real estate corporation. 

  • No. A personal real estate corporation cannot conduct business which can be conducted on a stand-alone basis. A personal real estate corporation can only provide real estate services. 

  • No. A personal real estate corporation cannot lend money as this could be construed as a stand-alone business and a personal real estate corporation can only provide real estate services. It would also be a conflict of interest for a personal real estate corporation to lend money to a client where the personal real estate corporation is providing real estate services to that client. 

  • No. The Regulation regarding personal real estate corporations is silent regarding the contents of the Articles. Therefore, providing the corporation meets the attributes set out in section 10.3 of the Regulation, the contents of the Articles would be up to the submitting party of the application for licensing as a personal real estate corporation. 

  • No. The parameters of the personal real estate corporation name are so specific, pursuant to section 10.3(f) of the Regulation, that pre-approval from BCFSA is not required.