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BCFSA’s information is clear, concise, easy-to-read explanations of the requirements for real estate professionals under the Real Estate Services Act (“RESA”), Real Estate Services Regulation (“Regulation”), Real Estate Services Rules (“Rules”), and other applicable legislation.
This information is intended for use by real estate professionals, to support their understanding of the standards they must meet in the delivery of real estate services.
(a) Disclosure of Representation in Trading Services
Real estate professionals are required to disclose the nature of the representation being offered by them on the Disclosure of Representation in Trading Services form prescribed by BCFSA.
The disclosure needs to be made prior to providing any trading services to the consumer. The disclosure must include the duties and responsibilities you owe to the client and to unrepresented parties and explain how a client can file a complaint if needed.
A disclosure is not required when hosting an open house or providing factual information in response to general questions. If you intend to solicit, or start to receive unsolicited, information about a party’s motivation or financial qualifications, disclosure must be made.
Where consumers may be filling out other forms online with their personal information or contacting the brokerage and providing personal information, you must ensure that the required disclosure is made ahead of time. Be mindful what you are putting online because websites that solicit personal information immediately from the consumer could put you in violation of the disclosure obligation by not having the consumer receive the required disclosure form first.Learn more about agency relationships
(b) Disclosure of Interest in Trade
The disclosure of interest in trade is used any time a real estate professional (regardless of the category of licence) or associate of the real estate professional, directly, or indirectly acquires or disposes of real estate. An indirect acquisition can occur when it is an associate of the real estate professional making the purchase or sale and the real estate professional is providing real estate services to the associate. This disclosure must be made prior to entering into any agreement with the consumer on the other side of the transaction.
When making this disclosure, you must use the Disclosure of Interest in Trade form required by BCFSA. You must indicate the name of the person to whom the disclosure is being made, your name and the name of the associate who may be entering into the transaction, the amount of remuneration being earned and who will receive it. The form must also indicate, for any acquisition, if the property is being held for personal use or being resold and if the resale has been negotiated, the terms of that resale. For the disposition of the real estate, you only need to indicate whether you or your associate is the owner or tenant of the real estate. This form must be signed by your managing broker.
You should be aware that your Real Estate Errors and Omissions Insurance Indemnity Plan excludes coverage for real estate professionals when they are either buying or selling real estate and are representing themselves.
(c) Disclosure of Risks to Unrepresented Parties
Self-represented consumers in a real estate transaction are referred to as “unrepresented parties”.
Should you encounter an unrepresented party and wish to engage with your client in a real estate transaction, mandatory disclosure of the nature of the services you are providing, and the risks associated must be made using the form provided by BCFSA.
The mandatory form contains information around the risks to the unrepresented party, the limited assistance you as the real estate professional are able to provide, and a recommendation that the consumer seek independent professional advice. You must ensure that the unrepresented party not just read the form, but that they fully understand it to eliminate the possibility that they assume an agency relationship with you exists. The Consumer Acknowledgment box on page 2 identifies that the form is not a contract. There is a space available for the consumer to (if they choose) include their name and initials to acknowledge their receipt of your disclosure to them.
This form must be completed prior to any confidential information being shared by the unrepresented party or an implied agency relationship may be created. An open house is just one scenario where the timing of disclosure is key because of the risk that an unrepresented party unexpectedly may share personal information before knowing how that information may be used by you. The form must be retained in your brokerage file.
(d) Disclosure to Seller of Expected Remuneration
Ensuring that your seller understands the financial impacts of accepting a particular offer is part of acting in the best interest of your client. When offers are received the offer prices can vary, and the total value of the funds your client will receive net of the remuneration payable will be impacted. This could lead to confusion when a seller is trying to determine how much they will end up receiving at the end of a transaction.
While not every expense can be anticipated, expenses around the remuneration being earned by the real estate professional’s brokerage, and the amount that will be paid to a cooperating brokerage can provide valuable insight to your seller and assist them in negotiating a deal that is favourable to them.
This disclosure must be made on the form prescribed by BCFSA, and must include information on every offer, and counteroffer. This information includes:
- The amount being paid to your brokerage;
- The amount being paid to the cooperating brokerage;
- The amount being retained by your brokerage; and
- The amount of any remuneration you might receive or anticipate receiving other than commission.
Additionally, you are required to provide the dollar figure on the form not the percentage of the sale price that is often used in a service agreement. Providing the dollar figure will make the disclosure much more transparent for the seller to understand.
You must present this form to your seller client prior to them entering into any contract with a potential buyer. It is important to explain the form to your clients, and ensure that they understand the disclosure.
This form must be retained in the brokerage file.Read the remuneration information
(a) Disclosure of Remuneration
This disclosure applies to any real estate professional receiving, or who anticipates receiving, any remuneration, directly or indirectly, other than the remuneration being paid by their client. Such remuneration can be the result of referrals from other real estate professionals or from third party service providers, such as home inspectors you refer your client to. The disclosure is only required to be made to your client. You do not need to disclose remuneration to an unrepresented party to a transaction.
Strata managers and rental property managers are required to make the same disclosures as those real estate professionals who provide trading services.
The disclosure must include the source of the remuneration, the amount of the remuneration (or the likely amount and method of calculation if the figure is not known), and any other relevant information. The disclosure must provide the total amount being earned by the brokerage, not just the amount you will receive after brokerage fees are paid. Since there is no mandatory form, ensure that the written disclosure is easy for your client to understand. You are encouraged to use the form provided by BCFSA.
Remuneration from a party other than a client can be disclosed in the service agreement and/or in a record (other than an agreement giving effect to a trade in real estate) that is separate from the service agreement. This means that while a disclosure of remuneration can be made in a listing contract or management agreement, the disclosure of remuneration cannot be made in a contract of purchase and sale, because that is an agreement giving effect to a trade in real estate.
A copy of the disclosure must be provided to your managing broker and retained in the brokerage file.Learn more about remuneration
(b) Benefits in Relation to Rental Property Management Services and Strata Management Services
If you are providing rental property or strata management services and receive, or anticipate receiving a benefit (directly or indirectly), as a result of expenditures made on behalf of the client to whom the management services are provided, the nature and extent of the benefit must be disclosed in writing to the client and the real estate professional’s brokerage.
Benefits may include things such as hiring a company in which you or an associate of yours has an interest. In such a case, you benefit from any income earned by that company. A benefit may also include an administration fee that you charge each time you write a cheque on behalf of your client or fees earned by a brokerage for forms (e.g. Form B and Form F).
If you are aware of a benefit that you will earn throughout the agency relationship (such as a fee for Form B), you must disclose this information in your service agreement to your client. You must ensure that this information is disclosed to each new strata council elected in that strata corporation and that the actual payments received are disclosed annually.
It is important that all other benefit disclosures are provided to your client prior to engaging the company providing the benefit and getting the client’s approval first. The disclosure must be separate from any service agreement or agreement giving effect to a trade in real estate.
You are encouraged to use the form provided by BCFSA.Learn more about remuneration
(c) Disclosure of Latent Defects
Material latent defects, pursuant to the Real Estate Services Rules, are any defects that cannot be discerned through a reasonable inspection of the property including:
- A defect that renders the real estate dangerous or potentially dangerous;
- A defect that renders the property unfit for habitation;
- A defect that renders the real estate unfit for the purpose a party is acquiring it if that purpose is known to you or that party has made that purpose known to you;
- A defect that would involve great expense to remedy;
- A circumstance that affects the real estate in respect of which a local government or other local authority has given a notice to the client or the real estate professional, indicating that the circumstance must or should be remedied;
- A lack of required local government building or other permits respecting the real estate.
Material latent defects must be disclosed in writing and the disclosure must be separate from any service agreement or agreement giving effect to a trade in real estate. This disclosure must be provided to your brokerage and retained in the brokerage file.
Once you become aware of a material latent defect that needs to be disclosed, you must promptly (or at least before any agreement to rent, acquire or dispose of the real estate is agreed upon) disclose that defect in writing to all other parties to the transaction. Should a client instruct you not to disclose a material latent defect, you must inform them you cannot provide further services to them unless the disclosure is made.
If your client has already made the disclosure in writing to the other parties, perhaps by way of a Property Disclosure Statement (“PDS”), there is no obligation to provide additional disclosure.Learn more about material latent defects
(d) Management of Strata Corporation by Real Estate Professional Who Is an Owner
Real estate professionals who provide strata management services to strata corporations in which they own a strata lot can act under an exemption under the Real Estate Services Rules subject to restrictions. If that describes you, your conduct is not governed by RESA for the purposes of that relationship. You may only provide these services to a maximum of two strata corporations in which you own strata lots.
Should you own a unit in a strata corporation and wish to manage the corporation (which includes sitting on the strata council), there is a written disclosure that must be made. The disclosure must be made prior to providing any services to the corporation and must indicate that you are not acting as a real estate professional while providing the management services, that you are not regulated under RESA relating to the services you are providing, and that the corporation is not entitled to the same protections they would be if they hired an independent strata manager who was operating under the legislation.
You must be aware that under this exemption, you are not permitted to be the sole signing authority for the withdrawals of any funds of the strata corporation and that you cannot have sole authority for expenditures. You must also not charge any remuneration for the services you are providing.
It is important the strata corporation fully understand what your exemption from being governed under RESA means, and how it can affect them. Any funds collected on behalf of the corporation must be immediately turned over to them.
A copy of this disclosure must be provided to your brokerage and retained in the brokerage file.
(e) Acquisition or Disposition of Real Estate by Real Estate professional or a Spouse or Family Partner of a Real Estate Professional
This exemption under the Real Estate Services Rules applies to real estate professionals who are only licensed to provide rental property management services and/or strata management services. Those licensed for trading services may not claim this exemption.
If you are licensed as a rental property manager or strata manager and wish to acquire real estate for your own use, or dispose of real estate that you, your spouse or family partner own, there is an exemption that may apply. You must, however, disclose in writing to all potential buyers and sellers before any agreement is entered into that even though you are licensed under RESA, you are not acting as a real estate professional in this case and are not regulated under RESA for the transaction. You must also be careful to not provide any real estate services to the buyer or seller or receive any remuneration for real estate services connected to the transaction.
When advertising, you are not permitted to indicate the name, address or telephone number of your brokerage or any place where you are engaged as a real estate professional.
A copy of this disclosure must be provided to your managing broker and retained in the brokerage file.
(f) Management of Rental Real Estate Owned by Real Estate Professional’s Family
This exemption applies to a real estate professional who provides rental property management for a family member (spouse, family partner or child) in relation to real estate they own. A disclosure is also required for any partnership or corporation that owns property and whose shareholders are only made up of two or more people comprised of the real estate professional, spouse, family partner or child.
In order to act under the exemption, you must disclose to each family member or partnership or corporation promptly, that you are exempted from RESA¸ the Regulations, and Rules and are not acting as a real estate professional. You must not advertise the rental in the name of the brokerage or advertise the address or phone number of the brokerage or any place where you are engaged in your capacity as a real estate professional. You must also not receive any remuneration for real estate services provided under this exemption.
This disclosure must be presented in writing to the family member, partnership, or corporation prior to providing any services. You must also provide your managing broker with a written disclosure.
(a) Disclosure of Relevant Facts and All Known Material Information Respecting the Real Estate and the Trade and Real Estate
The Rules provide a list of duties all real estate professionals owe to their clients. On that list is an obligation to disclose all known material information respecting the real estate and the trade in real estate to which the services relate.
As the name implies, you are responsible to ensure that your client has all the information they need about the property and the transaction to ensure they can make a fully informed decision as to how to proceed.
This information may include facts you discover about a property that your client is acquiring such as zoning issues that may affect the property, unpermitted work, or information you obtain about the party on the other side of the transaction that may impact their ability to proceed. Material information, can however, also include any referrals you may be earning or paying out to another brokerage or third party.
In addition to the Disclosures Guidelines, see the
(b) Disclosure of Conflicts
While you have an obligation to avoid all conflicts where possible, sometimes you will encounter conflicts of interest that cannot be avoided and will require specific disclosure under the Real Estate Services Rules. While the section of the Real Estate Services Rules that deals with the duties owed to a client speaks to the obligation to disclose all potential and actual conflicts to the client, it is important to verify that there is no other section that outlines specific steps for that particular conflict disclosure, such as with the disclosure of interest in trade.
Under your duties to your clients, the Real Estate Services Rules state that you must disclose conflicts of interests promptly.
(c) Management of Rental Real Estate Owned by a Real Estate Professional
This disclosure applies to a real estate professional who provides rental property management for a property they own.
When providing rental property management services in relation to property you own, there is an exemption from RESA that may apply. You can provide the rental property management services in your own name, not advertise the rental in the name of the brokerage or advertise the address or phone number of the brokerage.
In order to act under the exemption, you must disclose to each potential tenant promptly, but in any event, before a tenancy agreement is entered into that your conduct is not governed under RESA despite your being licensed. While disclosure to the potential tenant is permitted in any form, a disclosure of your activities must also be provided in writing to your brokerage.
Most disclosures are made as a way to address potential or actual conflicts of interest and outline for your client duties owed to them.