Real Advice E-News Issue 19 (April 27, 2018)

Real Advice is a weekly e-newsletter helping licensees prepare for regulatory changes.

April 27, 2018

Teams, Agency and Disclosure

Each week we offer tips and guidance on how to prepare for the changes to agency and disclosure rules that will come into effect on June 15, 2018. This week, we are focusing on things real estate teams need to consider.

Licensees who are members of teams may be wondering, “how will my team be affected by the Superintendent’s rules banning dual agency and requiring new disclosures to consumers?”

Teams are considered to be collectively the designated agent of a client, because team members typically share confidential information about clients. This means that after June 15, 2018 team members cannot act as designated agent for the seller and as designated agent for the buyer in the same transaction. That would be dual agency, which is banned after June 15, 2018. A team also cannot act for two separate buyers who each make an offer on the same property.

After June 15, if a team is representing a seller, and an unrepresented buyer wants to make an offer on the property, the team could deal with the buyer as an unrepresented party, provided the team first makes the Disclosure of Representation in Trading Servicesand the Disclosure of Risks to Unrepresented Parties.

Before dealing with an unrepresented party, a licensee must:

• Encourage the unrepresented buyer to seek independent representation from another licensee; and
• Consider the substantial risks of working with unrepresented parties.

See Small Brokerages and Teams in our FAQs for more information.

Answers to Your Questions

Since the launch of the Real Advice e-newsletter, licensees have been sharing their questions about the Superintendent’s rules with us. We are grateful for your questions and welcome your feedback as we transition to the new agency and disclosure rules.

Over the next several weeks, we’ll answer one of the most-frequently received questions in each issue of Real Advice.

This week’s questions: Who do the agency and disclosure rules apply to?

Do the new agency and disclosure rules apply to strata managers?

No. The agency and disclosure rules that come into force on June 15 apply only to trading services and some aspects of rental property management. Learn more.

Do the new agency and disclosure rules apply to rental property managers?

Yes – when a rental property manager is providing services like lease-ups and tenant placement. These services are considered trading services in relation to the rental of real estate. When providing these services, rental property managers must provide consumers with the Disclosure of Representation, the Disclosure of Risks to Unrepresented Parties, and (in the rare cases when it would be appropriate) the Disclosure of Risks of Dual Agency.

Because property is not being sold, rental property managers do not have to make a Disclosure of Expected Remuneration each time an offer is presented.Learn more.

Do the agency and disclosure rules coming into effect on June 15 apply to commercial real estate transactions?

Yes! Licensees who practice commercial real estate must comply with all the requirements that come into force on June 15, 2018. The ban on dual agency and the requirement to provide the mandatory disclosures apply to all forms of trading services – residential, commercial, agricultural, industrial, recreational. Learn more.

Clarification

Alert licensees have pointed out to us that information in last week’s e-newsletter about the current requirements to disclose referral fees could have been more specific. We advised that licensees must “promptly disclose a referral fee” however Rule 5-11, Disclosure of Remuneration, states that a licensee must disclose a referral fee they receive “or anticipate receiving”. We’ve updated last week’s e-newsletter to reflect this: see Real Advice: Exploring Education.

Published on Apr 27, 2018