RESA 21-004 - Brokerage Reporting Requirements

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  • REGULATORY STATEMENT NUMBER:    RESA 21-004  

    TITLE:    Brokerage Reporting Requirements 

    LEGISLATION:    Real Estate Services Act (“RESA”) 

    RELATED FORMS:      Accountant’s Report Solemn Declaration Brokerage Activity Report Brokerage Winding-Up Report

    DATE:    August 1, 2021 

    DISTRIBUTION:    Brokerages, managing brokers and associate brokers licensed under RESA 

Purpose 

This Regulatory Statement provides the form and content requirements for brokerages licensed under the Real Estate Services Act (“RESA”) for the following reports: 

  • Accountant’s Report; 
  • Solemn Declaration; 
  • Brokerage Activity Report; and 
  • Brokerage Winding Up Report. 

Background Information  

Section 25.1 of RESA provides that the Real Estate Services Rules (the “Rules”) may require brokerages to submit reports, including setting requirements related to the form and content of brokerage reports. 

Section 75 of the Rules provides that within 120 days after the brokerage’s fiscal year end, a brokerage must submit to the Superintendent of Real Estate (the “Superintendent”): 

  1. financial statements for that fiscal year; 
  2. an accountant’s report respecting that fiscal year; and 
  3. a brokerage activity report respecting that fiscal year. 

In addition, section 93 of the Rules provides that a brokerage that ceases to carry on the business of a brokerage must submit a winding up report. 

These reports must be completed in accordance with this regulatory statement. 

Requirements  

Part 1 Accountant’s Report 

1 (1) An accountant’s report filed by the brokerage with the Superintendent under section 75 (1) (b) [annual accountant’s report] of the Rules must: 

  1. be in a form approved by the Superintendent; 
  2. be prepared in accordance with this section; and 
  3. include the information required by this section. 

(2) After the completion of the brokerage’s fiscal year, the brokerage must prepare an accountant’s report for the fiscal year containing the following information: 

  1. the start and end dates of the brokerage’s fiscal year in relation to which the report is filed; 
  2. the address of the brokerage and of all branch offices of the brokerage that operated at any time during that fiscal year; 
  3. a list of each brokerage trust account, commission trust account and other savings institution account opened, closed or maintained by the brokerage during the fiscal year; and 
  4. for each account listed under paragraph (c), 
    1. the name and branch location of the savings institution at which the account is or was kept, 
    2. the account number, 
    3. an indication of the type of account, and 
    4. if the account was opened or closed, or both, during the fiscal year, the date of the opening or closing, or both, as the case may be. 

(3) The brokerage must provide the report prepared under subsection (2) to the accountant who is to complete the report in accordance with subsection (4), together with: 

  1. the brokerage’s financial statements for the fiscal year; 
  2. copies of any subordination agreements to which the brokerage is a party; 
  3. for each brokerage trust account, the monthly reconciliation referred to in section 80 (c) [trust account and general account records] of the Rules, for 
    1. all month ends that occurred during the fiscal year, and 
    2. all month ends that occur after the end of the fiscal year but before the date of completion of field work undertaken by the accountant to prepare the report; 
  4. for each brokerage trust account that is a pooled trust account, monthly trust liability and asset reconciliations for 
    1. all month ends that occurred during the fiscal year, and 
    2. all month ends that occur after the end of the fiscal year but before the date of completion of field work undertaken by the accountant to prepare the report; and 
  5. any other information that the accountant considers necessary in order to fulfill the accountant’s obligations under subsection (4). 

(4) The accountant’s portion of the accountant’s report must do the following: 

  1. indicate whether the brokerage has, for the brokerage’s fiscal year, 
    1. maintained proper books, accounts and other records as required by RESA, the Real Estate Services Regulation and the Rules, 
    2. maintained in its brokerage trust accounts sufficient funds to discharge its gross trust liabilities as disclosed in the information provided by the brokerage to the accountant for the purposes of the report, and 
    3. prepared a monthly trust reconciliation for all month ends referred to in subsection (3) (c); 
  2. confirm, as a result of conducting a review engagement, the brokerage’s 
    1. current and total assets (exclusive of goodwill, incorporation costs and other intangibles), and 
    2. current and total liabilities; 
  3. report on the accounting principles used by the brokerage in preparation of its financial statements for the fiscal year; 
  4. note any qualifications or exceptions to the information provided in subsections 4 (a) to (c); 
  5. provide the date of completion of field work undertaken to prepare the report; 
  6. provide 
    1. the name and professional status of the accountant, 
    2. the name of the accountant’s firm, if applicable, and 
    3. a contact address and phone number for both the accountant and, if applicable, the accountant’s firm; and 
  7. be dated and signed by the accountant. 

(5) After the accountant has completed the accountant’s portion and returned the report to the brokerage, the brokerage must comply with subsection (6). 

(6) Following its receipt of the accountant’s report from the accountant, the brokerage must have the report certified in accordance with subsection (7) as follows: 

  1. in the case of a brokerage that is a sole proprietorship, 
    1. by the sole proprietor, if the sole proprietor is acting as a managing broker for the brokerage, or 
    2. in any other case, by both a managing broker and the sole proprietor; 
  2. in the case of a brokerage that is a partnership, by both a managing broker and a partner of the brokerage; or 
  3. in the case of a brokerage that is a corporation, by both a managing broker and a director or officer of the brokerage. 

(7) The certification under subsection (6) must be, subject to any noted exceptions, that: 

  1. all books, records, accounts and subordination agreements of the brokerage, plus any correspondence between this brokerage and BCFSA related to the fiscal year with regard to these books, records, accounts and subordination agreements, have been disclosed to the accountant; 
  2. there have been no changes in capital structure, directors, officers, shareholders, partners or accountants of the brokerage since the date of the previous accountant’s report filed; and 
  3. to the knowledge of the individual making the certification, the report is true and complete. 

Part 2 Solemn Declaration (Alternative to Accountant’s Report) 

2 (1) A solemn declaration filed by a brokerage with the Superintendent under section 75 (8) of the Rules must: 

  1. be made by a related managing broker on oath or by solemn declaration; 
  2. be made before a commissioner for taking affidavits for British Columbia; 
  3. be in a form approved by the Superintendent; 
  4. be signed by the related managing broker and the person before whom the declaration is made; 
  5. include the information and statements required by this section and 
  6. be submitted to the Superintendent together with the brokerage activity report and the financial statements for the applicable fiscal year of the brokerage. 

(2) The declaration must contain, or have attached to it, the following: 

  1. the name of the brokerage; 
  2. the name of the related managing broker making the declaration; 
  3. a list of each brokerage trust account, commission trust account and other savings institution account opened or maintained by the brokerage during the fiscal year; 
  4. for each account listed under subsection 2 (c), 
    1. the name and branch location of the savings institution at which the account is or was kept, 
    2. the account number, 
    3. an indication of the type of account, and 
    4. if the account was opened or closed, or both, during the fiscal year, the date of the opening or closing, as the case may be; and 
  5. the end date of the brokerage’s fiscal year to which the declaration relates. 

(3) The declaration must state that: 

  1. the brokerage did not hold or receive any public trust money during the fiscal year to which the declaration relates; and 
  2. to the knowledge of the relating managing broker, all information and statements in the declaration are true and complete. 

Part 3 Brokerage Activity Report 

3 (1) A brokerage activity report filed by the brokerage with the Superintendent under section 75 (1) (c) [annual brokerage activity report] of the Rules must: 

  1. be in a form approved by the Superintendent; 
  2. include the information and statements required by this section, and 
  3. be submitted to the Superintendent together with the annual accountant’s report and financial statements for the applicable fiscal year of the brokerage. 

(2) The brokerage activity report must contain, or have attached to it, the following: 

  1. the name of the brokerage; 
  2. the start and end dates of the brokerage’s fiscal year in relation to which the report is filed; 
  3. the number of related licensees of the brokerage; 
  4. information respecting any business changes, as referred to in section 24 [brokerage must give notice of business changes] of the Rules, for which notice has not yet been given to the Superintendent; 
  5. an estimate of the percentage of the brokerage’s current total business that each of the following types of business constitutes 
    1. residential sales, 
    2. industrial, commercial and investment sales, 
    3. leases, 
    4. appraisals, 
    5. consulting services, 
    6. rental property management, and 
    7. strata management, 
  6. the approximate number of transactions of each type of business as described in subsection (e) (i) to (v) that the brokerage has been involved with during the fiscal year;  
  7. the approximate number of 
    1. rental units, 
    2. rental property management clients, 
    3. strata lots, 
    4. strata corporations with sections, 
    5. sections within strata corporations, and 
    6. strata corporations in total 

      currently managed by the brokerage; 
  8. the average monthly trust balances in all trust accounts for 
    1. trades in real estate,  
    2. commissions, 
    3. strata corporations, including sections, and 
    4. rental real estate; 
  9. the average monthly total of rents collected; and 
  10. the average monthly total of strata fees, excluding special levies, collected on behalf of strata corporations, including sections. 

(3) The brokerage activity report must be completed, dated and signed by a managing broker who is licensed in relation to the brokerage. 

Part 4 Brokerage Winding Up Report 

4 (1) A brokerage winding up report filed with the Superintendent by a brokerage under section 93 [brokerage obligations when winding up business] of the Rules must; 

  1. be in a form approved by the Superintendent; and 
    1. include the information and statements required by this section 

(2) The brokerage winding up report must contain, or have attached to it, the following: 

  1. the legal name of the brokerage; 
  2. the address of the brokerage head office and any branch offices; 
  3. the name of the brokerage’s managing broker; 
  4. the reason for the winding up; 
  5. the effective date on which the brokerage will cease to carry on the business of a brokerage; 
  6. information relating to each of the brokerage’s trust accounts, including for each account 
    1. the account number, 
    2. the name of the savings institution, and the location of the branch, with which the account is held, 
    3. the type of trust account, 
    4. the account balance, and 
    5. written confirmation, or a copy of the trust account statements, from the relevant savings institution verifying that the trust account balances are as indicated in subparagraph (iv); 
  7. particulars relating to the brokerage’s trust accounts, including 
    1. for trades in real estate, a list of all transactions in relation to which the brokerage holds money in a trust account, including deal number, name of buyer and seller, amount of deposit being held, date of contract of purchase and sale and completion date, 
    2. for all rental properties managed by the brokerage, a description of each property managed, a list of the persons on whose behalf trust funds are being held and the amount held in trust for each person, including security deposits, pet damage deposits and any other deposits, 
    3. for remuneration held either in a brokerage trust account or a commission trust account, or anticipated to be received, 
      1. the names of all licensees on whose behalf the remuneration is being held or is anticipated to be received, 
      2. the amount for each such licensee, and 
      3. the expected date of pay out, and 
    4. any unclaimed amounts held in a trust account; and  
  8. a certification of a managing broker, director, officer, partner or sole proprietor of the brokerage in accordance with subsection (3). 

(3) For the purposes of subsection (2) (h), the certifying individual must certify the following: 

  1. the brokerage has ceased or will cease to carry on the business of the brokerage on the effective date indicated under subsection (2) (e); 
  2. the brokerage has given written notice to all related licensees that 
    1. the brokerage has ceased or will cease ceasing carry on the business of the brokerage, and 
    2. the licences of the licensees will become inoperative at that time, but may be reinstated in accordance with the rules and any applicable regulatory statements; 
  3. the licences of the brokerage, and the licences of all related licensees that are in the possession of the brokerage, have been or will be returned immediately to the Superintendent; 
  4. the certifying individual, as trustee of the brokerage’s trust accounts, 
    1. will be responsible for paying out all amounts held in trust as referred to in subsection (2) (f), and 
    2. will immediately inform the Superintendent as each trust account balance reaches zero; 
  5. the certifying individual has arranged for the brokerage records to be kept as required by section 93 (e) [records to be retained on winding up] of the Rules; and  
  6. to the best of the certifying individual’s knowledge, all information and statements in the report are true and complete. 

Part 5 Approved Forms 

The table below provides the title and date of the approved versions of brokerage reporting forms. 

Form and Link Approved Version Date 
Accountant’s Report  
Solemn Declaration  
Brokerage Activity Report 
Brokerage Winding-Up Report  

Other Information  

For inquires on completion and submission of the Accountant’s Report, Solemn Declaration, and Brokerage Activity Report, please email [email protected].  

For inquires on completion and submission of the Brokerage Winding-Up Report, please email [email protected].  

As the BC Financial Services Authority, we issue Regulatory Statements outlining how entities must operate, or the form and content required by the Regulator for mandatory regulatory filings identified in the Real Estate Services Act, Real Estate Services Regulation, Real Estate Services Rules and other pertinent legislation. While the comments in a particular part of a Regulatory Statements may relate to provisions of the law in force at the time they were made, these comments are not a substitute for the law. The reader should consider the comments in light of the relevant provisions of the law in force at the time, taking into account the effect of any relevant amendments to those provisions or relevant court decisions occurring after the date on which the comments were made. Subject to the above, instructions, definitions, and positions contained in a Regulatory Statement generally apply as of the date on which it was published, unless otherwise specified.