August 2013 Report from Council Newsletter

First Meeting of 2013-14 Council Held in July

Marshall Cowe of Royal LePage Coronation West, Coquitlam, was elected Chair of the Real Estate Council for the 2013-14 year during the first meeting of the new Council in July. Mr. Cowe, who succeeds Michael Ziegler, brings to the position 41 years of real estate experience. Mr. Cowe is a past Director of the Real Estate Board of Greater Vancouver and of the British Columbia Real Estate Association. He has served on the Real Estate Council from 2003 to 2006, and again from 2008 to the present date. Elected Vice-Chair of the Council was Susan McGougan of Re/Max of Nanaimo. Ms. McGougan is a past President of the Vancouver Island Real Estate Board and a past Director of the British Columbia Real Estate Association. She has been licensed for 22 years and has served on the Council since 2010.

There are 16 members of the Council, 13 of whom are real estate licensees- three representatives and nine brokers- elected from throughout the province, with one individual the strata/rental property management member, and three appointed by the provincial government. Members are elected for two-year terms, with half of the Council elected each year.

2013-14 Members of the Council

Back Row, L to R: William (Bill) B. Phillips, Bruce Turner, Richard Valouche, David Rishel, J. Garth Cambrey, Robert O. Fawcett (Executive Officer); Front Row, L to R: John J. Nagy, Subhadra Ghose, Susan Lynch, R.E. Michael Ziegler, Susan G. McGougan, Marylou Leslie, Marshall J. Cowe, William (Bill) R. Binnie, Joseph Pearson. Missing from Photo: Barbara Barry and Abdul Ghouri

Results of a formal survey recently commissioned by the Council to gauge licensee awareness, understanding, and satisfaction levels, indicate support for how the Council administers and enforces the Real Estate Services Act (RESA) and its efforts to engage and educate licensees.

Upholding its commitment to consumer protection, the Council is now reviewing the survey results in detail to determine how it can further extend and strengthen its support to licensees to ensure a continued focus on professional excellence. Self-regulation is a privilege and the Council takes very seriously its mandate to protect the public through the development and enforcement of regulations and standards of practice that guide licensee behaviours.

The Council retained the Mustel Group, a local market research firm, to conduct the survey in April. Of the representative sampling of 4,000 licensees randomly selected to participate in the survey, 1,000 -or 25%-responded, a higher than average response rate.

The survey was designed to generate feedback in five key areas:

1. Role and responsibilities of the Council
2. Education
3. Enforcement
4. Information and Communications
5. Service

Highlights from the survey include:

• 80% of licensees understand the role and responsibilities of the Council, with an even higher proportion attributed to managing brokers (94%), associate brokers (97%) and rental representatives (87%). Metro Vancouver licensees have a slightly higher level of understanding than their counterparts elsewhere in the province.
• 72% of licensees are satisfied with the education they took to become licensed, with results higher amongst strata managers (78%) and representatives (73%). Satisfaction levels are higher among Vancouver licensees (74%) than elsewhere in BC.
• 80% of licensees understand the requirements of RESA and the Council Rules, with a higher proportion attributed to managing brokers (92%), associate brokers (89%) and rental representatives (83%).
• 73% of licensees agree that the Council effectively enforces conduct requirements of RESA and the Council Rules with 55% in agreement that the disciplinary decisions are appropriate in relation to the wrongdoing.
• Approximately 85% of licensees agree that the Council is the key source of information regarding RESA and the Council Rules and 90% agree that the Council keeps them informed.
• Of the 80% of licensees who have accessed the Council website, 21% refer to it weekly and 44% monthly.
• The Professional Standards Manual and the Report from Council are rated very or somewhat useful by 87% and 90% of respondents respectively, with the remainder of the Council’s publications being identified as less useful to them or materials with which respondents are not familiar.
• Overall, the Council meets licensee service expectations with 18% indicating the Council exceeded expectations. 42% of managing brokers, who have the most direct experience with the Council, indicate service levels that exceed their expectations.

The Council operates in an environment of continuous improvement and the survey feedback will be considered carefully as part of the Council’s effort to ensure regulatory compliance and high professional standards. The Council believes that this will contribute to positive consumer experiences when dealing with real estate licensees. Thank you to all licensees who participated in the Council survey. Licensees who wish to receive the full survey results should contact the Council at info@recbc.ca.

It is an honour to have been elected Chair of the Real Estate Council of BC for the 2013-14 year. A special thank you to outgoing Chair Michael Ziegler and fellow Council members for their years of commitment to strengthening the industry and building on a platform from which this year’s Council will continue to evolve professional excellence.

I am fortunate to be part of the Council at a time when we know, through a formalized survey that we are providing the education, information, tools, and leadership licensees require to deliver a standard of professional practice that shapes a positive consumer experience.

The survey results also indicate where we can focus efforts to further improve licensee awareness and understanding and we are doing that, starting with this issue of the Report from Council. Consider some of the quick references on Pages 4 and 5. We know there can be confusion amongst licensees around the differences between the Council and the provincial trade associations. We are also now aware through the survey that you may not realize that we have brochures available to consumers through the Council website. Recent disciplinary actions indicate that licensees need to be reminded of the regulations related to the offer and sale of owner-built homes. It is imperative that all actions are in compliance with the Homeowner Protection Act. Please refer to this very important article on Page 5.

The Council is committed to protecting the interests of consumers through the development of educational and awareness programs and the introduction and enforcement of Regulations and Council Rules. We take seriously our responsibility as a self-regulated industry.

I look forward to working with this year’s Council members and the Council staff. On behalf of all of us, I wish you all an enjoyable and successful summer.

Marshall Cowe,

Chair

Licensees are reminded of amendments to the Council Rules which took effect July 1, 2013. The changes to sections 3-3 and 5-8, and new sections 3-3.1 and 3-3.2, reflect requirements to be met when brokerages and licensees agree with their clients and customers to either modify duties, or to provide trading services as designated agents. Wording for the new rules and a description of their effect were published in the April 2013 Report from Council (www.recbc.ca/2013/04/april-2013-report-from-council-newsletter/#rules)

The British Columbia Real Estate Association has advised that new forms, which reflect these changes, are available on WEBForms® for the use of licensees who are members of real estate boards/associations. Licensees who are not members of a real estate board should ensure that documents they use to establish their service relationships are in compliance with these new requirements. If you have any questions about these new requirements, please contact the Council at info@recbc.ca.

The Council is a regulatory agency that was established by the provincial government in 1958. Its mandate is to protect the public interest by enforcing the licensing and licensee conduct requirements of the Real Estate Services Act. The Council is responsible for licensing individuals and brokerages engaged in real estate sales, rental and strata property management. The Council also enforces entry qualifications, investigates complaints against licensees and imposes disciplinary sanctions under the Act.

A trade association is a group of people or companies in a specific industry, organized to promote their common interests. An industry trade association participates in activities such as advertising, public relations, education, lobbying and collaboration between companies. Associations usually offer other services, such as producing conferences, networking and offering educational courses. Examples of real estate trade associations in BC include the British Columbia Real Estate Association and the Real Estate Board of Greater Vancouver.

In addition to the Report from Council and the Professional Standards Manual, did you know that the Council also publishes the following publications on its website?

• Working with a Strata Management Company Guide
• Brokerage Standards Manual
• Selling a Home in BC Guide
• Buying a Home in BC Guide
• Complaint and Discipline Procedures Guide

Be sure to promote these information guides with clients, colleagues and prospective employees.

Do You Know that the Council Website is for Licensees and the Public?

The Council website — recbc.ca — is a valuable information tool for both licensees and consumers. Licensees should regularly visit the site to access the latest news from the Council as well as licensing, regulatory and disciplinary information. The site’s content is also of interest to consumers who can access publications as well as legislative information and a licensee search directory.

Two recent disciplinary decisions, not yet published, involve listings of new homes under the Homeowner Protection Act (HPA). The following information, which appears in the Professional Standards Manual (www.recbc.ca/psm/owner-built-homes-changes-to-the-homeowner-protection-act/), is published as a reminder to licensees about the requirements related to the sale of owner-built homes.

No person may build, sell or even offer to sell a new home except in compliance with the HPA. Under that Act, a new home is defined to include a home that is “substantially reconstructed”. Sections 20.1 and 22(1.1) prohibit the offer or sale of an owner-built home and new home respectively unless specified conditions are met. A licensee may not accept a listing of a new home unless and until the owner has complied with the requirements of the HPA.

When the HPA regulations came into effect on July 1, 1999, owner-builders were permitted to be exempt from licensing and home warranty insurance requirements provided that they built a detached, self-contained dwelling for their own personal use not more than once every 18 months. Owner-builders who sold their home within 10 years of completion were required to provide prospective purchasers with an Owner-Builder Declaration and Disclosure Notice identifying that the builder was not licensed and was not providing a policy of home warranty insurance; however a 10-year statutory warranty would apply, giving the purchaser some rights against the owner-builder should defects occur during the 10-year period.

There was a sizeable abuse of this owner-builder exemption, involving either an owner who was not actually Owner-builders must occupy the new home themselves for at least a year after obtaining an occupancy permit before renting or selling. building or managing the construction of the home himself or herself or an unlicensed builder who was trying to avoid meeting the requirements of licensing and the cost to provide 2-5-10- year home warranty insurance for the home buyer.

As of November 19, 2007, changes to the HPA and Regulation regarding owner-built homes enhanced protection for homebuyers, including the following changes:

• Individuals planning to build a new home for their personal use are required to meet stricter eligibility requirements, pay a fee, and obtain an Owner- Builder Authorization from the HPO prior to commencing construction of the home.
• Owner-builders must occupy the new home themselves for at least one year after obtaining an occupancy permit and are not permitted to sell or rent the new home during that one-year period. The owner-builder is also not permitted to sell a new home during construction ”as is” without permission from the HPO.
• Owner-builders who sell their home within the first 10 years after obtaining an occupancy permit are obligated to subsequent purchasers for defects in the new home during that 10-year period. The new legislation clarifies that an owner-builder’s obligations under the statutory warranty are similar to obligations of licensed residential builders under a policy of home warranty insurance. That is, 2 years for material and labour, 5 years for defects in the building envelope and 10 years for structural defects. The statutory warranty enables subsequent purchasers to sue the owner-builder for defects as set out on the statutory warranty. There are some reasonable exceptions to the statutory warranty (for example, defects caused by someone other than the builder, natural disasters) and these are set out in detail in the Regulation.

Licensees acting for either an owner-builder or a potential purchaser can check the HPO’s New Homes Registry (lims.hpo.bc.ca/prs/NewHomes/) to determine whether a new home built under an Owner-Builder Authorization can be legally sold as having met the occupancy requirement.

Buyers should be aware that the statutory warranty from an owner-builder is only as good as the owner-builder’s ability to pay and/or their ability to rectify the defects of the home. Factors such as ongoing financial stability, continued local presence and an owner-builder’s willingness to fulfill his or her obligations, may affect the buyer’s ability to seek recourse for these defects. Licensees acting for buyers of such homes should advise buyers to consider these issues in making their purchase decision.

Owner-Builder Disclosure Notice

Owner-builders who built their home prior to November 19, 2007 must continue to provide prospective purchasers with the old-form Owner-Builder Declaration and Disclosure Notice within the first 10 years after occupancy.

Owner-builders building under an Owner-Builder Authorization (after November 19, 2007) are required to provide an Owner-Builder Disclosure Notice, obtained from the HPO, to prospective purchasers within the first 10 years after occupancy. The owner-builder must advise the HPO of the occupancy date and the HPO does not release the Disclosure Notice until the one-year occupancy requirement has been verified. Subsequent purchasers are also required to provide the Disclosure Notice if they sell the home within the 10-year period. The Disclosure Notice will state that the home was built under an Owner-Builder Authorization, when the 10-year period started, and whether or not there is a voluntary policy of home warranty insurance in place for the home.

NOTE: A survey of owner-builders conducted in 2007 found that the majority of purchasers of owner-built homes did not receive a disclosure notice and did not know whether or not their home had home warranty insurance. Not providing a disclosure notice is an offence under the legislation and, thanks to stronger compliance tools now available to the HPO, the requirement to provide the disclosure notice will receive increased attention.

When a licensee represents a seller who is an owner-builder, or who is a subsequent owner within the first 10 years as required by the HPA Regulations, the licensee should insert a clause in the Contract of Purchase and Sale confirming delivery of the Owner-Builder Disclosure Notice as follows:

Receipt of Owner-Builder Disclosure Notice Clause

The Buyer acknowledges having received a copy of the Owner-Builder Disclosure Notice dated (date), prior to making this offer, in accordance with the Homeowner Protection Act and Regulations.

Permission To Sell

Despite the occupancy requirement for owner-builders, the HPA does allow an owner-builder to apply to the HPO on the basis of undue hardship for permission to sell during construction or earlier than 12 months after occupancy. For homes built under an Owner-Builder Authorization, applicants can download an application form from the HPO website and mail in the completed form along with any required supporting documentation and the applicable processing fee. Such approvals are not given lightly and conditions may be imposed on any approval given. An owner-built home may not be offered for sale or sold either during construction or earlier than the 12 months from obtaining an occupancy permit without approval.

Illegal Sales under the HPA

Licensees acting for either owner-builders or buyers can avoid becoming a party to an offence under the HPA by remembering the following:

• Owner-built homes may not be offered for sale or sold without providing the Owner-Builder Disclosure Notice to all potential buyers.
• For owner-built homes since November 19, 2007, Owner-Builder Disclosure Notices must be obtained from the HPO and will not be released until the one-year occupancy requirement has been verified.
• The HPO is advised by the Land Title Office whenever the title of an owner-built home is transferred and pursues enforcement action if the sale is illegal (which may include compliance orders, monetary penalties, court injunctions, or convictions under the HPA).

Licensees can assist owner-builder clients by advising that occupancy permit information should be filed early with the HPO (owner-builders can file using their online account) so the HPO will have time to verify the information and provide an Owner-Builder Disclosure Notice well in advance of any offers for sale.

Further information about the requirements of the HPA is available in the Professional Standards Manual (www.recbc.ca/licensee/psm.html) and on the Homeowner Protection Office website (www.hpo.bc.ca).

The Homeowner Protection Office (HPO) helps to protect British Columbia home buyers every day by enforcing the Homeowner Protection Act (HPA) and its regulations. In fact, the HPO works with a number of industry partners, including builders, local governments, and regulatory agencies like the Real Estate Council (the Council) to ensure that consumer protection measures are upheld.

This cooperative approach increases awareness of the HPO’s compliance mandate and its enforcement tools. It also serves to promote voluntary compliance through education and awareness. Operating province-wide, the HPO’s compliance team includes staff at the head office in Burnaby and field investigators based in regional offices in Victoria, Penticton and Prince George.

The HPO has an important role to play in sharing information with real estate licensees so that they can properly advise their clients. This includes being aware of helpful online resources and public registries that are available on the HPO website. For example, licensees can search the HPO’s New Homes Registry for free to find out if a home has a home warranty insurance policy and was built by a Licensed Residential Builder, or if it was built without home warranty insurance under an exemption, such as an Owner Builder Authorization.

The HPO and the Council recently signed an Information Sharing Agreement. Effective June 6, 2013, the Agreement allows both organizations to share pertinent information pertaining to their respective licensees in order to assist each other with effectively regulating their areas of responsibility. As part of its compliance work, the HPO frequently sends information letters to licensees and managing brokers regarding homes that licensees are either listing for sale or working with buyers to purchase, and that are in contravention of the HPA. The HPO has posted an advisory on its website indicating that information letters sent to real estate licensees and managing brokers may be copied to the Council.

To learn more about the HPO or to view public registries, visit www.hpo.bc.ca. The HPO website offers a range of helpful online resources, and licensees can subscribe to receive News and Tips for Real Estate Professionals.

Since the June 2013 Report from Council newsletter, the following actions have been taken as a result of disciplinary hearings and Consent Orders conducted by the Council.

Trading Services

• Marco Vincenzi
• Victor Uganec
• Daniel Robert McSkimming
• Deborah-Kim Rice
• Ian Murdoch Thompson
• Lorris (Larissa) Mary Hadley
• Katherine Ann Campbell

Trading Services

• Balhar Mangat

Property Management

• Lorin Bruce Campbell

• Johnson Castaneto Salanga