Regulatory Statement

Purpose

This Regulatory Statement (“Statement”) sets out the position of BC Financial Services Authority (“BCFSA”) with respect to licensing requirements for non-profit organizations providing rental property management services.

Non-profit organizations engaged in real estate services other than rental property management may wish to seek legal advice regarding the application of licensing requirements under the Real Estate Services Act (“the Act”).

Background Information

Non-profit organizations are active participants in B.C.’s real estate market, playing an important role in providing access to and managing non-market housing. They often operate under arrangements with municipalities and government/Crown corporations; depending on the circumstances of the arrangements, the non-profit organization may or may not required a license under the Act.

As set out in Section 1 of the Act, “real estate services” include trading services, rental property management services, and strata management services. “Rental property management services” includes trading services in relation to the rental of real estate, collecting rents or security deposits, along with managing the real estate on behalf of the owner. The latter can include making payments to third parties, negotiating or entering into contracts, supervising employees or contractors hired or engaged by the owner, as well as managing landlord and tenant matters.

The Act also defines a “principal”, in the context of rental property management services, as the owner of the rental real estate to or on behalf of whom the services are provided. An “owner” is defined under the Act as a person entitled to possession of the real estate who exercises a right to sub-rent or sub-lease the real estate to another.

Section 3(1) of the Act sets out the requirement to be licenced to provide real estate services. A person must not provide real estate services to or on behalf of another, for or in expectation of remuneration, unless the person is licensed to provide those services, or is otherwise exempted from the requirement to be licensed. For further information on licensing exemptions, please visit Licensing Exemptions Information.

Section 2.1 of the Real Estate Services Regulation (“Regulation”) provides an exemption from the requirement to be licensed for employees of a principal. This exemption applies where (1) the real estate services are provided to or on behalf of a principal in relation to those services, (2) the individual providing services is the employee of the principal to whom or on whose behalf the services are provided, and (3) the individual is not providing real estate services to or on behalf of any person other than the principal to whom or on whose behalf the services are provided.

Section 2.15(2) of the Regulation specifies that an individual who provides rental property management services for properties administered by the British Columbia Housing Management Commission (“BC Housing”), and where the property is rented to tenants based on their income, is exempt from the licensing requirements under Part 2 of the Act. Section 2.15(3) further provides that a non-profit organization that has entered into an agreement with BC Housing and is providing rental property management services in relation to property rented to tenants based on the tenant’s income, is exempt from the licensing requirements under Part 2 of the Act.

For the purposes of Section 2.15 of the Regulation, a “non-profit organization” means an organization constituted exclusively for charitable or benevolent purpose, with no part of its income being payable to or otherwise available for the personal benefit of its members or shareholders.

Requirements

Non-profit housing organizations operating as a principal

Under the Act, an individual or entity that is a principal is excluded from the requirement to be licensed. This would apply, for example, where a non-profit organization owns and self-manages rental units.

This would also apply where the organization has entered into a lease agreement with a property owner (e.g., a municipality) and, in turn, sublets the rental units in the leased building. BCFSA interprets this arrangement as making the non-profit organization an owner of the property, as defined in the Act. This is because the non-profit organisation has possession of the property and the right to sublet. As an owner, the organization is considered a principal in the context of rental property management services. Therefore, it is exempt from the requirement to be licensed.

Employees of a principal are also exempt from the requirement to be licensed, provided that they are employed by the principal and the rental property management services they provide are provided to – and only to – the principal.

Operating under an agreement with the British Columbia Housing Management Commission

Under Section 2.15(3) of the Regulation, a non-profit organization is exempt from the requirement to be licensed where they have entered into an agreement with BC Housing and are providing rental property management services in relation to property administered by BC Housing that is rented to tenants based on their income.

This means if a non-profit organization has entered into an agreement with a government corporation other than BC Housing, or they have entered into an agreement with BC Housing other than to provide rental property management services in relation to property administered by BC Housing that is rented to tenant’s based on their income, this arrangement would not meet the conditions for the exemption. In such a situation, the non-profit organization providing rental property management services on behalf of the government corporation would need to be licensed to comply with the Act, unless another licensing exemption applies.

Operating under a service agreement with a principal

Where a non-profit organization enters into a service agreement with a principal, such as a municipality, to provide rental property management services on their behalf for a fee under an arrangement other than a lease or an agreement with BC Housing, the non-profit organization must be licensed under the Act. This is because the non-profit organization is not acting as a principal, given they do not have ownership or long-term possession of the property, and the licensing exemption in Section 2.15 of the Regulation does not apply. Instead, they are simply providing rental property management services for a fee on behalf of the municipality, and to do this, they must be licensed.

Additional Information

If you have any questions about licensing requirements, please contact Licensing at licensing@bcfsa.ca.

If you need further clarification on this regulatory statement or have any additional questions, please contact our Practice Standards Advisors at advisor@bcfsa.ca.  

Legislation

Real Estate Services Act, Section 1 and 3
Real Estate Services Regulation, Section 2.1 and 2.15

Copies of the legislation are available from www.bclaws.gov.bc.ca

Regulatory Statements issued by BC Financial Services Authority (“BCFSA”) establish the form, content, or timing of a regulatory submission; prescribe the manner of meeting or enforcing a requirement existing in an enactment; and/or provide BCFSA’s interpretation of the laws that BCFSA administers. Accordingly, BCFSA expects regulated entities (and others where applicable) to use the form or process, and/or to comply with the requirements set out in a Regulatory Statement. Regulatory Statements may refer to law, practice, or background existing at the time of publication. If relying on the legal information contained in a Regulatory Statement, confirm that any references to the law, including enabling legislation, are up to date and obtain independent legal advice, when needed. Regulatory statements are effective on the date of their publication, unless stated otherwise.