Teams, Agency and Disclosure: New Dual Agency Rules
On June 15, 2018, consumer protection rules from the Superintendent of Real Estate will take effect. The goals of the rules are to ensure consumers are well-protected, well-informed, and can benefit from the undivided loyalty of a real estate licensee who is acting in their best interests. These rules will protect consumers by:
- Prohibiting limited dual agency in almost all cases, and
- Requiring new disclosures about commissions, services to expect from a licensee, and the risks of being an unrepresented party in a real estate transaction.
The Superintendent’s rules will change the way real estate is practiced in BC, and will enforce the fundamental REALTOR® duties of undivided client loyalty, confidentiality, managing conflicts of interests, and informed client consent. Clients will be further empowered to make decisions in their own best interests. In March, the Superintendent distributed more draft rules, which are currently under consultation.
Ensure You're Well-Informed
Beginning June 15th, REALTORs® will be expected to begin using new disclosure forms with clients and unrepresented parties, as required by the Superintendent’s Rules. To make sure that you as a consumer are well-informed and well-protected, you should expect the following of any real estate agent:
- Clear and open communication, whether you're a client, potential client, or unrepresented party.
- Active listening to understand your expectations and questions.
- Professional judgement.
- Enough time to ensure mutual understanding between you and the agent, and that you are making fully-informed choices.
- Carefully documented conversations and agreements, to prevent misunderstandings later.
Four Questions to Ask Yourself
If you are already receiving real estate services from an agent, you can start assessing your information and their services by asking these key questions:
- Has your agent clearly explained agency relationships, and their fiduciary duties?
- If you are an unrepresented party, has the agent explained the limits to the services that they can offer you, and the services they can't provide?
- Has your agent explained the options for managing any conflicts of interest that might arise?
- Has your agent made it clear that while they can offer you expert advice, ultimately you are the decision-maker?
Real Estate Teams
Teams are considered to be collectively the designated agent of a real estate client, because team members typically share confidential information about clients. This means that after June 15, 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 Services and the Disclosure of Risks to Unrepresented Parties.
Before dealing with an unrepresented party, an agent must encourage the unrepresented buyer to seek independent representation from another real estate agent.
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.
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.
Do the agency and disclosure rules 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, and recreational.