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New rules for real estate teams in B.C.: Here’s what you need to know

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The B.C. Financial Services Authority (BCFSA) has introduced new rules for real estate teams in the province. 

In a blog post for the BC Real Estate Association (BCREA), Peter Borszcz, lawyer and partner at Montgomery Miles & Stone Law Firm, explains that new rules: 

  1. Team names must now be registered with BCFSA;
  2. Family names, when used in joint advertising where the family members are an unregistered team, are no longer permitted as an exception;
  3. Teams must be composed of at least two licensed members;
  4. Team members must be associated with the team and must be licensed to the same brokerage;
  5. Team members cannot provide trading services outside of their team;
  6. All team members are collectively the designated agent of all the team’s clients;
  7. Real estate professionals can only be members of one team at a time.

“Forming a team expands your agency obligations, in that you will now owe agency obligations to all the current clients of all the existing team members,” Borszcz explains. 

“When considering how agency works within the rules for teams, remember the motto by Alexandre Dumas in The Three Musketeers, ‘All for one, one for all.’ New Rule 42.4(5) clearly states that team members share their agency obligations.”

 

“The regulator saw the opportunity to identify what that gap looks like, do a consultation, engage the industry, engage realtors, brokers and work on rules that would actually make sure that this new thing called teams was actually being properly regulated.”

– Trevor Koot, CEO, BCREA

 

Trevor Koot, CEO of the BC Real Estate Association, says the primary reason for the change is that teams weren’t necessarily contemplated in the regulator’s Real Estate Services Act.

Koot elaborates, stating that the absence of a clear definition and context for a business model that has organically developed within the industry over time is a common occurrence. This evolution is influenced by factors such as brokerages, technological advancements, and changing dynamics in how consumers engage with realtors, licensees and the real estate sector.

“As all of that changes and adapts to new environments as time goes on, then regulation very often has gaps, and so this was one of those gaps that just evolved,” he adds.

“The regulator saw the opportunity to identify what that gap looks like, do a consultation, engage the industry, engage realtors, brokers and work on rules that would actually make sure that this new thing called teams was actually being properly regulated.”

Koot expects the impact on the industry will be negligible. Some people weren’t registered in the past as teams because they were family members, which used to be an exclusion. Now they’re required to register. 

 

“Limited dual agency was abolished in British Columbia about three years ago. The new rules make it very clear when you have a team, the entire team’s fiduciary responsibility is as if it’s one person.”

– Elton Ash, EVP, Re/Max Canada

 

Elton Ash, executive vice-president of Re/Max Canada, said the new rules tighten down the team’s agency fiduciary responsibility to consumers.

“Limited dual agency was abolished in British Columbia about three years ago. The new rules make it very clear when you have a team, the entire team’s fiduciary responsibility is as if it’s one person,” says Ash. “So if any member of the team is dealing with the consumer to list a home, the entire team that the individual realtor is a member of is bound by the fiduciary responsibility to that seller. It’s not that one agent,” he said.

He gives the scenario that if a consumer attends an open house where a team member is present, it is essential for that team member to clearly inform the consumer about a form that outlines the realtor’s relationship with them. If that person expresses interest in the property, the realtor must disclose their responsibilities. Ash emphasizes that it is strictly prohibited for the team member to disclose confidential information about the seller or provide advice or consultation to the potential buyer. Instead, the team member must refer the consumer to an external party, as the same fiduciary responsibility binds the entire team.

Ash said the new regulations clarify the roles and responsibilities of team members. 

“It provides a greater administrative and regulatory responsibility to the team leader in administering how the team works on a day-to-day basis,” he said.

 

Realtors who are not currently part of a team should carefully evaluate their current working relationships, Borszcz cautions

 

In his blog post, Borszcz gives the following examples of business practices that may create a team:

  1. Licensed family members who advertise jointly or who otherwise have access to each other’s files;
  2. Employing a licensed assistant (they would be a defacto team member under the rules);
  3. Referring the majority of your in-market referrals to a single realtor;
  4. Shared marketing;
  5. Regularly co-listing properties or co-hosting open houses;
  6. Regular meetings of two or more realtors to discuss each other’s current business activities;
  7. Sharing an office space outside a brokerage;
  8. Ability to regularly access client data (paper or electronic) of another real estate professional;
  9. Sharing an unlicensed assistant who has access to both of your client databases.

 

He advises real estate professionals who are not currently part of a team should carefully evaluate their current working relationships. 

The new rules came into force Apr. 1, 2023, and according to Borszcz, the regulator’s past rulings on teams indicate the significance of prompt registration and notification to the regulator. 

He cautions realtors, explaining instances, where individuals have neglected to register a new team or have not registered a team in a timely manner following a brokerage change, have resulted in penalties.

 


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