Much has been written about the B.C. government’s decision to end the self-regulation of the real estate industry by appointing a new dedicated superintendent of real estate, thus putting the industry under “government oversight” in order to provide better consumer protection. Let’s understand what this means and how it may impact other provinces in Canada.
1. All real estate councils operate as an arm of the government.
It is wrong to assume that somehow just because the real estate industry is self-regulated, the government is not overseeing what is going on. Every real estate council takes their responsibility very seriously and this is why in Ontario, for example, for every complaint the Registrar may receive from a member of the public, a file is opened and the matter is dealt with according to the nature of the complaint. The result could in some cases lead to a fine or the loss of licence, if the matter is serious. The government always has input, as was the case in Ontario when Bill 55 was instituted, in an attempt to prevent the practice of phantom offers in bidding wars.
2. Does Ontario have the same issues as B.C.?
The main issue that arose in B.C. appears to have been the “shadow flipping”, where some agents purchased properties themselves that they had already flipped for higher prices to other buyers, without disclosing. This would have been a clear violation of the Ontario Real Estate and Business Brokers Act 2002 Code of Ethics and to my knowledge, has rarely, if ever, occurred. Registrants in Ontario are required to always act in the best interests of their clients.
Many of the recommendations by the panel in B.C., regarding continuing education, more diligent enforcement and being responsive to the public, are already being done by the Real Estate Council of Ontario. A better solution would have been to just import the Ontario model to B.C. but that would not have generated the same headlines for the government in B.C.
3. Will this mean more investigations in Ontario?
Part of my own real estate practice is assisting real estate salespeople when a Real Estate Council of Ontario (RECO) complaint is made against them, to make sure that they fully co-operate with the investigation and provide the appropriate response to the complaint. Consumers seem to think that in Ontario, for example, the Registrar is a collection agency and if they complain, they will see some money from the salesperson or broker. Or they think that just by threatening to complain, the salesperson will rush to pay them some money not to complain.
Consumers need to be reminded that RECO is not a collection agency and solely determines whether a salesperson acted ethically and professionally in the circumstances. Any fines levied by RECO do not go to the consumer, they go to the Registrar. Still, since this issue is now in the newspapers, it can be expected that more consumers may decide to complain against salespeople and brokers in other provinces if they suspect any unethical behaviour is going on.
4. What are the key lessons for agents and brokers when it comes to consumer complaints?
In my experience, it always comes down to having a written record of everything you do. Did you properly sign up the prospect to a listing or buyer representation agreement and leave them with a copy? In a bidding war, did you obtain written instructions, for example, to hold off on presenting offers to a certain date, and later, if a pre-emptive offer appears, did you receive written instructions from your seller to now consider this offer? Did you make sure that the buyer client spoke to their lawyer or completed OREA form 127 any time they ask you to make an offer without conditions? Did you give your client a copy of any accepted offer immediately, preferably by email, where there is a written record? Did you confirm any instructions by email or text, especially any changes during the course of negotiations?
When you are careful in keeping a written record of everything you do, you are not only well on your way to successfully defending against any complaint made against you by the public, you will also develop the right practices to create long term successful relationships with your clients, which will lead to repeat business and referrals.
Mark Weisleder is a senior partner, author and speaker at the law firm RealEstateLawyers.ca LLP. Contact him at mark@realestatelawyers.ca or toll free at 1-888-876-5529.
