British Columbia has become the first province to ban dual agency, with new rules set to come into force on March 15, 2018.
“These rules will significantly change the way that real estate services are provided in British Columbia,” said Micheal Noseworthy, B.C.’s superintendent of real estate. “The changes will empower consumers and provide clarity around the role of an agent. Ending dual agency removes the potential for conflict and serious problems. We want to create transparency for both consumers and licensees to ensure everyone understands in whose interest licensees must be working.”
The Office of the Superintendent of Real Estate (OSRE) says the new rules originate from the recommendations made in the final report of the Independent Advisory Group on Real Estate Regulation in B.C. in June 2016.
It says the new rules will also:
- Require enhanced disclosure of real estate licensee remuneration that will inform consumers about how remuneration is to be divided between a listing brokerage and co-operating brokerage.
- Ensure licensees inform consumers of the duties and responsibilities owed to both clients and unrepresented parties before working with consumers.
- Warn consumers of the risks of relying on a licensee to provide limited assistance if the licensee already represents another party to the transaction.
The rules will also provide for a small exemption to the dual agency prohibition in situations where a property is so remote as to make finding another agent extremely difficult. Strict reporting requirements will apply in these circumstances, says OSRE.
A consultation on the rules was completed on Oct. 6 after OSRE posted a draft version of the proposed rules for a 30-day public comment. The dual agency ban was supported by 62.6 per cent of the public but just 34.7 per cent of licensees.
Among the objections to the rule was that a restriction on dual agency would limit a consumer’s choice to work with their preferred licensee, with whom they may have developed trusting, long-standing relationships, and that consumers may prefer to work with the listing agent, whom they believe has the most information about the property and may be able to save on commission.
In response, the OSRE says that “acting as a dual agent may impede the ability of licensees to fulfil the fiduciary duties owed to both of their clients. While regulation, by its nature, limits consumer choice, the restriction on dual agency is a reasonable limitation in order to ensure consumers are protected. Further, the results of the consultation do not demonstrate that the public is concerned with the limitations the rule would place on consumer choice as the majority of public respondents were in favour of the restriction on dual agency.”
A proposal that OSRE adopt transaction brokerage so that consumer choice is not limited was rejected. “Transaction brokerage provides no agency to both parties. While transaction brokerage addresses some of the conflicts of interest associated with dual agency, it reduces the range of services that licensees can provide and results in lesser consumer protections for all parties to a transaction,” says OSRE.
“The feedback received from licensees indicated a strong desire for education on the new rules, something strongly supported by both OSRE and the Real Estate Council of B.C. The superintendent will require licensees to complete education relating to the new rules and intends to publish a rule for feedback in the coming weeks to support this requirement,” says OSRE.
For the full article, visit: http://bit.ly/2BpFobm