Today in the BC Legislature I had the opportunity to further question the Minister of Finance in Budget Estimates with respect to whether or not she would consider stepping in to rectify numerous problems that have arisen from the impending ban on limited dual-agency transactions in the real estate sector. The BC NDP inherited this problem from the BC Liberals’ “sledgehammer” approach to dealing with what was largely a Metro Vancouver issue. There are profound consequences for rural BC if this ban goes ahead.

After a series of exchanges with the Minister, I became more and more reassured that she was aware of the impending crisis and is willing to step in.Below I reproduce the video and text of our exchange.

Video of Exchange

Text of Exchange

A. Weaver: I’d like to carry on the line of questioning that my colleague from Cariboo-Chilcotin has been pursuing.

I’ve got several letters here from various organizations, but first, I’d like to comment upon and seek your response to the statement that you’ve made. I do recognize, right off the bat, that this is legislation that government has inherited. It was brought forward as an amendment to the Real Estate Services Act by the former government. That amendment was put in, in the lead-up to, and following, some rather newsworthy issues that were occurring in Vancouver. The office of the superintendent of real estate was created through these legislative changes, and that office has put forward some measures which some would describe as a sledgehammer response to issues that arose in Metro Vancouver.

Now, there have been unforeseen consequences of this. According to section 89.2 of the Real Estate Services Act, the minister has regulatory power on all aspects of what the superintendent of real estate can do. So I would argue that, in fact, it is within the minister’s jurisdictional and legal right now to pass regulatory powers to limit the ability of the office of the superintendent, according to section 89.2 of the Real Estate Services Act, with respect to his or her jurisdiction in terms of licensing or requirements at this particular time.

Perhaps the minister could comment, and I will get back to some specific examples of why this is an important issue right now.

Hon. C. James: Thank you for raising the issue. The member is quite right. There are regulatory powers that exist around authority of the superintendent, as the member has mentioned, in the area of jurisdiction.

I think it’s important to note in this legislation, though, where the legislation identifies the superintendent as independent, that those regulatory powers also have to be balanced with the independence that is also in the legislation — so in taking a look at due process, whether due process was followed in bringing forward the rule; in taking a look at the discussion, the consultations, the work that was done around the consultations.

Remember that this recommendation around dual agency came forward as a central recommendation in 2016 from the independent advisory council. They brought this forward. They, again, did consultation. The superintendent’s office, again, lengthened the consultation.

I certainly, as I’ve said, have passed along the concerns. I think there are concerns there. But when I look at the balance of due process and balancing regulatory powers with the independence of the office, I did not see the ability to be able to utilize regulations in this specific case.

A. Weaver: With respect to the statement about the Independent Advisory Group, I understand that 28 recommendations were done. I would like to quote from a letter I received from the B.C. Northern Real Estate Board, which was copied to my colleague from Cariboo-Chilcotin. The letter says this:

“We are writing to request your support in our call to government for a review of the ban on limited dual agency. The ban was instituted, along with 28 recommendations from the Independent Advisory Group, after a limited review, no consultation with small communities and based on no empirical evidence.  It is important to remember that the IAG began its less than 15 weeks of work in response to a ‘shadow-flipping issue in the Lower Mainland.'”

I come back to this. This is a very real concern that has been outlined and addressed by the member for Cariboo-Chilcotin that I would describe solely as a sledgehammer response to issues that were arising in Metro Vancouver. As the member for Cariboo-Chilcotin pointed out, there was limited, if any, representation from rural B.C. on the IAG.

Again, coming back to the issue at hand here, I understand that the minister has inherited this office from the prior government. I understand that the 28 recommendations came from the IAG. The problem therein comes in exactly with that consultation process, as well as with the recommendations and their implementation.

Just today, May 15, 2018, one month prior to the full implementation, finally rules have been put up on a website. I received an email from a couple of realtors in Parksville today in this regard. They haven’t even had the instructions, the guidelines, about how they’re supposed to implement these. There are brokers who are profoundly troubled about the legal liability they are taking on, by what can only be perceived as a half-baked list of recommendation follow-throughs, to implement these on a timeline that is just not possible, when there are no educational tools available.

I’ll quote this right here. It says: “Today, one month prior to the scheduled rule implementation, the new forms and corresponding rules, interpretations, were finally emphasized, made available to licensees on the RECBC knowledge-base website. It’s notable that significant errors in the information required RECBC to retract and amend the information.” This is one month before it’s supposed to be implemented.

The error noted wasn’t typographical or grammatical but a clear misrepresentation of the rules. If there are troubles with the understanding of the rules with RECBC and the superintendent’s office and realtors in B.C. are trying to implement these in a month — one month —we’ve got a problem. I think it’s a duty and responsibility that the minister recognize that she has the regulatory powers under section 89.2.

Again, I ask the minister, knowing that she has alluded to the consultation process, knowing that there are profound flaws with that, including the inability of realtors to get information on the topic until today, which was then retracted, is the minister willing to step in and use her regulatory powers or to insist that the independent office actually delay the implementation of its regulations — in particular, a limitation on dual agencies — now as opposed to waiting until disaster ensues on June the 15?

Hon. C. James: Thanks to the member. I think it’s just important to unpack a little bit of the issues that the member raises, because certainly I’ve heard those concerns and heard those specific issues as well.

I think it’s important to note that information has been posted since January. They’re continuing to post. Today it was the new forms that were posted. So it’s not that no information had gone out. Today they had the new forms go up. There have been previous postings that have been happening since January.

I think when the recommendation came forward — and the member, I’m sure, will remember this, as we both were part of that discussion — as the member had said earlier, it was in reaction to making sure that there was consumer protection in place.

Then concerns, as the member has rightly pointed out, were raised about representation for all of British Columbia. That’s why you see the exception there for rural and remote communities so there is an opportunity for rural and remote communities to have an exception to this rule if there isn’t proper representation.

Again, I come back to the issue of balancing the independence with the regulation. When there was process, when there was consultation, all of the real estate boards, all the regional boards were consulted through this process.That includes the Northern Real Estate Board and other real estate boards. The Real Estate Council, which is the body that licenses real estate agents — their own organization — has given written confirmation that they believe that everyone will be up and ready to go on the 15th of June.

Again, that reassurance has been given. So given all of that, from my perspective as minister, I think there was due process. It doesn’t mean that there aren’t concerns that have still been raised. That’s part of why, as I said, I’m making sure that I go through the review so that if there’s clarification around who is responsible for what, we’re able to look at that.

If there are still concerns after the implementation date, if people feel that the exception isn’t working, those will be concerns that I’ll continue to raise as well.

A. Weaver: I have two final questions. This is with respect to follow up on the issue.

Again, I’m quoting from a letter that I received today, in fact, from the Real Estate Alliance of B.C. This letter is referring to a response that they got on May 14, which was yesterday, from the office of the superintendent of real estate. The office of the superintendent said this: “Licensees should not wait until June 15, 2018, or council’s new course to prepare for the approaching implementation date. OSRE encourages licensees to take proactive steps to educate themselves” — in bold — “and determine what, if any, business practice changes are necessary to comply with the rules.”

The superintendent is confident that the industry can and will adapt in a positive manner to the new rules. Well, that’s not very reassuring, because this is the counter-argument that is given. The assumption that licensees — these are realtors on the street — will be able to educate themselves and understand how to comply with the rule when it takes effect is unrealistic and unreasonable.

There are changes to the rule interpretations that are ongoing — daily, in some cases. Questions posed to regulators regarding the new rules have yet to be answered. The mandatory education course on compliance under the new rules has not yet been launched, nor will licensees have access to the education prior to the effective date of the rule implementation. The forms have just been made available to licensees on May 15.

We have a real problem here. We have an office of the superintendent of real estate that is implementing these new regulations, which are being applied in response to dealing with shadow flipping in Vancouver, frankly.

We’re having consequences across B.C. — one last question on limited dual agency in a second — we have realtors on the street who can’t get questions answered. We have the brokers who have a fiduciary responsibility, who are unable to train their realtors, because they can’t get answers. We’ve got the Real Estate Council not knowing who is on first base in the office of the superintendent, and we have rules changing on a daily basis.

Forms came out today, and apparently, one had to be retracted. This is a gong show, hon. Chair. And we cannot expect one of our…. I think it’s something like 30 percent of our GDP is in this broad sector. We cannot afford, as an economy, to have this uncertainty continue in the real estate sector, particularly in light of the fact that there are issues like speculation tax, employers tax, which I’m sure we’re going to canvass more thoroughly.

My question, again — the final question on this topic — to the minister is this. Will she, in recognition that there is chaos out there in terms of education, exercise her right under section 89.2 of the Real Estate Services Act to step in and ensure that the implementation date is deferred so that a proper consultation and due diligence can be done to ensure that licensees are actually educated across British Columbia.

Hon. C. James: I come back again to due process because I think that’s really the critical piece here when we’re taking a look at new rules coming in or we’re looking at changes and the ability to use regulations to override the independence. That’s really the balance that is required when you take a look at the legislation — the ability to set regulations but to be balanced off with the legislation that makes it very clear that the superintendent’s office is independent.

The Real Estate Council, as I said, is the governing body for all real estate agents in the province, rural and urban. They cover everybody. They are the professional body for real estate agents — have assured us and assured the superintendent’s office that agents will be prepared. That is the assurance that they have provided. They are the body that governs the real estate agents.

The rule was announced in November 2017. So the rule was announced. I recognize, as the member raised, that there continue to be questions raised. But the information continued to go out.

I think, just in case anyone’s wondering what the dual agency is…. I realize we haven’t really talked about what the dual agency rule is. This is related to not allowing a real estate agent to represent both sides, as a consumer protection issue.

This isn’t a rule that changes practice for most agents or most communities, because you basically are saying to someone, “This is a practice that you can’t do,” and then the exception provides an opportunity in those communities where there are few real estate agents — or remote communities — the ability to get the exception. Someone can then look at representing both sides. So that opportunity is there.

I think the last piece I just want to touch on is the personal responsibility for real estate agents, who are professionals and who do have a responsibility to inform themselves.

Do I believe that we need to make sure that the information continues to be out there? Will I continue to raise concerns that I hear, just as the member has done, with both the superintendent and the council? Yes, I will. But in weighing the due process with the ability to use regulations to override the independence — I do not see the ability to be able to do that.

A. Weaver: My final question — and I’ll come back to that again — is…. Clearly I disagree with the minister on this. And clearly, just to follow up on the limited dual agency….

The limited dual agency serves very useful purposes in many cases. In rural B.C., it’s very important for those educated buyers who want to go directly to the listing agent. They know that they can negotiate a better price because there’s only one side of a commission that has to be negotiated.

Sometimes, for example, a realtor might have a slew of clients that they’re working with. They get a listing. What’s happening right now is that one of their clients….

Let’s suppose that I’m a realtor — let’s pick: in Comox — and I listed a house and had 15 clients who were going to come to that house. Then one of my people want to buy that house. Well, I go and find my other friend to be a realtor with them, and I now have to get off of both sides of this because I’m in a conflict because that was originally my client. Now I’ve assigned that client over to someone else, but I’m still the listing agent. I can’t even be the listing agent for that house.

There are many, many problems that have arisen from this application. I recognize, again, that the government has inherited this mess from the previous government. And as it played out…. I don’t, frankly, think the previous government had thought it was going to play out the way it has, either. But we have a situation now where they have an impending deadline that’s going to likely lead to chaos.

I know, again, that the minister is setting up a review process. Why this is important is that there is a recognition that there can be potential conflicts of interest that arise in limited dual agencies. This is why, for example, in the province of Alberta, they’ve created something called a transactional agency, where they’ve created a different type of response for dealing with limited dual agencies in the case of potential conflicts. The review that B.C. is doing might, for example, come and recommend an approach like this.

The problem with not delaying is that if the B.C. review says, “We can see that it’s better to follow this transactional agency approach like they do in Alberta,” we’ve already gone and switched the whole system in B.C., and now we’re going to switch it back. This is chaos upon chaos. Surely the prudent response would be to pick up the phone or use regulatory powers under section 89.2 and say to the office of the superintendent: “Until such time as this review has been completed, we will recognize the potential conflict that may arise in limited dual agencies. There are solutions on the table. We don’t want to fix it twice. So let us delay the application of limited dual agency until, say, the fall, at which point we’ll re-look at it then.”

My question to you is: will the minister consider either picking up the phone and suggesting a delay on this or using what she seems reluctant to do — regulatory powers under section 89.2?

Hon. C. James: I just want to clarify one piece because this, again, comes to the details of the dual-agency rule that’s in place. Because of the consultation that occurred, because of the discussion that has been going on since November when the rule came out, there actually is a clarification. The example that the member used — where someone is selling a place, they’re representing it, they had a former client, the person came — that they would have to exclude themselves from both those sales is actually not accurate. With the rule clarified, they do have an ability…. Where both parties agree that they understand that that’s there, the person can continue to represent one of the parties. They don’t actually have to exclude themselves from that sale completely. I just wanted to make sure that people are aware of that. That is an important piece.

Again, when I take a look at that rule clarification, when I take a look at the exception that’s been put in place for dual agency in remote and rural communities, it’s hard not to say that there was a consultation process and exceptions made because of that consultation process — therefore, listening to the concerns that were raised to be put in here.

I think the other piece, just to clarify for the member, is that the review that’s going on is not a review of the rules. Right now the superintendent, according to the legislation, has the ability to set those rules. The review that’s going on is to clarify roles and responsibilities. Who is responsible for what? Where are there problems in place? Where does that need to be addressed? So the review wouldn’t, in fact, touch the rules one way or the other because that’s not part of the review process. It’s a review around roles and responsibilities — clarification there.

A. Weaver: I just wanted to thank the minister for her comments. I recognize that there were some…. This is part of the problem, actually. There’ve been numerous changes. Things are changing on the fly. With respect to the upcoming review, we must not forget section 89.2. Ultimately, neither of these other bodies has the rules. Ultimately, the rules fall squarely in the jurisdiction of the minister, who has regulatory power to say what they can and cannot do, in terms of the rules. I think that the minister needs to own some of these rules because they are within her regulatory power. I hope that we see that happen in the months ahead.