The issue of assignments is a hot topic with the media and elected officials these days.
In early February, the Real Estate Council of BC established the Independent Advisory Group (IAG) to review the Council’s handling of licensee practices. This move was strongly encouraged by the provincial government, following the publication of several media articles drawing attention to potentially unethical behaviour around the assignment of real estate contracts. The IAG will make its final report by the end of May.
On March 18, Premier Christy Clark announced that her government would not wait for the IAG report before taking action on real estate licensee misconduct, conflict of interest and housing affordability. Among her promises was new rules to prevent misconduct related to assignments. The new rules are being developed now, and BCREA is in contact with government officials to ensure the changes meet the needs of consumers and REALTORS®. The Association is also working to make the transition as easy as possible for REALTORS®.
In the meantime, there are several things REALTORS® can do to ensure they are using the best practices:
1. Raise the matter of assignments with your clients, and document the results of those conversations. Two clauses available through WEBForms® deal with assignments:
Assignment Option Clause
The Buyer reserves the right to assign this contract in whole or in part to any third party without further notice to the Seller; said assignment not to relieve the Buyer from his or her obligation to complete the terms and conditions of this contract should the assignee default.
No Assignment Option Clause
The Buyer agrees not to assign this contract in whole or in part to any third party.
2. Refer to the Council’s Professional Standards Manual , which already contains excellent guidance regarding assignments.
3. When a REALTOR® intends to buy or sell, disclose your intentions, as per the following:
- REALTOR® Code, Article 11. A REALTOR® shall not buy or sell, or attempt to buy or sell an interest in property either directly or indirectly for himself or herself, any member of his or her Immediate Family, or any entity in which the REALTOR® has a financial interest, without making the REALTOR®’s position known to the buyer or seller in writing.
- Real Estate Council Rules 5-9 (paraphrase). If a licensee acquires, directly or indirectly, or disposes of real estate, or if the licensee assists an associate in acquiring, directly or indirectly, or disposing of real estate, the licensee must make a disclosure in writing to the opposite party before entering into any agreement for the acquisition or disposition of the real estate.
4. Read the February 2016 issue of the Report from Council or more information about licensees disclosing their interests in trades.
5. Contact your local real estate board to find out whether it has plans to offer BCREA’s Professional Development Program course: Assignments of
Contracts of Purchase and Sale.