All for One, One for All — New Team Rules in Effect #559
CATEGORY: Legally Speaking
TAGS: BC Financial Services Authority Business Practices Real Estate Services Rules Real Estate Teams
The BC Financial Services Authority (BCFSA) has introduced new Real Estate Services Rules (“Rules”) with respect to teams effective April 1, 2023. But, what’s new in them?
- Teams names must be registered with BCFSA;
- Family names, when used in joint advertising, where the family members are an unregistered team are no longer permitted as an exception;
- Teams must be composed of at least two licensed members;
- Team members must be associated with the team and must be licensed to the same brokerage;
- Team members cannot provide trading services outside of their team;
- All team members are collectively the designated agent of all the team’s clients;
- Real estate professionals can only be members of one team at a time.
The regulator’s historical decisions on teams suggest that timely registration and notice to the regulator is important as, where real estate professionals have failed to register a new team or have failed to register a team following a brokerage change in a timely manner, penalties have been assessed by the regulator.
The regulator has published a lengthy FAQ to assist real estate professionals in various situations to assist in compliance with the new rules by the deadline (see Real Estate Teams FAQs)
Why do the Team Rules matter?
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.
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 related brokerage of the members of a real estate team must, under section 32 [designated agency], designate all members of the real estate team to provide, as designated agents, trading services to or on behalf of any client of any member of the team.
Before the team rules come into effect, teams are well advised to carefully examine how they are conducting day-to-day business to ensure they don’t create unnecessary conflict of interest.
- Team Member A and Team Member B both show different buyers the same property on the same day;
- Team Member A and Team Member B receive conflicting listing instructions from separating spouses;
- Team Member B’s seller cancels a team listing and lists their property with another brokerage, Team Member A is contacted days later by a potential buyer to show the same cancelled listing.
As illustrated by each of these situations and absent frequent and daily communication, a conflict of interest may arise. Teams should have a process whereby client information is shared confidentially and regularly to ensure that each team member is aware of the business activities of the other team member.
Given the requirements of the Rules, timely communication of business activities between the team members will be required for regulatory compliance.
Real estate professionals may need to modify or stop some of their daily business activities to align with the new requirements.
Implied Teams – Be Careful with Business Practices
Rule 42.2 has been expanded with broad language to capture into the concept of “teams” those activities where real estate professionals are likely going to be perceived by the public as doing business together. This rule may capture many real estate professionals who have historically not considered themselves to be part of a “team.”
Examples of business practice real estate professionals should consider that may create a “team” may include:
- Licensed family members who advertise jointly or who otherwise have access to each other's files;
- Employing a licensed assistant (they would be a defacto team member under the rules);
- Referring the majority of your in-market referrals to a single REALTOR®;
- Shared marketing;
- Regularly co-listing properties or co-hosting open houses;
- Regular meetings of two or more REALTORS® to discuss each other’s current business activities;
- Sharing an office space outside a brokerage;
- Ability to regularly access client data (paper or electronic) of another real estate professional;
- Sharing an unlicensed assistant who has access to both of your client databases;
There are many more examples that can conceivably be caught by this expansive rule, so REALTORS® should review their own individual situations with their managing broker and ask the following question: If the activity in question were to be viewed by the public could they possibly assume that the two individuals in question were regularly working together?
Real estate professionals who are currently not on teams should examine their existing working relationships to ensure that they will not be a team under the new rules and if necessary, take those steps to ensure the separation of their business activities from other Real estate professionals or forming a team.
The new Real Estate Services Rules on teams go into effect as of April 1, 2023.
To subscribe to receive BCREA publications such as this one, or to update your email address or current subscriptions, click here.
What we do
Popular tags within Legally Speaking
- Contract of Purchase and Sale
- Standard Forms
- Real Estate Practice
- Statistical Releases
- Strata Properties
Popular posts from BCREA
Housing Market Update – May 2023May 16, 2023
Mortgage Rate ForecastMar 22, 2023