Learning from an RECBC Discipline Decision #535

Feb 26, 2021

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Posted by
Brian Taylor
Norton Rose Fulbright LLP

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Starting in 2016, the real estate profession has seen numerous regulatory changes, including increased fines, new regulations, greater involvement from the Real Estate Council of BC (RECBC) and the elimination of limited dual agency. As a result, I have tried to focus many of my more recent articles on discipline decisions of RECBC. While discipline decisions sometimes generate unwanted attention, it is important to put them in perspective. In 2020, there were close to 100,000 MLS® transactions in BC. A tiny fraction (probably less than 1%) lead to any type of disciplinary action. While discipline decisions are a rare occurrence, they are important to review so that all licensees are better aware of the conduct that RECBC considers unacceptable and why. 

A recent RECBC decision1 deals with the lockbox system that is prevalent throughout the province. A buyer's agent had arranged with the seller's agent for her clients to view his listed property. As is often the case, neither the seller nor the seller's agent would be present at the viewing. The buyer's agent was to gain access to the property by using a key contained in a lockbox at the property. Shortly before the viewing, the buyer's agent realized she would be unable to attend the viewing in person. Without contacting the seller's agent or her managing broker, the buyer's agent obtained the code to the lockbox and provided it to her clients. Her clients then entered and viewed the property, unaccompanied by the buyer's agent. It is unlikely this transgression would have been discovered but for another licensee who had arranged a viewing a half-hour after the unaccompanied viewing. When he realized that no licensee had accompanied the prospective buyers, he contacted the seller's agent who ultimately complained to the buyer's agent's managing broker and RECBC. During RECBC's investigation, it was discovered that the buyer's agent had provided the lockbox code to her clients in respect of a second property, which they had also viewed without her accompaniment.

By way of a Consent Order, RECBC and the buyer's agent agreed that the buyer's agent's conduct contravened both the Real Estate Services Act (RESA) and the Real Estate Rules and agreed upon the following penalties:

  1. Three-month suspension,
  2. $15,000 fine,
  3. $1500 in enforcement costs, and
  4. completion of remedial professional development courses.

To put a three-month suspension in monetary perspective, licensees reading this article should simply take 25% of their last year's income and add that to the additional $16,500 in fines and enforcement costs. It is not clear from the record whether the licensee was represented by a lawyer in this matter but if she was, those legal costs would have come out of her own pocket. All-in-all, this was a substantial price to pay for not accompanying her clients on a viewing.

What struck me as interesting in this decision was RECBC's approach to this matter. How did it view the licensee's conduct?

Section 35 of RESA sets out the various ways a licensee may commit professional misconduct. The most common way is by contravening RESA, the regulations or the Rules. But there are other criteria in section 35 that RECBC used in this case. In addition to breaching the Rules, the buyer's agent was found to have committed professional misconduct by demonstrating incompetence in performing an activity. She was also determined to have had committed conduct unbecoming a licensee in that her conduct undermined public confidence in the real estate profession and brought the real estate sector into disrepute. These charges are not commonly laid, are broad and subjective in their scope and, together with the significant penalty, may well reflect RECBC's condemnation of the conduct.

With respect to the Rules, Council determined that the buyer's agent had breached her duty to act in the best interest of her client (emphasis added) by not accompanying them to the viewing. I suggest that this finding might reflect RECBC's acknowledgment of the vulnerability of buyers in the caveat emptor reality of the process of purchasing property in BC and RECBC's desire to see those buyers fully accompanied and represented throughout each and every step of that process.

One has to assume that this conduct was an isolated incident. If, however, it was not, this decision will certainly ensure that it does not happen again.

For further information on using lockboxes and using the Lockbox Acknowledgement, Consent, Release and Indemnity form with buyers and sellers, you can access the form toolkit on the BCREA Standard Forms Resource Centre here (REALTOR Link® login required). P.S. On an unrelated note, a recent BC Court of Appeal decision has reaffirmed that payment of commission is not always dependent on the completion of the transaction. In Panegos v O'Byrne2,the court said "A standard form listing agreement was used which provided that the Realtor's commission would become payable if, inter alia, an enforceable contract of purchase and sale was entered into during the term of the listing contract." The vendors were liable for the Realtor's commission, whether the transaction closed or not; it was not payable "out of" the sale proceeds. I believe I may take judicial notice that this is not an unusual provision in listing agreements.

  1. RECBC Decision re Li December 9, 2020.
  2. Panegos v O'Byrne, 2020 BCCA 352 (para 3).

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