Necessity is the Mother of Invention #526

May 29, 2020

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Posted by
Brian Taylor
Norton Rose Fulbright LLP

The COVID-19 pandemic has deeply affected many parts of our society and economy – including the real estate industry. Terms many of us hadn’t heard of just three months ago – social distancing, self-isolation, lockdown, and Zoom conferencing – are now as common as, “What’s for lunch?”

Buying real estate, particularly in a caveat emptor jurisdiction such as British Columbia, usually requires physical inspection. Like Brad Pitt, most real estate has to be seen to be appreciated.

For many years, traditional methods of “showing a property” have included open houses, REALTOR® tours, private showings, and, with the advent of the lockbox, buyer tours with their agent in the absence of the listing agent. But with many sellers reluctant to have strangers in their home, and many buyers reluctant to enter a stranger’s home, these traditional methods are less than optimal under the circumstances. The Canadian Real Estate Association, the British Columbia Real Estate Association and the Real Estate Council of British Columbia have all expressly recommended against the holding of open houses during the COVID-19 pandemic.

Given these circumstances, many Realtors, with the assistance of their real estate board, are turning to technology to assist their clients in showing properties. These technological approaches have not required any regulatory changes and create little additional legal risk – they are simply replicating current practices through the use of common digital technology like Zoom, Facebook Live, Skype, and others. As the real estate profession has always been an early adopter of new technologies, this has not proved difficult for most Realtors.

For example, the Victoria Real Estate Board (VREB) is promoting the “live stream open house.” To conduct a live stream open house, the listing agent schedules the open house using a live stream platform of their choice and buyers can attend digitally to tour the house. Buyers can ask – and the listing agent can answer – questions that would have been asked at an in-person open house.

As a Disclosure of Representation in Trading Services (DORT) form is not required to be provided to an unrepresented buyer at an in-person open house (unless the listing agent is soliciting or receiving information from the unrepresented buyer about their motivations, financial qualifications and needs in respect of real estate), it is also not required to be provided to an unrepresented buyer who attends a live stream open house. Listing agents do not have to change their behaviour when conducting a live stream open house – they simply act as they would if the buyer was physically present.

The Kamloops & District Real Estate Association (KADREA) and the Kootenay Association of REALTORS® (KAR) have also introduced the “Live Tour,” designed to replace a lock-box tour by a buyer and their agent. During a Live Tour, the buyer and their agent connect with the seller and the listing agent for a digital tour of the property, with the seller acting as the cameraperson (learn more here).

Again, there is no need for a change in behaviour with a Live Tour. The listing and buyer’s agents are careful to maintain the confidentiality of their clients and all questions and interactions between the buyer and seller are conducted through their agents. As the buyer is virtually accompanied by their agent, the listing agent is not required to provide the buyer with either the DORT form or the Disclosure of Risks to Unrepresented Parties (DRUP) form. You can find helpful tips on the KADREA website for both Realtors and consumers to consider when conducting Live Tours.

There is a third virtual option: a digital tour of a property by the listing agent for an unrepresented buyer. One issue that immediately jumps to mind is whether the DORT exemption would apply to such a tour. I am concerned it might not. Unless the listing agent is holding an advertised open house (which a private tour is likely not) or providing only factual responses to general questions while not soliciting or receiving information from the unrepresented buyer about their motivations, financial qualifications or needs (which is a factual test subject to interpretation), the DORT exemption does not apply and the provision of the DORT and DRUP is required. While each licensee will have to make their own decision, a prudent listing agent may wish to eliminate the risk of any future misunderstanding by providing the DORT and the DRUP to the unrepresented buyer before commencing the tour. In my view, it’s always better to be safe than sorry.

Ultimately, each seller and buyer will have their unique needs, and, as always, it will fall to Realtors to come up with the strategies and processes, including the use of technology, to satisfy those needs and get the deal done.

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