LESSON 1 Flashcards
(194 cards)
1
Q
LAND OWNERSHIP
A
-Ownership may be defined in terms of control, the owner of an object controls its use and decision to transfer ownership to someone else.
-Ownerships involves control of the right to use land.
-To enable private use of land, certain bundles of rights have been granted out of the Crown’s “regal estate” (original expression of “real estate”).
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2
Q
FEE SIMPLE
A
-The legal term for the maximum interest in land available to a person, or the maximum of legal ownership. Equivalent in many ways, for practical purposes, to absolute ownership.
-Fee simple owners are subject to:
1) the Crown’s right of expropriation and tax sale;
2) the Crown’s land use and building regulations; and
3) other individuals’ common law rights
-Absolute ownership of the land does not exist in Canada; rather, certain rights with respect to land may be owned by individuals subject to the rights of the Crown.
3
Q
FIRST NATIONS LAND
A
BC FN groups have 3 unique property rights:
1) Federal reserve lands under the Indian Act.
-Lands owned by Federal Government for the use and benefit of FN.
-FN don’t own reserve lands but they have the right to use and occupy those lands.
2)Treaty settlement lands.
-Negotiated between BC & FN.
-Process of reconciliation between the Crown and FN.
-Land treaties are owned by the FN groups in fee simple.
3) Aboriginal Title.
-AT is a unique interest in land that the Supreme Court of CA has said cannot be explained using traditional property law concepts.
-Court declarations or contractual agreements.
4
Q
LAND VALUE
A
-The value of land is represented by the amount of potential user is writing to pay in exchange for the right to use it.
-Land that is useful has a value to the person controlling the right to its use. This value is the motivation force for the operation of the real estate market.
5
Q
REAL PROPERTY LAW
A
-In land disputes, compensation was “real” so the interest in land was referred to as real property.
-Under the general heading of real estate property law, topics include: estates and interest in land, title registration, commercial and residential tenancies, strata titles and cooperatives and the rights under and limitation imposed by contract, common law and statute law.
6
Q
PARTICIPANTS IN REAL ESTATE MARKET
A
SEE THE FOLLOWING LIST OF PEOPLE
7
Q
BUYERS
A
-Buyers are a party seeking to acquire real estate.
-As a licensee, a key skill when representing buyers is the ability to identify their tastes, motivations and ideal characteristics in a property.
8
Q
SELLERS
A
-Sellers are a party seeking to dispose their real estate.
-As a licensee, the key being the ability to appropriately address the seller’s expectations.
9
Q
REAL ESTATE TRADING SERVICES (WHAT IS A REAL ESTATE LICENSEE?)
A
-A real estate licensee is a person who is licensed under a provincial statute to provide real estate services, to or on behalf of another, for or in expectation of remuneration.
-Note that real estate licensees do not see interests in land; they sell services to people who want to sell or buy interests in land.
10
Q
CREA
A
CANADIAN REAL ESTATE ASSOCIATION
11
Q
APPRAISERS
A
-A real estate appraiser determines the market value of a property based on its condition and the selling price of comparable properties that are recently sold in the area.
-Appraisals serve other purposes as well. For example, a lender may, as a condition to providing financing to a borrower, require an appraisal to ensure that the mortgage loan amount is not more than the value of the property being mortgaged.
12
Q
LAWYERS & NOTARIES PUBLIC
A
-They do drafting & reviewing the contract of purchase and sell, reviewing title to the property, preparing the closing dos, explaining all of the relevant docs to their clients, obtaining signatures from the parties for closing docs, collecting funds involved in the transactions, registering the transfer of property, and disbursing funds as instructed.
13
Q
HOME & PROPERTY INSPECTORS
A
-Conduct visual examination of property’s overall structure, major systems and components & provide a written report.
-Exterior structure, plumbing, electrical, insulation, heating and cooling, roof and foundation.
14
Q
SURVEYORS
A
-Surveyor is a professional whose job is to determine the boundaries and other features of land in order to accurately describe what is owned on paper.
-They do surveys of land, water and airspace, rights of ways, strata properties and mining claims.
15
Q
REAL PROPERTY ASSESSORS
A
-They establish and maintain uniform real property assessments in accordance to the Assessment Act.
-A real property assessor undertake two key tasks:
1) The determining of actual (or market) value of assessed properties.
2) Assign each property to a property class.
16
Q
RENTAL PROPERTY MANAGERS
A
-Many landlords, particularly owners of large scale projects and/or large scale investors, prefer to leave property management and leasing (renting) activities to specialists in this area, who require to be licensed under the Real Estate Services Act.
17
Q
STRATA MANAGERS
A
-When strata is created, a strata corporation is formed.
-A strata council will typically hire a strata manager to assist in the management of strata corporation and maintenance of the common areas and facilities, including exteriors of buildings.
18
Q
BORROWERS
A
-People who usually takes on a debt to help finance their purchase.
-To provide security of a loan, the borrower, also called the mortgagor, agrees to grant the lender a mortgage of the property that they own or will own.
-A mortgage is defined as the conveyance of title to property that is given as security for the payment of a debt or a performance of duty.
19
Q
LENDERS
A
-A lender is someone who is willing to make mortgage funds available to borrowers and can be a single person, a group of people or a financial institution.
-A lender may also be referred to as the mortgage in a mortgage transaction, as the lender receives the mortgage in exchange for a loan.
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20
Q
MORTGAGE BROKERS
A
-A mortgage broker acts as an intermediary, bringing borrowers and lenders together; however, the mortgage broker typically works for the borrower, not the specific lender.
21
Q
OTHER MORTGAGE ORIGINATORS
A
-These representatives are commissioned or bonus-based.
-Institutions who employ mortgage representatives, because they do not have to pay broker fees to a mortgage broker, may offer discounts for consolidating banking services with them.
22
Q
MORTGAGE INSURERS
A
-Financial institutions offer a variety of mortgage life insurance products to borrowers, which provide if the borrower dies, the insurance provides will pay the outstanding mortgage principal amounts, plus other amounts.
23
Q
RESIDENTIAL & INDUSTRIAL, COMMERCIAL & INVESTMENT (IC&C) REAL ESTATE MARKET
A
-Residential market consist of properties as single family homes, condominiums and residential land lots.
-IC&I market consist of properties like shopping centers, apartment buildings, hotels and industrial property.
24
Q
SIZE OF TRANSACTIONS
A
-Residential: $10,000 mobile home to $20 million waterhouse or more.
-IC&I: $5 million for small development and $100 million or more.
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FREQUENCY OF TRANSACTIONS
-Residential sales: continuous basis, involved in a # of sales per year.
-IC&I" few sales per year and may be involved in leasing activities.
26
MARKET SEGMENTATION
-Broken down by social class, price and location (single fam residences and condominiums).
-IC&I market" figure 1: Broad segments of the IC&I market.
27
BUYERS AND SELLERS
-Buyers of residential homes are primarily owners who will live in the home. However, some are purchased purely for investment. There are relatively few buyers and sellers in the IC&I market compared to the large number of potential buyers and sellers in the residential market.
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THE DECISION PROCESS
IC&I is more logical and analytical then buyers in the residential market, and may carry extensive financial analysis.
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FINFING BUYERS AND SELLERS
-Listing and selling IC&I properties is much more difficult than listing residential properties because it is typically harder to find buyers and sellers.
30
FINANCING
-Financing residential properties is straightforward and a quick process.
-Financing IC&I is lengthy and complicated.
It is influenced by form of ownership, which can include joint ventures, partnerships or corporations.
31
CONTRACTS OR PURCHASE AND SALE
-Residential contracts contain one or two basic conditions precedent clauses.
-IC&I can be lengthy and complicated.
32
EARNING POTENTIAL
in the IC&I market, the earning capacity is likely greater than the residential market.
33
THE SALE OF BUSINESS
-Owners of existing businesses with attendant property rights who whish to sell their businesses are generally in the same position as people who want to sell their interest in land; that is, they are lacking market info, experiences, expertise, methods of marketing and time.
34
IMMOBILITY
-Immobility is responsible for the local nature of real property markets.
-The forces of demand and supply in real estate markets are determined by the conditions which exist in each local region; transactions in one market area have little impact on transactions in another area.
35
EXTERNALITIES
-Property and its value are immediately affected by changes that take place beyond its borders.
-Externalities are not only personal (noise, sight, smell) they are also economic, and given rise to particularly difficult choices in the use of the land.
36
DEVELOPMENT
-The relationship between location, land use and land value is reflected in the history of development of our communities.
-People are typically first attached to a particular location because of the natural qualities and resources of the site.
37
SUPPLY OF URBAN LAND
-In urban areas, the opposite is the case; there is almost no limit to the supply for land for urban use.
-Urban growth is generally the result of the conversion of land from rural to urban uses through the action of real estate development.
38
DURABILITY OF IMPROVED LAND
-A second important characteristic of real estate is the indestructibility of space and the durability of structures.
-When considering the durability of structure, it is important to distinguish between the physical life and economic life of the structure.
-Real Estate is a source of shelter. The shelter by real estate; like other services, cannot be stored and must be on continuous production.
39
INDIVISIBILITY OF SERVICES
-The value of a parcel of real property ultimately depends physically and legally.
-There are horizontal and vertical boundaries in a property can be divided.
-Legal ownership of property may also be divided.
40
ORGANIZATION OF THE REAL ESTATE BROKERAGE INDUSTRY
-Two aspects:
1) The organizational structure crested by the statutory regulation of the industry; and
2) The voluntary structure created by the variety of professional organization that exists to fulfill objectives not addressed by government regulation.
41
THE SOURCES OF OUR LAWS
-"Law" can be defined as the enforceable body of rules which governs society.
-On BC there are the common law and stature law.
42
COMMON LAW
-Common law is the system of law made up of principles and rules of action based upon the ancient customs and usages of the people of a nation which have been recognized, affirmed or enforced by laws.
-An important concept of common law systems the doctrine of stare decisis.
43
STARE DECISIS
-"Let the former decision stand" - to abide by prior decision and not to disturb the doctrine of the courts that, when the court once laid down a principle of law application to a certain state of facts, it will adhere to that principle, and apply it to all future cases where the facts are substantially the same, regardless of whether the parties and property are the same.
44
EQUITY
-Equity (in common law) is the concept of justice administered by the courts according to fairness as contrasted with the strictly formulated rules of common law.
-In common law the term "equity" denotes the spirit and habit of fairness, justness, and right dealing which would regulate interaction of person with person.
45
JOINING OF THE TWO SYSTEMS
-Judicature Acts, "fused" courts of equity with the common law courts.
46
SPECIFIC PERFORMANCE
-the court, rather than granting damages in lieu of performance, orders that the terms of the contract be carried out by the party in default.
47
INJUCTION
-A court order which either restraints a party from doing something or require a party to do something.
48
STATUTE LAW
-Statute law or Legislation is the body of law by which made by our goal representatives in the federal Parliament, provincial legislature or municipal council.
-Involved in banking, bankruptcy, currency, postal services, marriage & divorce, criminal matters, patents, copyrights, shipping, fisheries and national defense. (Federal Govt).
-Civil rights, municipal institutions, administration of justice within the province for property and civil rights, the education and local/ private nature. (Provincial Govt).
49
CATEGORIES WITHIN OUR LEGAL SYSTEM
-Two major categories which diff. areas of law fall: civil law and public law.
50
CIVIL LAW
-Also known as Private law regulates disputes between individuals and the public on a whole.
-The term "public" may be i)general applying to all persons with the jurisdiction; ii) local (applying to a geographical area); iii) special (relating to an organization or authority charged with a public interest).
51
PRIVATE LAW
-The law that deals with disputes between two or more individuals.
52
PUBLIC LAW
-Includes tax law, constitutional law and criminal law.
-Civil law is more important area of real property law, contracts, agency, and tort law are also civil law matters of daily concern to licensees.
53
REAL PROPERTY LAW
-Because property and civil rights are matters within the jurisdiction of the provinces, legislation dealing with real property can vary widely from province to province.
54
THE JUDICIAL SYSTEM IN PRACTICE: THE BC COURT SYSTEM
-Administrative tribunals are not part of the court system.
-To ensure administrative tribunal act fairly and according the law, certain decisions are reviewable by the courts.
55
CIVIL RESOLUTION TRIBUNAL
-CRT is an online tribunal tasked with resolving almost all strata corporation disputes, including non-payment of strata fees or non-enforcement of strata bylaws; certain small claim disputes; and certain motor vehicle injury disputes.
-CRT has no legal authority to deal with certain matters like libel, slander, claims against the govt. claims constitutional questions and claims involving the Human Rights Code.
-There are 3 potential phases involved in settling a dispute through CRT:
negotiation, facilitation and adjudication.
56
COURTS OF ORIGINAL JURISDICTION
-There are two civil courts of original jurisdiction in BC: the Small Claims Court and the Supreme Court.
57
SMALL CLAIMS COURT
-Jurisdiction to deal with most claims of $35,000 or less.
-A person must be able to establish:
1) That the cause of action (i.e circumstances that give rise to the claim) arose within the territorial jurisdiction of the court; or
2) That the person being and lives or carries on business there.
58
SUPREME COURT OF BC
-BC Supreme Court is the top trial court in the province; there is no monetary limitation on claims which it will hear, nor is there territorial limitations within the province.
59
APPELLATE COURTS
-After a trial judge has made their decision, either party may appeal that decision to a higher court.
-The higher court is called an appellate and the person bringing the appeal is called appellant.
60
APPEAL FROM SAMLL CLAIMS COURT
-To the BC Supreme Court, but it does nor automatically lead to a new trial.
-All evidence is reheard and the new trial judge gives their own decision on the matter.
61
APPEAL FROM BC SUPREME COURT
-To the provincial appellate court, the majority view decides the matter.
-A panel of judges hears the appeal in the Court of Appeal.
62
APPEAL FROM THE BC COURT OF APPEAL
-The Supreme Court of CA can decide not to hear the appeal.
-Again, the evidence is not reheard and the majority view decides the matter.
63
PROCEDURE FOR BRINGING A CLAIM
-Where a civil wrong is committed, the injury party may decide to seek a remedy in the court systems to do so, they commence a lawsuit.
64
THE PARTIES TO A LAWSUIT
-Our common law system is based on adversarial process.
-This means that each party to a dispute presents their case/point of view as persuasively as possible, and then an impartial trier of fact, either judge or jury, makes findings of fact, applies the law to those facts, and comes to a decision that is binding in both parties.
-Not every claim results in a trial. Most claims are settled out of court. Two major reasons for this are the effect of our pre-trial process, and the rise of paying court costs.
65
THE PRE-TRIAL PROCESS
SEE THE FOLLOWING
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WRITTEN PLEADINGS
-BC Supreme Court civil Rules, a plaintiff beings an action by filing a notice of civil claim, which outlines the details of the plaintiff's claims.
-Once the notice of civil claim has been filed, the plaintiff must serve it on the defendant.
-This process brings the parties to agreement on the points about which they disagree.
67
DISCOVERY
-In addition to the written pleadings there are many legal devices from bringing out the relevant evidence in the case before it ever gets to trial.
-These proceedings are referred to as "discovery" proceedings.
-The examination of discovery is like a "mini-trial", each party can examine the opposite party under-oath, and evidence is recorded by a court reporter.
-Strengths and weaknesses of each party positions are presented.
68
THE TRIAL
-In order to succeed in court, the plaintiff must prove its case on what is known as the balance of probabilities.
-This obligation of the plaintiff to prove its case is called the burden of proof.
-Both the defendant and the witnesses are cross-examined.
69
THE JUDGMENT
-The judgment will set out the duties or liabilities, if any, that are owed by each party to the other, and may include an order of a particular remedy or course of action.
70
COURT COSTS
-Courts refers to the monetary allowance that the court orders the unsuccessful party to pay are successful party as a partial reimbursement of the legal expenses (legal fees and disbursement) of brining or defending the lawsuit.
-Court costs do two things, they partially reimburse the successful party for legal fees, and they discourage people from bringing on defending weak cases, due to the risk of having to pay costs if the other party is successful in court.
71
MEDITATION
-Mediation is a dispute resolution process whereby a mediator assists the parties to constructively resolve their dispute and avoid proceeding to a court hearing.
-The mediation process is often commented through a voluntary agreement to mediate between all involved parties including the mediator.
-When a party refuses to participate in the mediation process despite delivery of Notice to Mediate, the court has the power to impose sanctions against the offending party.
-Mediation is far less expensive than litigation.
72
ARBITRATION
-Arbitration is a form of ADR involves the parties authorizing a neutral third party to decide the outcome of their dispute. This third party may be an individual or a panel. The decision is typically binding on the parties.
-Another alternative to litigation is arbitration.
-Arbitration differs from mediation in that the arbitrator, after reviewing the evidence and arguments from the parties, will make a binding decision, similar to a judge, whereas a mediator works to assist the parties to achieve a consensual binding agreement themselves.
73
ENFORCING A JUDGMENT
-A losing defendant who has not yet paid the judgment is also known as a judgment debtor.
74
ECAMINATION OF THE JUDGMENT DEBTOR
-The first major consideration is how the plaintiff can collect the amount owed.
-If a judgment debtor has not paid voluntarily, the plaintiff may have to take further steps to collect from the debtor's income/assets.
-Any real estate owned, any major personal assets owned such as cars, boats or major machinery.
75
EXECUTION
-Execution is the process of commencing proceedings to collect an amount owing by reason of a judgment.
-If the judgment debtor has assets that are known to the judgement creditor (for example, a car) these can be seized and sold.
-Nulla bona or "no goods".
76
REMEDIES AGAINST LAND
-This judgment must be satisfied before any purchased, can obtain an estate or interest in the land free from the judgment.
-If the judgment debtor owns an estate or interest in land, the judgment can be registered in the appropriate land title office as a charge against the judgment of debtor's estate or interest.
-After paying out any prior financial charges registered against the land, the balance of the proceeds from this sale will then be paid to the judgment creditor.
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GARNISHING ORDER
-Where any third person owes money to one judgment debtor, the plaintiff can obtain money by means of a garnishing order.
-A garnishing order is served on the third party and orders them to pay the money into the court instead of the debtor.
78
LIMITATION PERIODS
-The Limitation Act, "basic limitation period" begins on the day the claim is "discovered", unless liability is acknowledged.
-The date of discovery is the day on which the claimant knew or reasonably ought to have known:
-of the injury, loss or damage;
-that the injury, loss or damage was caused by an act or omission of the defendant; and
-that a court proceeding would be an appropriate means to seek remedy.
79
IN EQUITY
-A person bringing an action in equity must bring that action within both the legal limitation period and also within a reasonable amount of time.
80
THE REAL ESTATE SERVICES ACT
-The provincial govt introduced two new statutes to govern the sale of real estate in BC: Real Estate Services Act (RESA) and the Real Estate Development Marketing Act (REDMA).
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RESA REFERENCES REGULATIONS AND RULES
SEE THE FOLLOWING
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REAL ESTATE SERVICES REGULATION (THE "REGULATION")
-The regulation deals with a number of matters, including the exemption from licensing, fees payables by licenses, trust accounts issues, disciplinary proceedings, administrative penalties, required standard terms in certain contracts and personal real estate corporations.
83
REAL ESTATE SERVICES RULES (THE "RULES")
-Deals with a number of matters including licensing, general responsibilities of licensees, business practices, relationships with principals and parties, dealing with other licensees and unlicensed persons, brokerage accounts and financial requirements, brokerage records and licensee exemptions.
84
REQUIREMENTS FOR LICENSING
-The purpose of RESA is to protect the public by:
-ensuring that those offering real estate services meet certain minimum reasonable competency requirements in order to obtain a license.
-setting out certain standards to ensure licensees conduct themselves appropriately while licensed; and
-appointing a regulator, BCFSCA, and empowering the Superintendent, to perform key regulatory functions under RESA.
85
REAL ESTATE SERVICES
-Real estate services as rental property management services, strata management services, or trading services, none of which can be provided to or on behalf of another, for or in expectation of remuneration, unless the person is licensed or exempt from the requirement to be licensed.
86
ACTIVITIES REQUIRING A LICENSE
-Real Estate Services is defined in RESA:
a) rental property management services;
b) strata management services; or
c) trading services
87
RENTAL PROPERTY MANAGEMENT SERVICES
A) trading services in relation to the rental of the real estate;
b) collection rents or securing deposits for the use of the real estate;
c) managing the real estate on behalf of the owner by:
i)making payments to third parties;
ii)negotiating or entering into contracts;
iii) supervising employees or contractors hired or engaged by the owner; or
iv) managing landlord and tenant matters.
88
STRATA MANAGEMENT SERVICES
a) collecting or holding strata fees, contributions, levies or other amount levied by, or due to, the strata corporation under the Strata Property Act;
b) exercising delegated powers and duties of a strata corp or strata council:
i) making payments to third parties on behalf of the strata corp.
ii) negotiating or entering into contracts on behalf of the strata corp.
iii) supervising employees or contractors hired or engaged by the strata corp; or
4) enforcing bylaws or rules of the strata corp.
89
STRATA CORP
-Strata corp is a legal entity created by the deposit of a strata plan in the land title office.
-The coprs responsibilities are set out in the Strata Property Act and include the duty to manage, repair, maintain and insure common property and common assets.
90
TRADING SERVICES
-Trading Services are activities related to purchase and sale transactions, lease transactions and assignment of lease and contract of purchase and sale transactions.
-RESA defines trading services to:
a) advising on the appropriate price for the real estate;
b) making representations about the real estate;
c) finding the real estate for a party to acquire;
d) finding a party to acquire the real estate;
e) showing the real estate;
f) negotiating the price of the real estate or the terms of the trade in real estate;
g) presenting offers to dispose of or acquire the real estate; or
h) receiving deposit money paid in respect of the real estate
91
RESA DEFINES "REAL ESTATE" TO MEAN:
a) real property;
b) regardless of whether it is or it is an interest in real property, a cooperative interest, shared interest in land or time share interest, as these are defined in REDMA; and
c) s right in relation to real property that is defined by regulation to be real estate.
92
RESA DEFINES "TRADE IN REAL ESTATE" MEAN:
a) a transaction for the purchase of sale of real estate, for the leasing of real estate or for any other form of acquisition or disposition of real estate;
b) an assignment of a contract for purchase, sale or lease of real estate, or a transaction in relation to such an assignment; or
c) a prospective trade in real estate within the meaning of paragraph (a) or (b)
93
ALL REAL ESTATE SERVICES BY A LICENSEE ARE SUBJECT TO RESA
-provides real estate services to their own behalf;
-provides real estate services to or on behalf of another but not for or in expectation of remuneration or;
-would otherwise be exempted by RESA or the Regulation from the requirement to be licensed in relation to the provision of those real estate services.
94
EXEMPTIONS
-The exempted individuals may provide rental property management services, strata management services or trading services for a fee without the need to posses a license.
-Collection agents acting in the court of their business;
-individuals involved in various mining and oil gas activities; and
-government and government corporations.
-
95
THOSE EXEMPTED FROM NEEDING A LICENSE WITH RESPECT OF TRADING SERVICES FALL INTO THE FOLLOWING 8 CATEGORIES:
- employees of developers
- notaries
- accountants in relation to purchase and sale of a business;
- appraisers and property inspectors;
- auctioneers
- individuals who provide info or general nature to assist owners to sell or otherwise dispose of their own real estate or who publish info contained in an advertisement of specific real estate;
- individuals who refer other's to a licensee or exempt party; and
-agents of expropriating authorities.
96
EXEMPTIONS WITHIN THE RULES
-99/95 Sections, provide exemptions for licensees who provide rental property management services on their own behalf in relation to their own real estate; or on a fam. member's behalf in relation to their real estate.
97
UNLICENSED ASSISTANT
-Section 66: a licensee must not pay, offer to pay or agree/allow to be paid, remuneration to a person in relation to real estate services if the person is required to be licensed in relation to those services but is not licensed.
-Licensees who provide trading services may employ unlicensed assistant, but must de diligent in ensuring that an assistant is not performing any tasks that falls in the def. of "trading services".
-An unlicensed assistant is a person who is not licensed under the Real Estate Services Act but who is nevertheless permitted to provide certain support and administrative services to licensees.
98
ACTIVITIES THAT AN UNLICENSES ASSISTANT MAY NOT PERFORM INCLUDE:
-hosting an open house or soliciting sellers or buyers in any manner;
-showing a property to a client or a prospective buyer (but note that unlicensed assistants of property management licensees are permitted to show rental properties to prospective tenants);
-provide advice or guidance to a consumer with regard to any real estate contract;
-presenting or negotiating an offer; and
-communicating with consumers about any real estate transaction.
99
AN UNLICENSED ASSISTANT MAY:
-complete contacts forms with info at the direction of an with approval by a licensee;
-answer the telephone, take messages and forward calls to a licensee;
-perform office filing and bookkeeping;
-draft docs and correspondence for approval & signature by the licensee;
-place or remove signs on property;
-witness signatures; and
-arrange for repairs on a rental property.
100
INMPORTANCE OF AGENCY LAW IN PROVIDING REAL ESTATE SERVICES
-Crucial to your success in the real estate services industry is an understanding of what it means to be an agent.
101
AGENCY
-Agency is a relationship in which one person (the "agent") is authorized by another person (the "principal") to act on their behalf in dealing with third parties.
102
REASONS TO USE AN AGENT
-The agent is known as the "fiduciary" while the principal is known as the "beneficiary".
-When acting on behalf of another in any agency relationship to provide real estate services, you are also a fiduciary.
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THE ROLE OF THE FIDUCIARY
-Fiduciary is a person who holds a position of trust with respect to someone else and is obliged, by virtue of the relationships of trust, to act solely in the other person's benefit.
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THE DUTIES OF A FIDUCIARY
-the duty of loyalty
- the duty to avoid conflicts of interest
-the duty of full disclosure
-the duty of confidentiality
-the duty to obey lawful instructions
105
THE REGULATORY & LICENSING BODY - THE BC FINANCIAL SERVICES AUTHORITY
-The BC Financial Services Authority (BCFSA) is a Crown regulatory agency of the BC govt.
106
THE BCFSA HAS THE REGULATORY RESPONSIBILITIES FOR
-licensed real estate professionals;
-unlicensed real estate activity;
-real estate development marketing;
-mortgage brokers;
-credit unions;
-pension plans;
-trust companies;
-insurance companies; and
-the Credit Union Deposit Insurance Corp of BC.
107
BC FINANCIAL SERVICES AUTHORITY
BC Financial Services Authority is a Crown regulatory agency that has the regulatory responsibility over BC's financial services sector, including real estate services, real estate development marketing, mortgage brokerage, credit unions, pension plans and trust and insurance companies.
108
SUPERINTENDENT OF REAL ESTATE
Superintendent of Real Estate is the chief executive officer of CFSA who possesses certain powers and must fulfill specific duties, under the Real Estate Services Act.
109
THE REAL ESTATE FOUNDATION, THE ERRORS AND OMISSIONS INSURANCE CORPORATION, AND THE COMPENSATION FUND CORPORATION
SEE THE FOLLOWING
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REAL ESTATE FOUNDATION OF BC
Foundation as being:
a) to undertake and carry out real estate public and professional education real estate law reform, the real estate research and other projects intended for the public or professional good in relation to real estate activities; and
b) on written directions of the Minister of Finance, to undertake and carry out projects and activities the minister designates on being in the public interest.
111
REAL ESTATE ERRORS AND OMISSIONS INSURANCE CORP
-The E&O Insurance Corp was created as an affordable method of protecting licensees from financial loss due to errors and omissions.
-With respect to errors and omissions coverage, some of the more important exclusions are listed below:
1)acting as an insurance agent or broker, builder, contractor, property developer, mortgage, notary public, property appraiser or court appointed admin.
2)claims arising from providing real estate services in a transaction where an insured has or may acquire an ownership interest;
3)disputes concerning commissions or fees;
4)bodily injury to, or sickness, disease or death of any person;
5)dishonesty, fraudulent, criminal or malicious acts or omissions;
6)claims for discrimination arising from complaints of breaches of the Human Rights Code; and
7)claims pursuant to the Residential Tenancy Act.
112
REAL ESTATE COMPENSATION FUND CORPORATION
-RESA requires the compensation fund corp to establish a fund known as the Real Estate Compensation Fund - that is intended to provide compensation to persons in relation to a real estate transaction for funds that are misappropriated.
113
OTHER REAL ESTATE RELATED ASSOCIATION
SEE THE FOLLOWING
114
CANADIAN REAL ESTATE ASSOCIATION (CREA)
-CREA is a national organization comprised of licensees and real estate boards across the country, as well as all of the provincial real estate associations.
115
CREA CREATED THE REALTOR CODE WHICH IS MADE UP OF 3 DISTINCT PARTS
-1st the preamble
2nd is the Realtor Code of Ethics
3rd golden rule "do unto others as you would have them do unto you".
116
BC REAL ESTATE ASSOCIATION (BCREA)
BCREA represents the interests of its sight real estate member boards (organized by geographic area) -providing an extensive communications network, continuing education courses, standard forms and govt relations.
117
BCREA EDUCATIONAL INITIATIVES
-newsletter (legally speaking, the bulletin and connections) to keep realtors informed
-economic forecasts/ppt on topics such as housing and mortgage rate forecasts & quarterly and yearly sales activities etc.
-BCREA's Govt Relations Committee comprised of realtors from across the province, identifies emerging issues and recommends actions to address them.
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REAL ESTATE BOARDS (8 LOCAL REAL ESTATE BOARDS)
-Association of Interior Realtors
-BC Northern Real Estate Board
-Chilliwack and District Real Estate Board
-Fraser Valley Real Estate Board
-Powell River Sunshine Coast Real Estate Board
-Real Estate Board of Greater Vancouver
-Vancouver Island Real Estate Board
-Victoria Real Estate Board
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THE PBJECTS OF THE REAL ESTATE BOARDS INCLUDE
-promotion and development of continuing professional education;
-enhancement of the reputation of the members of the real estate industry as professionals in the mind of the public;
-adoption and maintenance of the Realtor Code; and
-active participation in legislative changes affecting the real estate industry.
120
MULTIPLE LISTING SERIVCE (MLS)
-MSL is an online cooperative selling system operated by real estate boards and associations in CA.
121
REAL INSTITUTION OF BC
-REIBC is an organization made up of members from a variety of sectors of the eral estate industry.
(focused on advancing the standards of education and professional development of its members).
122
REAL ESTATE INSTITUTE OF CANADA
-REIC is the major national professional bodies for the real estate brokerage industry.
-Provides lifelong leaning, maintaining relevant resource center, awarding professional designations, creating networking opportunities and representing & promoting the real estate industry and profession.
123
LICENSEE SYSTEM
SEE THE FOLLOWING
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ISSUE OF LICENSES
-RESA describes 4 level of licenses: brokerage. managing broker, associate broker and representative.
125
BROKERAGE
Brokerage- is a licensee (often corporate) on behalf of which other licensees must provide real estate services.
-All real estate transactions are performed through the brokerage.
126
THE BROKERAGE MUST FILE
1) financial statements for the fiscal year
2) an accountant's report respecting that fiscal year
3) a brokerage activity report respecting that fiscal year.
127
MANAGING BROKER
-Managing Broker is the licensee responsible for a brokerage, and who is responsible for exercising the rights conferred on the brokerage, as well as for the performance of the duties imposed on the brokerage by its license. In addition, the managing broker is responsible for the control and conduct of the brokerage's real estate business and including the supervision of its related licensees.
128
RESA, A MANAGING BROKER IS RESPONSIBLE FOR
1) The exercise of the right coffered on the brokerage by its license;
2) The performance of the duties imposed on the brokerage by its license and
3) The control and conduct of the brokerage's real estate business, including supervision of the associate brokers and representatives who are licensed in relation to the brokerage.
129
SUPERVISION
-Managing brokers have a duty to be actively engaged in the management of the brokerage, ensure that the business of the brokerage is carried out completely and in accordance with RESA and Rules and ensure that all licensees and employees of the brokerage have adequate supervision.
130
ACCOUNTS AND RECORDS
-Managing broker must ensure the trust accounts and records of the brokerage are maintained in accordance with RESA and Rules and ensure proper management and control of docs and other records related to licensing and regulatory requirements.
131
NOTICE TO PARTIES RESPECTING DEPOSITS
-Managing broker must ensure that all parties involved in real estate transaction are immediately notified if a deposit has not been received or a deposit cheque has not been honored by a financial institution. This notice must be given or confirmed in writing.
132
ASSOCIATE BROKER
-Associate Broker is a licensee who meet the educational and experience requirements to be managing broker, but who is providing real estate services under the supervision of a manager broker.
133
REPRESENTATIVE
-Representative is a licensee providing real estate services under the supervision of a managing broker.
134
RECORDS
-An associate broker or representative has a duty to provide their managing broker with a copy of all the records of the Rules that were prepared by or on behalf of the associate broker or representative or on behalf of the principal.
135
KEEPING MANAGING BROKER INFORMED
-An associate broker or representative must keep their managing broker informed of the business activities being performed by the associate broker or representative on behalf of the brokerage, and must immediately notify their managing broker if a deposit has not being received.
136
RESPONSE TO MANAGING BROKER
-An associate broker or representative must respond to an inquiry that is addressed to the licensee by their managing broker.
137
SUPERVISION OF EMPLOYEES
-An associate broker or representative must ensure that there is an adequate level of supervision for their employees and others who perform duties on the associate broker or representative's behalf.
138
KNOWLEDGE OF IMPROPER CONDUCT
-An associate broker or representative has the duty to notify their managing broker of improper conduct.
139
PERSONAL REAL ESTATE CORPORATIONS
-Personal Real Estate Corps is a corp licensed under the Real Estate Services Act that may be used by a licensee through which they provide real estate services.
140
TEAMS
-Some licensees within a single brokerage operates as teams, where members of the team typically share info with respect to various persons to whom they provide real estate services.
141
BCFSA HAS CREATED SOME GUIDELINES FOR TEAMS
-A team must include at least two people, one of whom must be licensed.
-All licensed team members must be licensed with the same brokerage.
-A licensee can only be a member of one team at the time.
-It is the obligation of the licensed team members to advice BCFSA, in writing, when any team member leaves the team, or when a new member joins.
142
CATEGORIES OF LICENSE
-Trading
-Rental property management
-Strata management
-Trading rental property management
-Trading strata management
-Rental property management / strata management
-Trading/rental property management/strata management
143
APPLYING FOR A LICNSE: QUALIFICATION FOR A LICENSE
1)Applicant must have good reputation and be suitable to be licensed at the level.
2)Applicant must:
a) be at least 19 years old
b) meet the educational and experience requirements established in the Rules.
3)If the applicant is a partnership or corp, its partners or directors and officers, as the case may be, must be a good reputation.
4)The applicant must not have been:
a)refused a license or have been disciplined under real estate, insurance, mortgage broker or securities legislation in BC or another jurisdiction.
b)Disciplined nu a professional body; or
c)Convicted of an offense, for a reason that reveals the applicant as unfit to be a licensee.
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GOOD REPUTATION
-no criminal charges
145
EDUCATIONAL REQUIREMENTS
SEE THE FOLLOWING
146
REPRESENTATIVES
-Applicants seeking a trading services license are required to complete one or two post licensing courses offered by BCFSA, the Residential Trading Services Applied Practice Course or the Commercial Trading Services Applied Practice Course.
147
LANGUAGE PROFICIENCY INDEX PROGRAM
It is deemed to have satisfied with this requirements is the applicant:
-graduated from a bachelor's degree
-has been licensed to engage in real estate servicer in another Canadian jurisdiction.
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ASSOCIATE BROKERS AND MANAGING BROKERS
-There are no experience requirements for applicants seeking a representative license; for a managing broker or an associate broker, the applicant must have been providing real estate services as a licensee for at least two years during the 5 years before the date of application in BC, or in equivalent jurisdiction.
149
TERM OF A LICENSEE
-A term of a licensee, as set out in the Rules is 2 years.
-Temporary license.
150
LICENSEE NAMES
-Legal name of the brokerage or the trade name of the brokerage.
-Individual licensee names (legal name).
151
RENEWAL OF A LICENSE
-Prior to expiry of a license, each licensee is required to apply to BCFSA for renewal.
-Before applying to renew a license, ever licensee must complete the mandatory continuing education courses set out by BCFSA.
-BRCREA must successfully meet the requirement of its Professional Development Program within 2 years licensing cycle.
152
REFUSAL TO ISSUE OR RENEW A LICENSE
-If a managing broker, associate broker or representative ceases to be engaged by a brokerage license becomes inoperative.
-The license can be reinstated if that person is re-engaged by the same brokerage or is engaged by another brokerage.
153
VOLUNTARY SURRENDER OF A LICENSE
-It becomes inoperative unless and until reinstated by BCFSA before the end of its term.
154
EMPLOYEE VS INDEPENDENT CONTRACTOR
-Contractor is self-employed.
-Employee is a person receiving or entitled to wages for work performed for another, or a person an employee allow, directly or indirectly, yo perform work normally performed by an employee.
-Under RESA, a managing broker, associate broker or representative must only be licensed in relation to and engaged by, a single brokerage. Being "engaged" by a brokerage means being either and employee or an independent contractor of that brokerage.
155
PROPERTY MANAGEMENT CONDUCTED BY TRADING SERVICES LICENSEES
-Trading services licensees may be asked by consumers to provide property management services.
156
IN RESA, TRADING SERVICES IS DEFINED AS
a)Advising on the appropriate price for the real estate;
b)Making representations about the real estate
c)Finding the real estate for a party to acquire
d)Finding a party to acquire for the real estate
e)Showing the real estate
f)Negotiating the price of the real estate or the terms of the trade in real estate
g)Presenting offers to dispose of or acquire real estate
h)Receiving deposit money paid in respect of the real estate
157
TRUST ACCOUNTS
-Trust account is an account where money is deposited by one for the benefit of another. The money is devoted to a particular purpose and cannot or should not be diverted for other purposes.
-According to RESA, a brokerage must maintain one or more interest bearing trust accounts with one or more saving institutions in BC.
-A trust account is a type of account maintained by one party where the money within the account is held for the benefit of another (the beneficiary).
158
THE GENERAL RULE UNDRE RESA IN THAT A LICENSEE MUST PROMPTLY PAY OR DELIVER TO THE BROKERAGE ALL MONEY
-Held or received on account of remuneration for real estate services, once the money is on the trust account, a brokerage is permitted to withdraw it from the account if it is:
a)Money paid into the trust account by mistake
b)Interest paid to the Real Estate Foundation
c)Money intended as remuneration for a licensee and that has been earned in accordance with the Rules.
d)Unclaimed money transfer
e)Money paid into court, where a dispute has arisen between the parties over the right to it
f)Money paid in accordance with a court order
g)Money paid to or in accordance with the institutions of the principal to whose credit the money was deposited.
159
THE MONEY FOR A TRADE IN REAL ESTATE THAT IS BEING HELD IN A BROKERAG'ES TRUST ACCOUNT MAY ONLY BE WITHDRAWN IF
1)Circumstances in a to f from the list apply.
2)The parties to the trade in real estate agree in writing to the withdrawal; or
3) The money is deposit money and its being withdrawn to pay the seller the fee payable by a buyer who exercises their right to rescind in contract of purchase and sale within the Home Buyer Rescission Period under the Property Law Act OR to return the balance of the deposit back to the buyer.
160
A CLOSER LOOK AT THE RULES: THE RULES ARE BROKEN INTO 9 PARTS
Part 1 - General
Contains definitions of the section
Part 2 - Licensing
6 divisions that deal with license categories: brokerage relationships and offices (including affiliated and branch offices); license qualification requirements; general license matters (certificate, license term etc.), communications with BCFSA; and discipline and enforcement.
Part 3 - General Responsibilities of Licensees
Professionalism and ethics.
Part 4 - Business practices
3 divisions that deal with general business practices; licensee names and advertising names.
Par 5 - Relationships with principals and parties
4 divisions that deal with general contractual matters between licensees and consumers; disclosure requirements on licensees, commission and other remuneration matters; and dual agency and conflicts of interest.
Part 6 - Dealing with other licensees and unlicensed persons
Prohibiting paying unlicensed persons for providing real estate services and acting for unlicensed persons unless they are a principal.
Part 7 - Brokerage Accountants and Financial Requirements
Deals with a variety of brokerage accounting and financial issues, such as trust accounting, account monitoring and key brokerage docs (e.g. annual financial statements, accountant's reports and brokerage activity reports).
Part 8 - Brokerage records
Contains 3 divisions that deal with financial records requirements of the brokerage; other record requirements of the brokerage; and general record keeping matters.
Par 9 - Licensee exemption
Deals with variety of exemptions from RESA and the Rules in certain situations (all of which apply to either rental property management or strata management scenarios).
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DISCIPLINE AND ENFORCEMENT: CATEGORIES OF COMLPAINTS
RESA sets out 2 broad categories of improper conduct by licensees:
-contravene RESA, the Regulation, The Home Buyer Rescission Period Regulation or the Rules.
-breach a restriction or condition of license
-do anything that constitutes wrongful taking or deceptive dealing
-demonstrate in competence in performing any activity for which a license is required;
-fail or refuse to cooperate with an investigation by BCFSA
-fail to comply with an order of BCFSA
-fail to comply with an undertaking given by them under RESA; or
-make or allow to be made any false or misleading statement in a doc, that is required or authorized to be produced or submitted under RESA
162
INVESTIGATION INCLUDES
-licensees
-former licensees and
-officers, directors, controlling shareholders or partners of a licensee or former licensee.
163
DISCIPLINE PROCESS
Following an investigation or cancellation of an administrative penalty; a notice of discipline hearing must be given at least 21 days in advance of hearing and:
-describe the nature of the complaint or other matter that is to be the subject of the discipline hearing,
-specify the time and place set for commencement of the hearing; and
-advice the licensee that BCFSA is entitled to proceed with the hearing in the absence of the licensee.
164
CONSENT ORDER
Consent order is an order made by BCFSA against a licensee in cases of professional misconduct or conduct unbecoming a licensee where the licensee has consented to the order rather than disputed the notice of hearing.
165
URGENT ORDERS
Urgent order is an order made by BCFSA against a licensee in cases of professional misconduct or conduct unbecoming a licensee in situations where it would be detrimental to the public interest to proceed through the traditional rout of completing a full investigation or holding a discipline hearing.
166
AVAILABLE SANCTIONS
If BCFSA determines that a licensee has committed professional misconduct BCFSA must:
1) reprimand
2) suspend the licensee for the period of time that BCFSA considers
3) cancel the licensee's license
4) impose restrictions or conditions on the licensees license or vary any restrictions or conditions applicable to the license
5) require the licensee to cease or to carry out any specified activity related to the licensee's real estate business;
6)require the licensee to enroll in and complete a studious course or training specific in the order;
7) prohibit the licensee from applying for a license for a specified period of time or until specified conditions are fulfilled
8)require the licensee to pay enforcement expenses incurred by BCFSA in relation to either or both of the investigation and the discipline hearing (with max. amount set out by the regulation);
9) require the licensee to pay a discipline penalty in an amount of
a)not more than $500,000 in the case of brokerage, former brokerage; or
b)not more than $250,000 in any other case; or
10) require the licensee to pay an additional penalty up to the amount of remuneration accepted by the licensee for the real estate services in respect which the conversation occurred.
167
DISCIPLINE AGAINST UNLICENSED PERSONS
BCFSCA has the power to order that the unlicensed person:
-cease the unlicensed activity
-carry out specific actions necessary to remedy the situation
-require the person to pay enforcement expenses
-pay a penalty of no more than $500,000 for corporations and partnerships, or $25,000 for individuals; and
-pay an additional penalty up to the amount of the remuneration accepted by the person for the real estate services provided
168
APPOIINTMENT OF A RECEIVER
-The receiver is authorized to exercise all the powers necessary for the wind up or management of the business and affairs of the licensee
169
10 THINGS TO KNOW ABOUT COMPLAINTS/INVESTIGATIONS AND LICENSEE DISCIPLINE
1)complains and investigations are confidential
2)licensees have a voice
3)communication to resolve a misunderstanding is encouraged
4)investigations are carefully reviewed
5)licensee have choices
6)consent orders and disciplinary decisions are public
7)BCFSA hearings are public
8)you will be kept informed
9) a licensee's role at a hearing
10)private matters are remain private
170
ADMINISTRATIVE PENALTIES
1)Category A
contraventions are generally characterized as d as business management infractions with a low risk of harm to consumers
2)Category B
contraventions are generally characterized as minor matters with no or immaterial harm to consumers, and where imposing and administrative penalty, rather than dismissing the file or disciplinary action initiated by a Notice of Discipline Hearing, is in the public interest.
3)Category C
contraventions relate to substantial duties licensees owe the clients and are subject to the highest administrative penalty amounts.
4)Category D
contraventions are characterized as minor matters that present a low risk of harm to consumers, but there is an interest in ensuring timely compliance, so the administrative penalty for CD contraventions are applied with compliance is achieved.
171
MONEY RECIEVE BY BCFSA ON ACCOUNT OF ADMINSTRATIVE PENALTIES EDUCATES ON
1)operation and regulation of the industry;
2)issues to related real estate and real estate services.
172
RESA THE FOLLOWNIG ACTIONS ARE OFFENCES
-failing to hold a real estate license
-failing to pay funds into a trust account
-improperly withdrawing money from the trust account
-interfering with an investigation
-failing to comply with an order of BCFSA; and
-making a false statement in record required by RESA
173
REAL ESTATE DEVELOMENT MARKETING ACT
(REDMA)
REDMA regulated the marketing within BC of "development units" in a "development property".
174
REDMA AIMS TO PROTECT PURCHAES BY REQUIRING DEVELOPERS WHO MARKET OR INTEND TO MARKET DEVELOPMENT UNITS IN DEVELOPMENT PROPERTIES TO
1)meet any preliminary requirements or approval applicable to the type of property to be marketed
2)ensure appropriate steps are taken to pay cost of utilities or other related services and to assure the purchaser's title (or other interest) upon purchase
3)prepare and file disclosure statement in the form required by BCFSA. A "developer" is defined in REDMA as a person who, directly or indirectly, owns, leases or has a right to acquire or dispose of development property, subject to exclusion by regulation.
175
REDMA Regulations set out a number of exemptions from the requirements of REDMA:
-the marketing of development units zoned and used for industrial or commercial purposes;
-leases of 3 years or less;
-sales or leases subject to Securities Act requirements, provided those requirements are met; and
-certain subdivision lost within municipalities
176
REAL ESTATE DEVELOPMENT UNITS
REDMA defines a "subdivision" as land that is divided into lots or parcels. Other than the Strata Property Act.
-Therefore, a subdivided lot in development property is a development unit.
177
STRATA LOTS
-A strata lot can be either a strata lot in a satisfied building or a bare land strata lot.
-A developer must not market a strata lot unless either:
1)a strata plan (or a bare land strata plan) has been deposited in the land title office; or
2)building permit (or an approving officer's preliminary approval) has been issued in relation to the strata lot.
178
COOPERATIVE INTERESTS
-a cooperative interest is an interest held in a cooperative association, either as a shareholder, partners or member, which includes a right to occupy land in which the cooperative association has on interest.
-cooperative associations are any corp or limited liability company or partnership.
-a sale of share that includes a right to occupy land in exempt from the registration requirements of the Securities Act. As a result, licensees can sell such shares.
179
TIME SHARE INTEREST
-A time share interest in an interest in a time share plan which grants a person a right of recurring use of land on a periodic bases.
-Permits the use of land on a week by week basis without the ownership interest in land.
180
SHARED INTEREST IN LAND
-A development offering a shared interest in land is a development in which the purchaser buys/leases the land with at least one person, and enters into an agreement, as part of the purchase or lease, that restricts the purchaser's use of the land to only a part of the land.
181
DEVELOPMENT PROBLEMS
-Development of a project may be delayed, or may not proceed at all. This could be for a variety of resons, (e.g inadequate sales, delays in obtaining financing or building permits, higher than expected costs for construction materials and inability to hire skilled construction workers due to the labor shortages.
-Presale contracts should be carefully reviewed to understand the implications for client if there is a development delay or the project does not complete.
-For example, the client should consider the best time to sell their current property, if they plan to do so before taking possession of the presale.
182
CHANGES IN PROPERTY VALUE AND FINANCING ISSUES
-A number of things can happen between the initial presale contract signing and the project compensation date that can impact a buyer's ability to finance their purchase.
-For ex. the cost of the development unit might increase, interest rates can go up, property value can go down, and a purchaser's employment status may change. If a property declines in value, buyers may not be able to finance as much of the purchase as previously anticipated, requiring the borrower to make up the difference.
183
CHANGES IN PROPERTY VALUE AND FINANCING ISSUES
-A number of things can happen between the initial presale contract signing and the project compensation date that can impact a buyer's ability to finance their purchase.
-For ex. the cost of the development unit might increase, interest rates can go up, property value can go down, and a purchaser's employment status may change. If a property declines in value, buyers may not be able to finance as much of the purchase as previously anticipated, requiring the borrower to make up the difference.
184
RESTRICTIONS ON ASSIGNMENT
-Presale contracts are community assigned from one buyer to another prior to completion of the development. Once a contract is assigned to a new buyer, the new buyer has the right to receive title to the property once development is complete.
-While assignments are common with presales, some presale contracts restrict the ability to assign the contract to new persons.
For ex. assignments may be permitted under a contract subject to the payment of an assignment fee to a developer. When an assignment of a presale contract may occur, the parties should be recommended to obtain legal advice to ensure that the assignment occurs in the appropriate way.
185
FINISHED PRODUCT
-Additionally, clients should be advised that presale contracts normally allow developers to substitute materials and finishing; there is always a risk with aa presale that the finished product may not align with what it was marked.
186
LEASEHOLD UNIT
-REDMA includes leasehold units in a residential leasehold complex as a development unit.
-A residential leasehold complex is a complex containing one or more buildings capable of being used for leasehold residential purposes.
-Buildings comprised of strata lots, cooperative interests and shared interests in land are excluded from the def. of residential leasehold complex.
187
MARKETING REQUIREMENTS
REDMA contains a number of requirements that developers must satisfy before the developer can market a development unit.
-A developer must obtain the necessary approvals 9or have the permission to market prior to obtaining the necessary approvals), make adequate arrangements relating to the title or interest being sold or leased, and prepare and file a disclosure statement with BCFSA.
188
DISCLOSURE STATEMENTS AND RESCISSION RIGHTS: DISCLOSURE STATEMENTS
-Disclosure statement is a doc prepared by the developer of a subdivision to ensure that investors or purchasers have adequate info upon which to base a purchasing decision.
189
MATERIAL CHANGES
A new disclosure statement will be required when:
-the identity of the developer changes;
-the court appoints a receiver, liquidator or trustee in bankruptcy over the development of property; or
-BCFSA gives notice to the developer that a new disclosure statement must be filed.
190
RESCISSISON RIGHTS
-Rescission rights is a law of contract, a rescission amounts to the unmaking, or an undoing of the contract from the beginning, as opposed to a termination.
-REDMA also provides that, regardless of whether title to the development unit has been transferred, a purchases may have a right to rescind the purchase agreement by serving written notice of the rescission on the developer. This allows the purchaser to "back out" of the purchase agreement, without a penalty.
-Home Buyer Rescission Period applies to "Residential Real Property" and allows a buyer to rescind their contract of purchase and sale with three business days.
-The HBRP does not apply to contracts of purchase and sale under REDMA.
191
SEVEN DAY RESCISSINO RIGHT
-A purchaser may rescind the purchase agreement by serving written notice of the rescission on the developer within 7 days after the later of:
1) the date that the purchase agreement was made; or
- the date that the developer obtained a written statement from the purchaser, acknowledging that the purchaser has had an opportunity to read the disclosure statement.
192
FAILURE TO DELIVER A DISCLOSURE STATEMENT TO THE PURCHASER
-If the purchaser does not complete the transaction, the developer may not be able to bring a lawsuit against the purchaser for a failure to complete.
193
FAILURE TO DELIVER AN AMENDMENT TO A DISCLOSURE STATEMENT TO THE PURCHASER
-the last rescission arises if the developer fails to deliver an amendment to a disclosure statement; written notice of the rescission must be served on the developer and the following must apply:
194
REAL ESTATE LICENSEES WHO FAIL TO COMPLY WITH THE REQUIREMENT TO PROVIDE A PURCHASER WITH A DISCLOSURE STATEMENT, IN REDMA BCFSA; LICENSEES HAVE BEEN DISCIPLINED FOR
1)Accepting remuneration directly from the developer and not the brokerage in relation to which the licensee was licensed.
2)Allowing or assisting the developer to breach REDMA by receiving, placing, and realising deposits not in accordance with REDAM
3)Failing to recommend legal advice to purchasers where the amount of the deposit to be paid to the developer contravened REDMA
4)Marketing out of province development units in BC without a disclosure statement being filed with BCFSA; and
5)Failing to act with reasonable care and skill on behalf of the developer when preparing the purchase agreement, which include a waiver of the purchaser's rescission under REDMA.
