Timely Issues for
REALTORS - January 2004
Laundering Compliance – IMPORTANT!
Your brokerage office may
get a visit and be subject to a procedure audit by FINTRAC later this year. The
agency is responsible for implementation of Canada's money laundering and
terrorist financing regulations.
In its 2003 annual report,
FINTRAC noted that it would follow a risk management approach that "focuses
first on those entities identified as most likely to be in noncompliance, and
then seeks to employ methods—ranging from providing more information and
outreach to formal examinations—that are most appropriate to bringing about
CREA has been informed that
in 2004, real estate is second on FINTRAC’s list of risk industries. This means
broker individual offices will be the subject of FINTRAC audits and possible
examinations to ensure compliance with money laundering regulations. In cases
where a cooperative approach fails, FINTRAC will refer cases to law enforcement.
This could result in criminal charges.
CREA has arranged to meet
FINTRAC officials in February. The Association is seeking clarification on the
risk management policy, and wants to know why real estate has been targeted as a
high-risk industry when so few cash transactions are involved in the buying of a
property. It is CREA's position these individual office visits, procedure
audits, and examinations are an undue burden on the industry when there is no
evidence provided of the existence of large cash transactions.
In the interim, it is
important brokers are aware of the plan for FINTRAC audits of procedures of
individual broker offices, with the possibility of an examination. This is
FINTRAC’s way of ensuring brokers have the compliance regime in
Audits are expected to begin
as early as May, and FINTRAC indicates they will start in BC.
Complete details of the
FINTRAC requirements, along with the procedures to set up a compliance regime,
are available in the Money Laundering Compliance centre on the front page of www.realtorlink.ca. CREA will
provide additional details of this situation following the meeting with FINTRAC
Insurance Market Softens—A Little
Like real estate,
the insurance industry is subject to cycles. Typically, the insurance market
cycle lasts between five and seven years. According to Dennis Prouse of the
Insurance Bureau of Canada, 2003 saw the tail end of the hardest part of the
In 2002, the insurance
market had an overall return on equity of 1.8 per cent. Declining profitability
caused many insurance companies to tighten their underwriting practices to
reduce risk. It seems to have worked: the last quarter of 2003 showed a return
on investment of 7.4 per cent.
Prouse expects tough
underwriting standards for property insurance to continue, but suggests "the
worst of the stiff increases is probably behind us." Overall, he believes
availability will improve somewhat in 2004. The biggest problems Prouse sees lie
in the commercial and construction sectors.
But the fact remains that
residential property insurance is still more difficult to obtain now than in the
past. Here are some factors that may cause problems:
- Knob and tube wiring
- Fuel oil tanks
- Wood stoves
- 60 amp electrical
- Aluminum wiring
- 20-year-old furnaces
- Galvanized steel supply
- Cast iron waste
- Old roofs
- Asbestos and
- Grow operations
- Income properties
- Polybutylene pipes
- Radiant heating
Some of these conditions are
described further in a presentation given by Carson Dunlop to the Ontario Real
Estate Association. Click here for the presentation.
What can you do for your
- Encourage them to have the property professionally inspected.
- Encourage them to begin seeking insurance coverage as early in the buying
process as possible, because the existence of some conditions—including those
listed above—can cause delays.
- Use the Real Estate Council of British Columbia’s Fire/Property Insurance
Clause in the Contract of Purchase and Sale:
This offer is
subject to the Buyer obtaining approval for fire/property insurance,
satisfactory to the Buyer, on the property located at _________ by _________,
20__. This condition is for the sole benefit of the
Trouble getting property
To support government lobby
efforts, CREA and BCREA need to know about the problems people are having.
Please send your comments and concerns about insurance to Manager of Government
Relations Steve Olmstead (604.742.2793, [email protected]), who will pass
them along to CREA.
Agreement—REALTOR Input Needed
BCREA signed a one-year agreement with BC Assessment (BCA) to extend the current
arrangement that sees an exchange of MLS® data for BCA rolls.
2001, the BCA rolls have not included the names of property owners. BCREA
continues to lobby the government for an amendment to the Assessment
Amendment Act that would allow the real estate profession to continue
receiving name data on the BC Assessment rolls as part of the bulk purchase
arrangement between BCREA and BCA.
How has your business been
affected by the loss of the name data? To gear up for new negotiations with BCA
that will begin in the fall, BCREA needs your input.
Please send your comments to
Manager of Government Relations Steve Olmstead (604.742.2793, [email protected]).
Residential Tenancy Laws, Regulations Take Effect
On January 1, the
new Residential Tenancy Act, Manufactured Home Tenancy Act and their respective
regulations came into force.
The Residential Tenancy
Act applies to landlords and tenants of conventional apartment suites in
BC. The Manufactured Home Tenancy Act addresses the unique needs of
landlords of manufactured home parks and owners who rent the site on which their
REALTORS and the public can
access information on the new laws, including fact sheets, through the
Residential Tenancy Office website at: www.pssg.gov.bc.ca/rto/.
BCREA is generally pleased
with the new legislation, regarding it as a step forward in balancing the rights
of landlords and tenants. Several of the Association’s recommendations are
reflected in the new laws, including:
landlords can now increase rent annually by a percentage equal to the Canada
Price Index (CPI) plus two per cent. The allowable rent increase for 2004 is 4.6
home park landlords can now increase rent annually by a percentage equal to the
CPI. The allowable rent increase for 2004 is 2.6 per cent. The notice period for
rent increases is reduced to three months from six.
Landlords of residential and manufactured home parks may prohibit pets or
restrict the size, kind, or number of pets, create rules regarding pets and
charge a one-time deposit of one-half of one month’s rent if a pet is allowed.
Guide animals and existing pets are exempt from the pet deposit
Under the Residential Tenancy Act, new compensation
entitlements are available to tenants who must vacate so the landlord can change
the use of the property or make repairs. BCREA believes this section of the
legislation is balanced, though the Association did not support the provision
under Section 51(1). Changes include:
Subject to Section 51 [tenant’s compensation: section 49 notice],
a landlord may end a tenancy for a purpose referred to in subsection (3), (4),
(5) or (6) by giving notice to end a tenancy on a date that must be
- not earlier than two months after the tenant receives the notice
A landlord who gives a tenant notice to end a tenancy under
section 49 [landlord’s use of property] must pay the tenant, on or before the
effective date of the notice, an amount that is equivalent to one month’s rent
payable under the tenancy agreement.
addition to the amount payable under subsection (1), if
- steps have not been taken to accomplish the stated purpose for ending the
tenancy under section 49 within a reasonable period after the effective date of
the notice, or
- the rental unit is not used for that stated purpose for at least six months
beginning with a reasonable period after the effective date of notice,
the landlord, or the
purchaser, as applicable under section 49, must pay the tenant an amount that is
equivalent of double the monthly rent payable under the tenancy
Click here for a complete list of BCREA's recommendations.
Privacy Legislation is in Force
Information Protection Act (PIPA) came into force January 1, 2004. Your
board is pursuing a plan to help you comply, but here are two easy things you
can do to protect your clients:
The site provides resources to help
you understand the Act, including a preparedness checklist, frequently asked
questions and a personal information inventory form, designed specifically for
REALTORS, brokers and member boards.
are using the revised standard forms
The following nine standard
forms were updated to include privacy clauses:
Buyer’s Agent Contract
Purchase and Sale
with a Real Estate Agent brochure
with a Commercial Real Estate Agent brochure
New forms are
available on WEBForms—make sure the ones you are using include the
Land Title Filing Started
The provincial government
launched a pilot project this month that will allow land title documents to be
submitted online from anywhere in the province quickly and
"This is part of our
government’s New Era commitments to cut the cost of paper flow and to give all
citizens and businesses better online access to core services, 24 hours a day,
seven days a week," said Stan Hagen, minister of sustainable resource
The new electronic land
title filing system will gradually bring firms online until the system is fully
implemented around the province by April 1, 2004, to handle a potential of
approximately one million transactions per year.
The electronic forms are
identical to the paper forms currently in use and the business processes are the
same for each. The Law Society of British Columbia certifies the electronic
signatures, which will be needed by lawyers and notaries to affix a digital
signature to electronic land title office transfer documents, using a secure
For more information,
including frequently asked questions, visit http://srmwww.gov.bc.ca/landtitle/EFS_web_site/index.htm.
Anniversary for Legal Update
Update seminar has been helping REALTORS avoid costly lawsuits and
embarrassing hearings for ten years now—and it remains one of the most popular
2003-2004 is brand new, featuring the most recent court cases, Real Estate
Council of British Columbia decisions and new legislation,
what happens if
you fail to properly check certain information in a title search
how to avoid
lawsuits over area shortages
precautions to take when an encroachment exists
when the courts
expect you to disclose repairs
contract law and how to write better amendments
applies when buying your own listing
what to do if a
buyer immediately demands the deposit cheque returned
Referral Program Winners
Congratulations to William
Ingram of Quesnel (bellow left) and Jim Forster of Nanoose Bay (bellow right, in
the black jacket), who each won a Kyocera 7135 smart phone by participating in
Bell Mobility’s referral program.
Customize Your Next Vacation and Save Money
Now is the time
to book your spring vacation—why not save money by using your 150,000 free
travel points from Loyalty Travel?
Visit BCREA Online (www.bcrea.bc.ca) today, click on
the Travel Benefits Program box and log in to see all the available packages.
Trips include land tours, cruises, vacation packages and resort specials—and if
you do not see your perfect vacation listed, Loyalty Travel can customize a
holiday for you!
Since trips are paid for
with a combination of cash and free points, you could save hundreds of dollars
on your next vacation.
This program is available to
REALTORS and real estate board and office staff. Registering is easy:
1. select your
region from the drop-down menu
2. click “login”
3. click “member
enter your contact information and password
5. click “add”
Registration is a
one-time process and subsequent logins are easy—just click “already a registered
member?” and login.
Click here to visit the Timely Issues for REALTORS
available on REALTOR Link™.
Columbia Real Estate Association
600 - 2695 Granville Street
BC V6H 3H4
British Columbia Real Estate Association. Reprinted with permission."
BCREA makes no
guarantees as to the accuracy or completeness of this