Probe launched into alleged fraud, insider trading by Vancouver real estate agents
A house built in 1930 that was recently listed for sale for $2.398-million is seen in the Point Grey neighbourhood of Vancouver, B.C., on Friday January 29, 2016. (Darryl Dyck/THE CANADIAN PRESS)
Laura Kane, The Canadian Press
Published Tuesday, February 9, 2016 11:17AM EST
Last Updated Tuesday, February 9, 2016 7:43PM EST
Premier Christy Clark says she expects British Columbia's real estate industry to act on allegations that some agents are exploiting a clause that allows a contract to be resold multiple times before a property deal closes, driving up prices and commissions.
"We're giving them the chance to fix it. if they don't, we're going to fix it for them," she told reporters Tuesday in Victoria. "I don't have a lot of patience on this issue."
Some Metro Vancouver real estate agents have allegedly been involved in "shadow flipping," or selling a property multiple times before a closing date. As a result, the final price rises by hundreds of thousands and the agent collects commission on each sale.
Only the final buyer pays the property transfer tax, meaning B.C. is potentially losing out on millions in tax revenue.
The allegations, which first emerged in media reports and from Opposition politicians, cast new scrutiny on the self-policing real estate industry.
Finance Minister Mike de Jong said he is writing to Real Estate Council of B.C. and the superintendent of real estate to ensure that professional conduct requirements are being followed.
"Realtors are privileged to be part of a self-regulated profession. That is a privilege," he said in Victoria. "Our expectation is that they will govern themselves and conduct themselves in a way that is respectful of that."
Asked what the province will do to prevent the practice, de Jong said the "real potential sin" is real estate agents who are not protecting the interests of their clients. It's up to the real estate council to take action, he added.
"It's why the council exists. If they're not up to the job, then we'll make some further decisions."
Council spokeswoman Marilee Peters said she agrees that self-regulation is a privilege and the regulatory framework in B.C. is one of the oldest and best-established in the country.
The council had received a few complaints about misuse of the so-called assignment clauses in contracts over the past year and had launched investigations, Peters said.
"I think what the recent reports have made clear is that there may be a greater incidence of flipping than we know from the complaints that we receive," she said in an interview.
The council is appointing an independent advisory group to probe the allegations and announced Tuesday it will be chaired by the superintendent of real estate, Carolyn Rogers.
Rogers said that like the council, her role is to ensure the public interest is protected and confidence in the real estate sector is maintained.
"I look forward to working with the members of the advisory group on this important assignment and responding in a manner that assures the public that they can have full confidence in the integrity of the sector," she said in a statement.
The advisory group will include representatives from the legal profession, academia, and the business community. An interim deadline of April 8 has been set for initial recommendations.
David Eby, housing critic for the Opposition New Democrats, said the superintendent and council have failed in their responsibility to oversee the industry and should not be involved in the probe.
"Here you have two bodies that are clearly part of the issue leading the investigation into themselves, and that is not an adequate response," he said.
But Darcy McLeod, president of the Real Estate Board of Greater Vancouver, said the council's role is to protect the interests of the public, not its members.
"We have a lot of faith in their ability to make good decisions and to investigate in a fashion that is going to serve the public."
With files from Dirk Meissner in Victoria