REBGV President Darcy McLeod sent the following letter to Premier Christy Clark in response to her announcement about new rules for assignments:
Dear Premier Clark,
On behalf of the more than 12,500 Realtors that we represent, I am writing to express concern at your decision to pre-empt the Real Estate Council’s independent advisory group’s review and introduce new rules on assignment agreements in real estate.
We are concerned that the provincial government is looking to change the rules to fix a short-term problem. We understand the intention is to curb speculation associated with the high demand, low inventory market Greater Vancouver is currently experiencing. There are often unforeseen consequences associated with attempting to impose limitations on the market and we respectfully ask that the government consider the following issues.
In other types of markets, assignments can protect sellers and buyers. For example, in pre-sale situations, which of necessity require a long time to complete, a buyer’s circumstance may change which precludes them from closing. Financial, family or other personal situations change. In such cases, assigning the contract to a second buyer allows both the original buyer to honour the contract and protects the developer/seller who would otherwise have a contract potentially in default.
People who buy an assigned contract with the goal of reselling to make a profit are taking a risk. They may profit, or they may incur losses, sometimes substantial losses. For example, in the early 1980s similar activity occurred in BC relative to land sales, and speculators did indeed incur substantial losses. People also experienced losses of this kind in the presale market between 2008 and 2009. In the government’s proposed model, profits are to go back to the original seller. Will that original seller also be responsible for any losses?
The term “shadow flipping” was coined to inflame public opinion. An assignment agreement is a regulated practice in BC.
The media has not let facts get in the way of painting a negative picture of Realtors in this story of assignments. We have shared with them, but they do not report, that our organization has yet to receive a formal complaint from the public about assignments.
There are already processes in place to deal with any Realtor in breach of their obligations and duties to their clients outlined within the Real Estate Services Act and our professional standards.
Our complaints process is posted on our public website. We administer the national Realtor Code of Ethics and the rules and regulations associated with being a member of our professional association. We and our members take very seriously any breaches to these standards. If Realtors are doing anything wrong, we want to know and we will vigorously investigate.
The housing affordability debate in Metro Vancouver is at a fever pitch today. It’s become emotional and political. Amid this climate, it’s important to remember that market cycles come and go, but government intervention is permanent.
We are concerned that the media hyperbole on this topic may lead to changes with unintended consequences once the market changes, as it inevitably does.
We welcome opportunities to work with your government to find solutions that help protect the public irrespective of current market dynamics.
Darcy McLeod, President
Real Estate Board of Greater Vancouver