Real Estate Professionals: What to Know about BCFSA and Real Estate Boards Disciplinary Actions

A real estate professional in British Columbia is governed simultaneously by legislation, regulations, and common law. A member of a professional real estate association, such as a REALTOR^®, is also obligated to operate pursuant to their real estate association’s rules and bylaws.

It can be a daunting task even for the most seasoned real estate professionals to fully understand their duties, so is navigating the disciplinary processes of their real estate board or the BC Financial Services Authority (the “BCFSA”).

This article provides essential information about what to expect if you are undergoing a disciplinary process or facing a prospective one. If you are under the disciplinary scrutiny of the BCFSA or your real estate association, it is highly recommended that you retain legal counsel as early as possible, even if the prospect of discipline seems unlikely.

Taylor Janis Workplace Law offers tailored legal services to all professionals facing disciplinary actions across BC. Contact us at our Vancouver or Kamloops office to schedule a consultation to secure a tailored legal plan.

The Disciplinary Powers: BCFSA vs. Real Estate Associations

The Statutory Regulator

The Financial Services Authority Act, enacted in 2019, established the BC Financial Services Authority as the regulator of the financial services sector in British Columbia. The former regulators, namely the Office of the Superintendent of Real Estate and the Real Estate Council of British Columbia, were absorbed by the BCFSA. The BCFSA has since become the sole regulator of all licensed real estate service providers in BC, whether they hold a brokerage, managing brokerage, associate broker or representative license.

Following the enactment of The Financial Services Authority Act, The Real Estate Services Act has also seen major amendments. Under the current legislative framework, the Superintendent of Real Estate, as appointed by the BCFSA, has the power to issue administrative penalties or discipline orders against a licensee. The Superintendent also has a certain degree of discretion over the procedures, as they can delegate these disciplinary powers.

As a statutory regulator, the BCFSA’s orders have a legally binding effect on licensees, and a wide range of actions may be considered, sometimes simultaneously, which include:

• Administrative penalties ranging from $1,000 to $100,000, depending on the type of contravention and whether it is a repeating contravention;
• A reprimand;
• Temporary suspension or cancellation of a licence;
• Imposition of restrictions or conditions on a licensee’s licence;
• Order the performance or cessation of specific business-related activities, including taking specific studies and training;
• Temporary or conditional prohibition on re-applying for a licence;
• Recovery of expenses incurred by the BCFSA in relation to investigation or discipline;
• Discipline penalties:
  • A fine of up to $500,000 against a brokerage licensee or a former brokerage licensee for each contravention;
  • A fine of up to $250,000 against other types of licensees for each contravention;
• Additional penalty up to the amount of the remuneration received for the particular service out of which the contravention occurred; and
• Freezing of property to protect public interests.

All discipline orders and most administrative penalties over $2,500 will be published on BCFSA and Canadian Legal Information Institute (“CanLii”) websites and remain publicly accessible perpetually. These decisions will also leave a record on your licensee profile search page for 5 years, or 10 years if involving a suspension of license.

Even a minor contravention attracting an administrative penalty of less than $2,500 will generally be published on BCFSA websites, though they might be anonymized. For most of your clients or customers, a real-estate transaction is one of the most important financial decisions they make in their lives, and they may just steer away from someone who does not have an impeccable record.

Therefore, you should tread carefully and consider engaging legal representation regardless of the severity of a prospective discipline.

The Membership-Based Professional Associations

All licensed real estate agents are under the regulatory and disciplinary purview of BCFSA, whereas members of real estate professional associations are additionally responsible for adhering to the rules of such member-based associations.

For example, the 26,000 BC real estate agents who conduct business under the professional designation REALTOR^® are members of their local real estate boards recognized by the British Columbia Real Estate Association (“BCREA”) and the Canadian Real Estate Association (“CREA”). Hence, as a condition of membership, REALTORS^® in BC are required to adhere to the REALTOR^® Code of CREA as well as the bylaws, rules and regulations of CREA, BCREA and their local real estate board. At the time this article is published, BCREA has 8 member boards:

• Association of Interior REALTORS^®
• BC Northern Real Estate Board
• Chilliwack and District Real Estate Board
• Fraser Valley Real Estate Board
• Greater Vancouver REALTORS^®
• Powell River Sunshine Coast Real Estate Board
• Vancouver Island Real Estate Board
• Victoria Real Estate Board

CREA and its member provincial and local real estate boards are voluntary associations at law. Under the BC Societies Act, a real estate board has the power to regulate and conduct its own internal affairs as well as discipline or expel its members.

At common law, rules of a voluntary association are binding in a contractual sense as long as they are voluntarily accepted by the membership, do not offend natural justice, and are not otherwise illegal. Hence, generally, courts tend to pay deference to voluntary associations’ disciplinary decisions, even when the procedures and reasoning are not perfect. A recent example can be seen in the Redekop v. Okanagan Mainline Real Estate Board decision.

Each local real estate board’s bylaw may differ, but, generally, a CREA member board can sanction a REALTOR^® by:

• Suspending, restricting or terminating a REALTOR^®’s license to use the REALTOR^® designation.
• Placing conditions on a REALTOR^®’s license to use the REALTOR^® designation.
• Suspending, restricting or terminating a REALTOR^®’s access to CREA services.

In the competitive and fast-moving marketplace of real estate, your privilege of using the REALTOR^® designation can make a major difference in attracting clients and customers. Just as crucially, losing the market information from REALTOR.ca, the customer leads from REALTOR.ca DDF^® and MLS^®, or the administrative and transactional tools provided by CREA WEBForms^® can be highly detrimental to your business. Moreover, your professional reputation is on the line, and you may lose your professional support network if an adverse decision is made against you.

Regulatory or Not, Being Disciplined Is Damaging

The BCFSA’s decisions have a legally binding effect on both your ability and license to conduct business. Though your real estate association decisions are strictly speaking administrative, they tend to be upheld by courts. Either type of discipline can have long-term and widespread reputational effects and severely affect your ability to conduct business as a real estate professional.

The key takeaway here is, if you are facing disciplinary scrutiny, irrespective of whether it is from a regulator or a professional association, you should consider retaining legal counsel to represent your case and your interests.

Understanding Your Duties & Defending against a Complaint

The Legal Duties and Defending against a BCFSA Complaint.

The primary sources of a licensed real estate professional’s duties are the Real Estate Services Act (the “RESA“) and its accompanying Real Estate Services Rules (the “RESR“), which provide the mandatory standards to be observed by all licensees, and the rules contained within ranges from general and overarching duties to detailed and technical requirements in how a licensee should conduct their business.

• Examples of general duties include the duty to act honestly and with reasonable care and skill when providing real estate services, and the duty to take reasonable steps to avoid conflicts of interest.
• More detailed rules can pertain to any aspect of managing a licensee’s business, such as advertising, managing trust accounts, record and bookkeeping, and the formation and delivery of written contracts. Some rules are so specific they might even seem mundane, for example, those regarding the proper keeping and display of licences.
• Certain violations of the RESA are provincial offences, meaning they may attract prosecution and quasi-criminal sanctions, including large fines and imprisonment for up to 2 years.

Notably, the obligations can arise outside of the context of a real estate professional’s current business activities, for example:

• The BCFSA can discipline a former licensee for their wrongdoing conducted whilst they were still licensed.
• A licensee is duty-bound when they are engaging in real estate transactions that would otherwise have been exempted from the licensing requirements, unless highly specific steps were taken. For example, when selling their own house, a licensee will generally be held to the same standards as if they are acting for a client.
• Conduct unbecoming a licensee, meaning conduct contrary to public interests, or conduct that disreputes or undermines public confidence in the real estate industry, can also attract discipline. Conduct unbecoming can potentially be found in someone’s personal life.

All these mean that a licensed real estate professional should be diligent both inside and outside of their business activities. One of BCFSA’s policy goals is to maintain public confidence in the real estate industry, and any person (whether a customer, a client, a fellow licensee or any member of the public) can make a complaint to the BCFSA. In fact, the BCFSA received more than 1200 real estate related complaints during their 2023/2024 fiscal year. Hence, it seems facing complaints might just be part and parcel with being in the real estate industry, and sometimes they may be levied against a licensee who is at all times diligently compliant.

The question then is, how should you prepare a defence against an allegation to safeguard your career and reputation? The usual and short answer is to back your facts with evidence and know how they apply to the rules. However, in reality, retaining legal representation is the ideal way to formulate a sound defence and minimize unnecessary risks. Just to name a few reasons and examples:

• Your duties are multi-sourced, and some rules are also nuanced, despite that they may appear to be clear-cut.
  • Remember, a licensee has to observe the law in general, and the adjudicator may have to base their decisions partially on laws other than RESA and RESR. When multiple rules interact with each other, things can get profoundly intricate.
  • For example, RESR provides that a licensee must act in the best interests of the client, and whether this duty is sufficiently discharged is often decided with reference to the common law fiduciary duty standards.
• Facts may be intensely disputed, and there are rules regarding evidence.
  • Though BCFSA does not strictly adhere to the evidence rules of a court, evidence should be reliable, factually relevant and legally material to be accepted under BCFSA’s discretion.
  • Robust and well-organized evidence can be the key to a favourable outcome, and a lawyer might be the best-equipped to prepare it for you.
• Skilled advocacy can highlight factors and issues that are under-considered by BCFSA.
  • Your legal counsel can help the decision maker identify and analyze legal and factual factors they might have otherwise overlooked. This can be particularly important when the issue is complex or the arguments revolve around public interests and policies.

Real Estate Board Discipline:

If you are a REALTOR^® in BC, you have an obligation to observe the bylaws, regulations and codes of CREA, BCREA and the local real estate board that you belong to.

Such rules can pertain to the general professionalism and ethics requirements both within and outside of the business activities of a REALTOR^®. For example, the duties to a client or customer, the advertising standards and usage of CREA intellectual properties, the relationship with other REALTORS^® and the associations, as well as the dispute resolution procedures, just to name a few.

To understand your obligations as a REALTOR^® and defend against an allegation in front of a local real estate board can be particularly challenging, as each board has a broad discretion in making and amending its own rules, and the discretion usually resides with a board’s leadership.

Consequently, it might be difficult to keep track of all rules and changes, and when an issue arises, in-depth analysis can be required to fully defend your case. Moreover, similar to defending against a regulatory proceeding of BCFSA, the facts may be intensely disputed, the rules can be complex, nuanced and multi-layered (considering a REALTOR^® is simultaneously a member of CREA, BCREA and a local real estate board).

Hence, undergoing a real estate board disciplinary procedure can be a stressful and intimidating endeavour for a REALTOR^®, and you should not risk going alone.

Taylor Janis Is here to Help

Taylor Janis recognizes the legal complexity of BCFSA regulatory actions, the practical difficulty in navigating the rules of a real estate board, and that every case is factually different. Whether you are under the scrutiny of the regulator or your real estate board, we are looking forward to offering tailored advice and strategic guidance to help you navigate the challenging situations.

Navigating the Procedures

BCFSA Disciplinary Procedures

A complaint can be levied against a licensed real estate professional by any person who has a reason to believe a licensee was non-compliant. This means any individual or entity with legal personhood, such as a company, can file complaints, which can greatly vary in gravity and merit and relate to a wide range of concerns.

Once the BCFSA receives a complaint against a licensee, an investigation may or may not commence based on its nature and strength, but an investigation does not necessarily need to stem from a complaint; it could be up to the Real Estate Superintendent and their office’s discretion to initiate an investigation.

An investigation can be highly disruptive to a licensee’s business activities, and the process can drag on for months, especially if not attended to carefully by the licensee.

• The BCFSA has the direct authority to inspect and retain records from a licensee’s business premises, and to request an interview, a reply and/or disclosure of information and records.
• A court order may be obtained to expand this power to search and seizure of other types of evidence at other places.
• If the investigation concludes that noncompliance has indeed occurred, depending on its nature, this may lead directly to an administrative penalty.

An investigation can result in direct financial and career setbacks for you, as well as have profound, intrusive effects on your business activities. You have a legal duty to cooperate during an investigation, but you should be aware of your rights and prepare your response strategically so as not to inadvertently jeopardize your case. You should preferably consult a lawyer as early as possible to minimize the risk of receiving an administrative penalty or escalating into the hearing process.

A BCFSA discipline hearing can be extremely stressful and difficult for a licensee to navigate, as it is considered a quasi-judicial procedure.

• A hearing is presumed to be public unless the parties, a witness, or the public interests would be unduly undermined. Hence, the reputational damages can amplify if you are under-prepared, regardless of the eventual outcome.
• BCFSA will be represented by legal counsel, who will duly advance their legal and factual positions; thus, a respondent licensee should be prepared to tenaciously and strategically defend their case. This can prove to be difficult without legal representation, especially considering the complexity of rules regarding procedures, evidence and witness examination.

An alternative available to an impugned licensee is to apply for a consent order before the commencement of a discipline hearing; however, this option should not be exercised lightly without legal advice.

• A respondent licensee initiates the consent order negotiation by making a proposal of discipline orders they are willing to accept. The orders proposed should be reasonable and acceptable to the BCFSA, yet the respondent wants to avoid proposing orders that are unduly harsh on themselves. It is hence a strategically nuanced decision, preferably based on knowledge of applicable laws and relevant legal precedents.
• Though it has the advantage of avoiding the stressful, costly and disruptive process of going to a hearing, a consent order equates to an admission of noncompliance, and it will be published just like a hearing decision.
• The making of a consent order forecloses any rights to appeal the decision.

Hence, if you have received a Notice of Discipline Hearing, you should retain a lawyer to comprehensively review your case and help you decide strategically what to do next. Whether you have decided to defend yourself at a hearing or to enter a consent order, legal representation can be essential for achieving a fair and favourable outcome.

The Disciplinary Process of Real Estate Boards

The CREA By-Laws and Rules contain only basic guidelines on local real estate boards’ disciplinary procedures, and the local boards have a wide latitude in setting their own procedures, which vary among regions. However, the following aspects are mandated by CREA:

• Complaints may come from any source, including the public and other REALTORS^®, and can be initiated by a real estate board.
• Aside from full hearings, consent to discipline and other alternative dispute resolution processes should be available.
• All regional real estate associations and local boards must have legal representation, and disciplinary actions might be taken under legal advice.

The procedures involved in a real estate board disciplinary process might just be as onerous and complex. An experienced lawyer can help a REALTOR^® navigate through these procedural challenges, but perhaps more importantly, a lawyer can help identify concerns regarding the fairness and legality of the procedures involved and safeguard your rights. This article will delve deeper into this point in the next section.

The Key Challenges in Navigating the Procedures

For both a BCFSA and a real estate board disciplinary process, the procedures can be complex and stressful to navigate. When the procedures start to commence, they can be highly disruptive to your daily business activities, and the reputational damage may radiate even before a final decision is made.

In BCFSA regulatory actions, there will be key strategic decisions for a respondent to make in regard to settling or defending a matter. Local real estate board actions also pose unique challenges, as their procedures could be less transparent.

Hence, whether it is a BCFSA or real estate board discipline process, it is highly recommended that you engage with a lawyer from the very beginning to give you the strategic support and help streamline the process to minimize adverse effects.

Your Rights when Undergoing a Disciplinary Process

Your Rights When Undergoing a BCFSA Disciplinary Process

When you are under BCFSA scrutiny, you have rights rooted in administrative law, common law, and even the Constitution. The exact way such rights manifest can be found in a series of legislation (as well as their accompanying regulations), including the Financial Services Act, Real Estate Services Act and the Administrative Tribunals Act. Further, your rights to have a decision reviewed by higher authorities are informed by the Financial Institutions Act and the Judicial Review Procedure Act.

A respondent’s legal entitlements when undergoing a regulatory action are considerable and complex; the above-cited legal authorities are not even a complete list of sources of your legal rights.

However, to summarize it for informational purposes, you have three broad but distinct rights:

• The right to procedural fairness:
  • this fundamentally means you are entitled to know the matter against you and have an opportunity to respond to and defend against that matter.
  • However, the exact procedures that protect this right depend on many factors. A lawyer can help you identify, object to and even judicially challenge an inappropriate procedure.
• The right to unbiased decision makers:
  • A decision and its making process should not give a reasonable apprehension of bias to a reasonably informed third party observing the entire circumstance.
  • This is assessed by taking into account whether the decision maker has acted fairly in all circumstances. This entails that a claim of bias must be substantiated with evidence and sound legal arguments.
• The decision must meet certain standards of substantive/ legal fairness.
  • Because you can first appeal a BCFSA to the Financial Services Tribunal, under the operation of the Real Estate Services Act, the Financial Institutions Act, and the Administrative Tribunals Act, the standard for the court to judicially intervene at judicial review is that the decision was “patently unreasonable”.
  • This is a highly stringent standard for a licensee trying to overturn a decision, and courts are required to pay deference to an expert tribunal like the Financial Services Tribunal.

The important thing to know is, your rights are engaged throughout the disciplinary procedure. Once it is made, it is monumentally challenging to overturn a decision.

Moreover, an appeal or judicial review at the court does not automatically halt the enforcement of a disciplinary order, and under the most favourable circumstances, a decision may be sent back to BCFSA to redecide, causing further complications.

Hence, our advice is to retain legal counsel to safeguard your rights and prevent unfairness at an early stage of a BCFSA discipline process.

What about Your Local Real Estate Board?

Generally speaking, a local real estate board can make and apply its internal procedures as long as such procedures were voluntarily accepted by its members and the members were given the opportunity to express concerns or objections. But this does not mean that a board can discipline REALTOR^® at whim.

Your first layer of protection is the Societies Act, which prohibits a real estate board from conducting its affairs in a way that is oppressive or unfairly prejudicial, and a REALTOR^® can bring such concerns to the BC Supreme Court’s attention.

Also, at common law, as expressed by the Lakeside Colony decision by the Supreme Court of Canada, courts can intervene when the following concerns arise:

• The rules of the board have not been observed by the decision makers;
• The conduct of the board was contrary to natural justice; and
• The decision was made in bad faith.

A lawyer can therefore play a crucial role in defending your rights when it comes to a real estate board discipline process by highlighting any legal concerns and potentially reversing the course of an unfair decision in the making.

Frequently Asked Questions

How Long Does a BCFSA Disciplinary Process Take?

This would vary greatly depending on the complexity, merit, and legal and factual gravity of the complaint. A substantial number of complaints are closed by the BCFSA within 90 days of reception, but for the ones that warrant investigation or a hearing, they can drag on for months or even years before a final resolution is reached. The process can be highly stressful and disruptive to your career, and an experienced lawyer can help to streamline the process and minimize the detrimental effects.

Can I Appeal a BCFSA Disciplinary Decision? How can I do it?

Yes, you can, unless the decision was a consent order. The first venue of appeal is the Financial Services Tribunal; further than this, you can apply to the BC Supreme Court for a Judicial Review. However, it is important to know that, once a decision is made, there are stringent time limits for you to start the appeal or judicial review process, which come with their own procedural and legal complexities. Furthermore, an appeal or judicial review does not automatically put a hold on the enforcement of a disciplinary order. Hence, it is strongly recommended that you engage legal representation as early as possible and try to achieve a favourable outcome at BCFSA.

What Happens if BCFSA Rejects My Consent Order Proposals? Will the Admitted Facts Be Used Against Me?

A Consent Order, as the name suggests, is a way to settle a discipline matter based on consent. It is an important tool in conserving the resources of both the BCFSA and a respondent licensee, and an initially rejected consent order does not eliminate the possibility of eventually reaching one with continued negotiation. The facts admitted in a proposal cannot be used against you during a hearing unless you waive this protection. Nonetheless, when negotiating for a consent order, you should aim to streamline the process as much as possible so as to minimize the disruptive effect on you and conserve BCFSA’s resources (remember, BCFSA’s costs in processing a matter can be compensable by you). Whether you are considering a consent order or already in the process of negotiation, you should seek legal advice as soon as possible.

Can I Be Represented by a Lawyer at BCFSA Hearings? What about Real Estate Boards?

For BCFSA hearings, you have a legal right to be represented by a lawyer, and it is highly recommended that you have a lawyer. For real estate board hearings, though, your membership agreement might not provide you the right to have a lawyer act for you at a hearing. However, even if this is the case, you can still have legal support in the background in the overall disciplinary process and safeguard your rights. Meanwhile, we highly recommend early engagement with legal representation at the investigatory stage.

My Local Real Estate Board Is Treating Me Unfairly. What Can I Do?

A sensible starting point is to let your lawyer communicate with them and highlight your concerns, and advocate on your behalf seeking to convince the board’s leadership to change their course. If this does not help, consider commencing legal action to affirm your rights.

Can I Sue My Real Estate Board for Defamation? (or Other Types of Wrongdoing)

Potentially, you can, even if your membership agreement or the board’s bylaws contain a clause to preclude your right to pursue legal actions against them for their wrongdoings. But a successful claim will likely require you to establish strong factual and legal arguments, such as that the board’s actions were oppressive or unfairly prejudicial, hence contravening the Societies Act, that the clause precluding rights to legal action does not apply to your situation, or that the action was in bad faith. You should consider having a lawyer review your case in depth to determine the strength of your claim.

Conclusion

When you are under the disciplinary scrutiny, regardless of whether it is from the BCFSA or a real estate board, an adverse outcome can result in a direct career and financial setback as well as long-term reputational damage. Both the factual and legal matrix of a case can be highly complicated, and so are the procedures involved. Defending against an allegation often requires skillful advocacy and strategic planning, and your legal rights are engaged from the very beginning of a disciplinary process.

Legal representation is instrumental in streamlining the process, minimizing adverse impacts, safeguarding your rights and achieving a favourable outcome. However, each case is legally and factually unique, and if you feel the need to talk to a lawyer, contact Taylor Janis Workplace Law at our Vancouver or Kamloops office for an initial consultation. We are looking forward to assisting you in any challenging situation with a tailored legal plan.

Disclaimer:

REALTOR^®, REALTORS^®, CREA WEBForms^®, MLS^® and REALTOR.ca DDF^® are registered trademarks owned by the Canadian Real Estate Association. Taylor Janis LLP does not claim any rights associated with these trademarks.

References:

• Real Estate Services Act [SBC 2004] CHAPTER 42
• Real Estate Services Rules
• Financial Services Authority Act [SBC 2019] CHAPTER 14
• Financial Institutions Act [RSBC 1996] CHAPTER 141
• Administrative Tribunals Act [SBC 2004] CHAPTER 45
• Lakeside Colony of Hutterian Brethren v. Hofer, 1992 CanLII 37 (SCC), [1992] 3 SCR 165
• Redekop v. Okanagan Mainline Real Estate Board, 2018 BCCA 226
• CREA By-Laws
• CREA REALTOR^® code
• BCFSA: Publication of Regulatory Actions.
• BCREA: 2024 Annual Report
• BCFSA Consumer Complaints and Investigations Report, Fiscal Year 2023/2024

Resources for Readers:

• Past BCFSA disciplinary decisions (real estate)
• BCFSA complaint process (real estate)

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