New B.C. flipping rules give sellers all the profit

The B.C. government introduced new, mandatory rules that require the addition of a clause into real estate contracts

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 (Getty / erhui1979)

(Getty / erhui1979)

Homebuyers, sellers and real estate agents will soon need to comply with new rules that will apply to residential real estate contracts. B.C. Premier Christy Clark announced that as of May 16, 2016, anyone involved in a residential home sale will need to include a clause that will give the original seller of the home ownership of any profit made from a subsequent assignment sale.

The new rules come after the premier promised, in March, to amend how assignment sales—also known as shadow flipping—were being conducted in this western province.

Sellers can amend or remove this now mandatory new condition, if they so choose.

“Real estate consumers now have a tool to help them decide whether they want their contracts to be assignable,” says B.C. Real Estate Association (BCREA) President Deanna Horn. “Like many other provisions in the contract, buyers and sellers have the option of keeping the new paragraph, changing it or striking it out completely—but at least the conversation is more likely to happen now.”

BCREA says it supports the new rules and will help real estate agents to implement the new rules.

“These new regulations are designed to empower real estate consumers to make informed decisions in their own best interests,” says B.C. Real Estate Council Chair Marylou Leslie. “As the regulatory body responsible for administering the Real Estate Services Act, we will be working on many fronts to make sure the requirements are well understood, that licensees comply with their new obligations, and that comprehensive monitoring and enforcement programs are put into place.”

Later this month, BCREA will also begin collecting data on citizenship of buyers through the Property Tax form.

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2 comments on “New B.C. flipping rules give sellers all the profit

  1. When signing a contract the purchasers information is already available and “Buyer Name and or Asignee” is clearly stated. Maybe adding a clause tries to protect sellers in some manner but a) there is no harm to the seller b) the agent and the seller have plenty of opportunity to see the contract before signing and should be able to read what virtually amounts to the first line of the contract. c) The effect of this will be to reduce sale certainly as people who buy and assign have this ability to also protect themselves. Unfortunately this is another misguided and totally unfounded problem.

    Reply

    • Bill,
      Until this change it was actually assumed that the seller gave up assignee rights unless a clause was added to the contract. Since most sellers are not familiar with assignment sales (the term or the process) it’s important that measures be taken to protect the seller. That’s what these new rules are trying to do — make the process more accessible, transparent and accountable for all involved.

      Reply

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