As of May 16, 2016, the government now requires contracts prepared by real estate licensees to include a clause that sets restrictions on assignments. This new requirement for real estate contracts is in effect and affects both residential and commercial contracts. The following paragraph has been added to the contracts as seen below:
Paragraph 20A (Residential) & Paragraph 40A (Commercial)
RESTRICTION ON ASSIGNMENT OF CONTRACT: The Buyer and the Seller agree that this Contract: (a) must not be assigned without the written consent of the Seller; and (b) the Seller is entitled to any profit resulting from an assignment of the Contract by the Buyer or any subsequent assignee.
"Real estate consumers now have a tool to help them decide whether they want their contracts to be assignable," says BC 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."
What exactly is an assignment? Basically, it is the practice of someone assigning their rights in a contract to someone else prior to the completion of the transaction. In layman's terms, someone can buy the right to step into the original buyer's shoes to complete the contract. While they are legal under common law and by secion 36 of the Law and Equity Act, there may be instances of parties utilizing assignments as a way to make a profit, especially in a busy real estate market. As such, the new revisions in place stipulate that the Seller is entitled to any profit resulting from the assignment.
Commencing in June 2016, the provincial government will be collecting citizenship data of real estate owners through the Property Transfer Tax Form as per Mike de Jong, Minister of Finance.
"BCREA is pleased that the government will collect this information, in which there is obviously a lot of public interest," says Association CEO Robert Liang. "Strong policy is based on solid information, and we look forward to learning more about this aspect of the real estate market."
For all your real estate needs, contact Amalia Liapis by e-mail at firstname.lastname@example.org or alternatively by phone at 604-618.7000.
Source: British Columbia Real Estate Association