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Licensee Obligation to Report Misconduct Guidelines

Licensee Obligation to Report Misconduct Guidelines

Guidelines
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  • Guidelines

    BCFSA’s Guidelines provide a practical application of the information and give suggested best practice guidance to assist real estate professionals. These guidelines provide BCFSA’s interpretation of RESA and all other applicable legislation.

    In addition, BCFSA’s Guidelines may be a useful information source for the general public looking for information about standards of conduct for real estate professionals.

Purpose

This guideline will help you understand your obligations to report misconduct to your managing broker and to BCFSA and how to make those reports.

The duty to report is a fundamental component of the licensing regime. Not reporting can put consumers at risk, may be contrary to the best interests of public and may undermine public confidence in the industry.

While reporting improper conduct can be uncomfortable, it will help maintain and even elevate the profession by minimizing the impact and hopefully stem continued misconduct on the part of the real estate professional.

  1. Report all instances of misconduct to your managing broker.
  2. How and where to report.

Guidelines

Report All Instances of Misconduct to Your Managing Broker

The Real Estate Services Rules require you to report misconduct by others in your brokerage to your managing broker. This could include your own misconduct, as well as misconduct by other licensees and by unlicensed individuals working at the brokerage.

You also have an ethical duty to report any misconduct of any real estate professional or unlicensed brokerage employee to your managing broker, including those from other brokerages. Elevating professionalism in the industry, protecting the public, and increasing public trust benefits everyone.

Failure to report misconduct to your managing broker (when the misconduct is known to you), could be viewed as conduct unbecoming of a real estate professional and you may be subject to discipline. If you think the conduct of another real estate professional is suspect, but are unsure if it rises to a level where reporting it is necessary, ask yourself the following questions and then speak with your managing broker:

  • What are the conduct requirements in this situation?
  • Have a consumer’s interests been harmed by their actions?
  • Does it seem likely that someone’s interests may be harmed in the future by their actions, if repeated?
  • Does the individual stand to obtain a direct or indirect benefit from their actions, and has this been adequately disclosed to the client?
  • Does the individual seem unaware of or unwilling to correct their actions?

You may also want to put yourself in the position of a member of the public and think about how they would react if they witnessed the misconduct and learned that it was not reported. Would this help or hurt the industry reputation?

When in doubt, speak with your managing broker about your concerns. You may also wish to contact a Practice Standards Advisor to get some advice.

How and Where to Report

(a) Reporting to Your Managing Broker

Your managing broker has a duty to deal with violations of RESA and its associated Real Estate Services Regulation (“Regulation”), Real Estate Services Rules (“Rules”) and Bylaws, where they have knowledge of improper conduct. For many managing brokers, their primary source of information is you, the real estate professional who is interacting daily with other real estate professionals and staff both at your brokerage, and at other brokerages. Reporting misconduct helps your managing broker fulfill their obligation to deal with, and hopefully resolve situations involving misconduct before they become larger issues that could bring the industry into disrepute.

There is no obligation when reporting misconduct to your managing broker to put your information in writing, but doing so can help you outline your concerns and any potential risks to the industry and public you may have identified. It also provides a record of what was reported, when and to whom, which can be helpful to refer back to at a later date.

(b) Reporting to the Regulator

You may also choose to report misconduct directly to the regulator. For example, this may be necessary if:

  • The individual’s conduct presents such a great risk to the public that immediate action is necessary (e.g., a real estate professional has misappropriated, or stolen, a client’s money);
  • Your managing broker is not immediately available, and the misconduct is of a serious nature;
  • You have concerns about how your managing broker is handling, or has handled, an instance of misconduct;
  • It is the managing broker who has committed the professional misconduct; or
  • For any other reason, you would feel more comfortable reporting to BCFSA rather than to your managing broker.

While most complaints submitted to the regulator are done through a formal process and in writing, BCFSA does have an anonymous tip line where real estate professionals and the public can report misconduct on the part of real estate professionals. If you make an anonymous complaint, the complaint must have sufficient information for an investigation to be opened. This information may include:

  • Names of parties involved, including the name(s) of other real estate professional(s) and their brokerage(s);
  • Type of real estate service involved;
  • Property address;
  • Description of key details of the transaction and the inappropriate actions;
  • Dates;
  • Real Estate Services Rules you believe might have been violated.

(c) Reporting Unlicensed Activity to BCFSA

Learn more for instances where it is suspected that someone is providing real estate services without a licence.

Relevant Cases

Case #1

Licensee failed to notify his managing broker of their own misconduct when they entered into a contract of purchase and sale using a fictitious name with the intent of misleading the seller.

Contraventions: Section 29(5) of the Rules, among others.

Read the full case (will open in a new tab)

Case #2

Licensee failed to notify their managing broker that another licensee at the brokerage was providing rental property management services without being licensed to do so.

Contraventions: Section 29(5) of the Rules, among others.

Read the full case (will open in a new tab)

Managing Broker Considerations

The Real Estate Services Rules provide the managing broker’s responsibilities when it comes to how the day-to-day operations of the brokerage are conducted. These Real Estate Services Rules include sections on supervision, accounts, and records, and even what to do when there is knowledge of improper conduct.

(a) What Do the Real Estate Services Rules Mean by ‘reasonable steps’?

When you are witness to or have been provided with information suggesting improper conduct on the part of one of your staff or real estate professionals, there is an obligation that you take reasonable steps to deal with the matter.

To determine what reasonable steps are, you will need to use your professional judgment. You may wish to ask yourself:

  • What are the details of the allegation?
  • Which regulatory standards may have been contravened?
  • What would a reasonable person with your knowledge and experience do to resolve the issue?

Each situation will be different and require a different response. Speaking to a BCFSA Practice Standards Advisor may help you if you are unsure how to proceed.

(b) Taking Reasonable Steps to Deal with Misconduct in the Brokerage

When there is evidence of misconduct within your brokerage, it is prudent to gather all the information you can about what led to the potential misconduct, and think about what a reasonable person with that information might do to reduce public harm, and protect the reputation of the brokerage and industry.

Decide how you are going to get the information you need. Perhaps speaking with the individuals involved — including real estate professionals, unlicensed individuals or impacted consumers – would help. You may also need to gather documentation such as contracts, service agreements, and even written correspondence between the offending real estate professional and other parties. Gathering this information will help you determine the seriousness of the misconduct and will also help you determine the best way to resolve the issue.

In some instances, you may determine that the misconduct was technical or minor in nature and resulted from a misunderstanding or lack of knowledge. In such cases, a discussion with your real estate professional or perhaps a recommendation of additional education may be enough to deal with the matter.

In situations where it appears that the misconduct is serious or where there appears to be a pattern of misconduct by an individual, “reasonable steps” would include reporting it to the regulator. For example, this would apply to activities involving unethical conduct, theft of trust funds, severe negligence or could result in a claim to the Errors and Omissions Insurance Corporation or the Real Estate Special Compensation Fund. In these cases, the conduct puts consumers and the industry’s reputation at great risk.

(c) Taking Reasonable Steps to Deal with Misconduct Outside of the Brokerage

Should one of your real estate professionals report misconduct on the part of a real estate professional or staff member of another brokerage, ask them to provide you with a detailed account of what occurred and any supporting evidence they may have.

If you believe that misconduct may have occurred, contact the managing broker of the other brokerage. Often, for minor issues, notifying the managing broker will be received positively as they will be able to assist in resolving the matter in a way that protects the reputation of the brokerage.

If the alleged misconduct is serious, such as misappropriation of funds, fraud, or unethical conduct or if it resulted in consumer harm, filing a complaint with BCFSA is prudent.

Learn more about anti-money laundering obligations

Applicable Section of RESA/Real Estate Services Regulation/Real Estate Services Rules

  • Section 35, RESA, Misconduct by licensee
  • Section 36, RESA, Complaints against licensee
  • Section 28, Real Estate Services Rules, Managing broker responsibilities
  • Section 29, Real Estate Services Rules, Associate broker and representative responsibilities

Definitions

Conduct unbecoming a licensee: in relation to a licensee or former licensee, means conduct unbecoming a licensee within the meaning of section 35 (2) [misconduct by licensee]

Professional misconduct: in relation to a licensee or former licensee, means professional misconduct within the meaning of section 35 (1) [misconduct by licensee];