Printed . This content is updated regularly, please refer back to https://bcfsa.ca to ensure that you are relying on the most up-to-date resources.

Managing Broker Responsibilities Guidelines

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

Managing brokers play a critical role in the real estate industry. They have a legal responsibility for the business operations of their brokerage and the actions of licensed and unlicensed staff that provide services on the brokerage’s behalf. They perform many functions within a brokerage, acting as supervisors, mentors, trainers, records keepers, bookkeepers, and administrators. Managing brokers have expansive duties under the real estate regulatory framework and, as a result, play an important role in protecting real estate consumers.

These guidelines will help managing brokers understand the key responsibilities that managing brokers have under the Real Estate Services Rules and cover the following topics:

Managing broker responsibilities;
Delegating authority during an absence;
Delegating authority when a managing broker’s licence is suspended; and
Supervising under designated agency when also acting as a designated agent.

Managing Broker Responsibilities

(a) Supervision

Managing brokers must:

Be actively engaged in the management of their brokerage;
Ensure that brokerage business is carried out competently and in accordance with all regulatory requirements; and
Ensure that there is an adequate level of supervision for licensed and unlicensed staff who perform services on behalf of the brokerage.

Managing brokers are required to actively supervise the brokerage’s related licensees and unlicensed staff. This includes, but is not limited to, being available to assist and advise licensed and unlicensed staff in day-to-day activities; providing training and guidance; and, fostering an understanding of, and compliance with, regulatory requirements (e.g., duties to clients, reviewing the brokerage procedures manual, and communicating changes in the law).

There is no one size-fits-all approach to providing suitable supervision as there are many factors that can impact the approach taken by managing brokers. Key factors include the type of business model and practices employed at a brokerage, and the capacity, experience, and skills of a brokerage’s licensees. As such, managing brokers must use their own judgement on how to best ensure that they are actively in charge in the management of their brokerage.

There are steps that managing brokers can take to ensure that brokerage business is carried out competently and in accordance with the laws, regulations, and rules that govern the real estate services industry in B.C, as well as other related legislation (i.e., the Real Estate Services Act, Personal Information Protection Act, Strata Property Act, Residential Tenancy Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act):

Ensure all brokerage staff and related licensees are aware of the regulatory requirements and develop a brokerage culture that promotes adherence to the regulatory framework and high ethical and professional standards more generally.
Develop and communicate clear brokerage policies and procedures that align with requirements set out in the regulatory framework.
Engage with the brokerage’s related licensees regularly and be generally available to provide guidance and answer questions in order to ensure their brokerage’s related licensees have the required level of competence for the transactions in which they are involved.
Periodically review and consider the structure and operations of the brokerage, with a focus on identifying and managing risk to reduce the likelihood of inappropriate conduct.

(b) Knowledge of Improper Conduct

When a managing broker has knowledge of conduct that they consider to be:

Professional misconduct or, conduct unbecoming a real estate licensee; or
Improper or negligent conduct, in relation to the provision of real estate services on the part of the real estate licensee, an employee of their brokerage, or any other person associated with their brokerage;

they must take reasonable steps to deal with the matter.

While the regulatory requirements do not include specific requirements about misconduct of an individual that is not affiliated with their brokerage, there is an ethical duty on managing brokers (and other licensees) to report misconduct that may be harmful to the public interest and/or the industry’s reputation.

Professional misconduct and conduct unbecoming are both defined in detail in the Real Estate Services Act (“RESA”) and generally refer to instances where a licensee contravenes any of their regulatory requirements, acts in a way that is contrary to the best interests of the public, and/or brings the real estate industry into disrepute.

(c) Understanding What it Means to Take “Reasonable Steps”

When a managing broker is witness to or has been provided with information suggesting improper conduct on the part of one of their staff, real estate licensees or any other person associated with the brokerage (such as unlicensed assistants), there is an obligation to take reasonable steps to deal with the matter. Such allegations may arise from complaints from the public, the brokerage’s related licensees and/or staff, or other licensees not affiliated with the brokerage. Improper conduct may also come to a managing broker’s attention through prudent oversight of the brokerage and the business practices of its related licensees (such as periodic file reviews).

To determine what reasonable steps are, managing brokers will need to use their professional judgment. Questions to ask include the following:

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

Each situation will be different and may require a different response. Speaking to a BCFSA Practice Standards Advisor may help in instances where it is unclear how to proceed.

When there is evidence of misconduct within the brokerage, managing brokers should gather all the information possible about what led to the potential misconduct, and consider what a reasonable person with that information might do to reduce public harm and protect the reputation of the brokerage and industry.

To gather this information, managing brokers should consider if speaking with the individuals involved — including real estate licensees, unlicensed individuals, or impacted consumers – would help. Managing brokers may also need to gather documentation such as contracts, service agreements, and even written correspondence between the offending real estate licensees and other parties. Gathering this information will help managing brokers determine the seriousness of the alleged misconduct and the best way to resolve the issue.

If the managing broker has determined that there was some misconduct, it may be technical or minor in nature and resulted from a misunderstanding or lack of knowledge. In such cases, a discussion with the real estate licensee 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 BCFSA. Examples include activities involving unethical conduct, theft of trust funds, severe negligence or an activity that 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.

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

Should a real estate licensee within the brokerage report misconduct on the part of a real estate licensee or staff member of another brokerage, managing brokers should ask them to provide a detailed account of what occurred and any supporting evidence.

If a managing broker believes that misconduct may have occurred, they should 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.

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

For additional information, visit:

(e) Accounts and Records

Managing brokers must ensure that brokerage trust accounts and records are maintained in accordance with regulatory requirements. They must also ensure proper management and control of the documents and other records related to licensing and regulatory requirements.

For additional information on specific requirements, visit:

(f) Notice to Parties Respecting Deposits (Trading Services)

Managing brokers must ensure that all parties to an agreement giving effect to a trade in real estate are immediately notified in writing if a deposit that was to be held by the brokerage is not received as per the terms of the contract, or the deposit is not honoured by the brokerage’s financial institution.

Delegating Authority

Managing brokers are allowed to delegate their authority to other licensees of the same brokerage, including during temporary absences (vacations, leaves, illness, etc.). However, it is important to note that managing brokers always remain legally responsible for their brokerage, regardless of whether they are physically present at the brokerage or providing remote supervision. This includes when they have temporarily delegated their duties to another person.

When delegating tasks to another licensee, make sure that agreed-upon responsibilities are clearly outlined in a written document, which specifies the name of the licensee who has accepted the responsibilities, the date when the tasks were delegated, and the expected end date (if any) of the delegation.

Managing Broker Absences – 30 Days or Less

If a managing broker plans to be temporarily absent from their brokerage (i.e., vacation), they are required to continue to remotely oversee the activities of the brokerage and remain electronically connected to the operations of the brokerage and its corresponding licensees.

Where this is not possible, managing brokers must delegate their duties to another experienced licensee (preferably an associate broker), who must be licensed at the same brokerage and must be licensed for the same real estate services (i.e., rental, trading and/or strata) as the licensees they will be overseeing. The managing broker has ultimate responsibility for the control and conduct of the business of the brokerage even when duties have been delegated. As such, it is prudent for managing brokers to request updates from the delegate and regularly review the work delegated.

If a managing broker will be absent for 30 days or less and consistent remote oversight is not possible, BCFSA’s Licensing Team must be notified of this by email, as far in advance as possible. The delegation will be reviewed by BCFSA and the Licensing Team will advise if there are any issues.

The email notification must include the following information:

Name of the brokerage;
Dates of absence (from/to);
Name of the delegated licensee; and
Details of the steps taken to ensure that adequate supervision and management of the brokerage will be in place during the absence.

Managing Broker Absences – More Than 30 Days or Undetermined Length

If a managing broker will be absent for more than 30 days or the length of time is undetermined, managing brokers are required to either:

Arrange for another individual to become licensed as a managing broker at the brokerage and assume managing broker duties during the absence. The new managing broker must be licensed in relation to the brokerage by BCFSA and must be licensed for the same real estate services (i.e., rental, trading and/or strata) as the licensees they will be overseeing. This may include an associate broker already licensed at the brokerage upgrading their licence to managing broker; or,
Advise BCFSA’s Licensing Team by email how the managing broker intends to maintain active control of the brokerage during their absence. BCFSA will review the plan and advise the managing broker in writing as to whether a replacement managing broker will be required.

Delegating Authority When a Managing Broker’s Licence is Suspended

If a managing broker’s licence is suspended, in rare instances, a managing broker may be allowed to be licensed as an associate broker or representative at the brokerage. During the suspension period, the managing broker may not perform or accept the delegation of any duties or obligations of a managing broker, even if they become licensed as an associate broker or representative.

Supervising Under Designated Agency When Also Acting as a Designated Agent

For brokerages licensed for trading services and practising designated agency and where managing brokers are actively providing trading services to consumers, managing brokers may find themselves in a conflict of interest and be unable to provide adequate supervision of the brokerage and the licensees. For example, where a brokerage licensee is representing one of the parties in a transaction and the managing broker is representing the other.

Managing brokers, like all licensees, are required to avoid conflicts of interest. If a managing broker routinely provides real estate services to clients while also overseeing the brokerage, the brokerage should have clear policies and procedures that set out how to avoid and manage conflicts, and to whom duties will be delegated. Ideally, the brokerage should have an associate broker to whom the managing broker’s duties can be delegated in such a situation. A managing broker at a small brokerage with two related licensees cannot delegate their duties and therefore must be extremely prudent in avoiding conflicts.

As with all conflicts of interest, managing brokers should carefully consider how best to address the situation. Managing brokers should be mindful of their existing duties to their client and their responsibility to be in active charge of the business of the brokerage. In some instances, the managing broker may need to recuse themselves from the transaction entirely. However, if the managing broker believes they can continue to fulfill their duties to their client, they will have to delegate their managing broker responsibilities for that transaction to another appropriately experienced real estate licensee at the brokerage to ensure the brokerage fulfills its requirements. As discussed earlier with other delegations, the managing broker remains responsible for the actions of the brokerage and its real estate licensees.

For more information, please see:

Relevant Cases

Louis Man Kam Kwong & Sunrich Realty Ltd. dba Amex Sunrich Realty

Applicable Section of RESA/Regulation/Rules/Bylaws

Division 2, RESA, Licence Levels, Categories and Relationships
Section 28, Real Estate Services Rules, Managing broker responsibilities

Definitions

“Managing broker” means a person licensed as a managing broker

“Professional misconduct” – A licensee commits professional misconduct if they:

Contravene RESA, its Regulation or section 43 [regulations for residential real property right of rescission] of the Property Law Act, or the Rules;
Breach a restriction or condition of the licence;
Do anything that constitutes wrongful taking or deceptive dealing;
Demonstrate incompetence in performing any activity for which a licence is required;
Fail or refuse to cooperate with an investigation by the Superintendent;
Fail to comply with an order of the Superintendent or an undertaking that the licensee gave under RESA; or
Makes or allows to be made any false or misleading statement in a document that is required or authorized to be produced or submitted under the Act.

“Conduct unbecoming” – A licensee commits conduct unbecoming if they act in a way that:

Is contrary to the best interests of the public;
Undermines public confidence in the real estate industry; or
Brings the real estate industry into disrepute.