Mike Mangan B.A., LL.B.
Other

A recent BC Supreme Court decision confirms that the Multiple Listing Contract (MLC) creates an equitable assignment by irrevocably assigning to the listing brokerage its commission out of the sales proceeds, imposing a trust obligation on the seller.¹ For the conveyancing lawyer or notary, this case and recent changes to the standard Contract of Purchase and Sale (CPS) raise the prospect that he or she may be personally liable for the commission, if they follow a client’s instructions not to pay it.

In the CPS, a seller has the contractual right to the purchase price from the buyer. In the law of assignment, with some exceptions, the seller may, in advance, transfer to another person some or all of that contractual right, if certain requirements are met.

When a seller enters a MLC, the seller irrevocably assigns to the listing brokerage the right to collect its commission out of the sale proceeds.² A third party who knowingly diverts those proceeds elsewhere may be personally liable for breach of trust.

In Coast Realty Group (Campbell River) Ltd. v. Neilson Island Holdings Inc., the property was an island near Tofino. The seller was a business corporation with two directors.

In 2012, the corporation entered into a MLC, co-listing the property with Coast Realty Group (Coast) and a RE/MAX office that had earlier listed the property without success. After Coast’s listing REALTOR® introduced the buyer to the property, one of the corporation’s directors intervened to directly negotiate the contract with the buyer.

Apparently, Coast did not hold any deposit in trust. At completion, the conveyancing lawyer or notary did not pay any commissions out of the sale proceeds.

Shortly after completion, Coast’s listing Realtor learned about the sale. Coast wrote to the seller requesting its commission, including RE/MAX’s portion of the commission.

The corporation refused to pay Coast’s commission, groundlessly claiming that Coast breached its obligations. Using funds from another source, the same director paid an apparently arbitrary, partial sum to RE/MAX.

In the meantime, the same director caused the corporation to pay the entire sale proceeds to other creditors, leaving the corporation without any assets. Coast sued for its full commission, while RE/MAX apparently did not.

The court found that the seller owed the $74,900 gross commission to Coast. By irrevocably transferring to Coast the right to collect its commission out of the sale proceeds, the MLC created an equitable assignment. The corporation held the relevant portion of the sale proceeds in trust for Coast. When the seller paid those funds to other parties, the seller, as trustee, also breached its trust obligation.

By causing the corporation to pay the entire sale proceeds to others, the corporation’s director knowingly assisted in that breach of trust. The director knew about the assignment and there was no principled basis to pay all the proceeds to others. The court also held the director personally liable to Coast for its commission.

To be personally liable for breach of trust by diverting sales proceeds elsewhere, one must know about the assignment. Until recently, the seller’s irrevocable assignment of sale proceeds was found in the MLC, but not the CPS. This meant that, most of the time, the conveyancer did not receive notice of the assignment.

As a remedy, BCREA recently added a new clause — Clause 20 — to the residential CPS. In that clause, buyer and seller both acknowledge that the seller has previously, in the listing contract, equitably assigned to the listing brokerage sufficient sale proceeds to pay its commission. They also confirm that the CPS is notice of that assignment to anyone acting on behalf of the buyer or seller, such as a lawyer or notary. If a seller groundlessly directs a lawyer or notary to refrain from paying the brokerage’s commission, the conveyancer who follows those instructions risks personal liability for knowingly participating in a breach of trust.

Realtors should always use the most current forms. When using the updated CPS, the listing brokerage may enhance the notice in Clause 20 by reminding the conveyancer, in writing, about the clause (e.g. in a cover letter). Finally, when listing with a corporation, a brokerage further improves its prospects for payment by obtaining a written guarantee from one or more of the corporation’s principals. In a guarantee, the principal personally guarantees the corporation’s performance of its obligation to pay commission.

Copyright ©2015 BCREA

Home sales in Greater Vancouver and Fraser Valley forecast to cool over next year or two, easing rate of price increases

Joannah Connolly
Other

Home prices are set to rise across BC next year, including Vancouver and the Fraser Valley, but at a slower rate than in 2015, according to a report issued October 26 by the Canada Mortgage and Housing Association (CMHC).

The average Greater Vancouver home price is expected to increase by nine per cent overall year-over-year in 2015 to $887,600, but more modest price growth of three per cent to $914,100 is expected in 2016. The CMHC forecasts a further 2.1 per cent growth in 2017 to $933,200.

Total Multiple Listings Service^® (MLS^®) sales in the Fraser Valley are forecast to reach 19,300 transactions in 2015, before edging lower in 2016 and 2017. Average MLS® home prices are expected to rise 8.8 per cent in 2015 and, like Vancouver, see smaller increases in 2016 and 2017 as higher mortgage rates and the supply of homes for sale grows over the next two years.

Home sales in Greater Vancouver are set to reach 41,800 by the end of 2015, the highest level in ten years, before easing back to 38,400 in 2016 and 37,400 in 2017. The CMHC added in its report that these levels would still be well above the 10-year average.

CMHC chief economist Bob Dugan said housing market activity in BC has benefited from sliding energy prices, record low mortgage rates and a falling Canadian dollar.

However, Dugan said the CMHC expected this “counterbalancing effect” to diminish over 2016 and 17.

The CMHC also predicts a “stable but elevated pace of new home construction” in 2016 and 2017, with Vancouver CMA housing starts forecast at 20,700 and 20,100 units, respectively.

“Demand for homes in Vancouver is well supported due to a strong labour market, low mortgage rates and steady population growth,” said Richard Sam, CMHC principal, market analysis for Vancouver.

© 2015 Real Estate Weekly

John Tenpenny
Other

Potential profits are waiting to be reaped by B.C. condo owners, especially in older buildings, with a change to the provincial Strata Property Act, but agents expecting a rush of new listings and clients should temper their expectations says one local expert.

The proposed change, which could come into effect by year’s end, would make it easier for strata owners to dissolve their strata corporation and sell the entire building. Under the change, 80 per cent of strata owners, rather than the current unanimous vote, would be needed to dissolve the strata.

The new legislation has passed first reading, and he expects it to become law as early as the end of this year.

“Some of these older buildings have been maintained properly, while others haven’t,” Matthew Lee, a real estate agent with Macdonald Realty Ltd. in Vancouver, told CREW. “So a number of these buildings are underfunded and there is no Plan B for some of these owners. B.C.’s strata depreciation reports, now mandatory for most buildings, have exposed the level of repairs that some buildings will need.”

In some cases, strata owners want to sell the property to a developer who can put it to better or more profitable uses, such as being replaced by a newer larger building, with more units, possibly handing listings to local agents, though a few years down the road.

Lee also notes that the proposed change will provide the development community with a greater degree of certainty, knowing that the existing zoning provides for replacing (and perhaps) increasing densities, as opposed to rezoning, which can take up to 15 months or longer for smaller scale projects.

If owners decide to sell individually, that doesn’t assure agents of more work, says Lee.

“There may be some stalling from some owners,” he says. “Owners may decide to hold off on selling individually because selling as a whole will yield a better price and people now on the fence may decide to wait or if currently listed, take it off the market.

“There is such a lack of inventory right now on the market and this may put more pressure on the market. It will continue to move pricing forward and continue to move the market eastward where people can find homes that they can afford to live in.”

For those owners who do sell, they will become potential clients, but not necessarily for local sales reps, says Lee.

“The question becomes where are they going to go? Most likely they’re going to be chasing the market when they come out and won’t be moving up in the same market.

“It may lead to an uptick in other areas.”

Copyright © 2015 Key Media Pty Ltd

A Home to Live, Work and Play

Other

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Steve Randall
Other

Single-family homes in Metro Vancouver are set for sharp increases in property assessments.

BC Assessments said Thursday that homeowners should prepare for hikes of between 15 and 25 per cent, while those with condos could be paying between five and 10 per cent more.

Elsewhere in the province a rise of 10 per cent is expected.

Two million property assessments will be mailed out early in 2016.

Copyright © 1996-2015 Key Media Pty Ltd                

JODIE WARREN
The Vancouver Sun

North Vancouver’s evolving skyline is set to get a sparkling new addition with Compass, the second tower in Denna Homes’ Seylynn Village development.

Situated in North Vancouver’s picturesque Lynn Creek area, Seylynn Village will ultimately be home to three world-class residential towers, and feature one of the bestequipped amenity clubhouses on the North Shore.

Slated to break ground next January, the 28-storey Compass tower is a dazzling combination of glass and metal, concrete and wood. When complete, it will be home to 247 luxury condominiums, including nine townhomes. Prices at Compass will start in the low $300,000s for one-bedroom homes and the low $400,000s for two-bedroom homes.

Seylynn Village’s first tower, Beacon, is now complete and close to sold out, although a few opportunities remain, says Nick Askew, president of Pacesetter Marketing. “Initially, the majority of buyers in Beacon were from the North Shore, specifically, east of the Grand Boulevard area,” he says. “They were the early adopters because they really understood the potential of this area.”

These days, Seylynn Village is drawing interest from all over the North Shore and beyond, as well as from investors. “With prices in Lower Lonsdale now quite high, investors are looking for the next big opportunity on the North Shore,” says Askew.

In addition to the location, Askew notes investors and end users alike are drawn to the quality of construction courtesy of veteran builder ITC, which includes triple-ply window glazing for superior insulation and sound proofing, air conditioning, and three elevators in each tower. The homes feature a host of luxurious touches such as wide-plank brushed laminate flooring throughout the kitchens and bedrooms, floor-to-ceiling windows and private oversized balconies from which to enjoy the views of downtown and the North Shore mountains.

Kitchens feature sleek modern cabinetry and high-end appliances — Fisher Paykel refrigerators and Bosch dishwashers, wall ovens and gas cooktops. Bathrooms are well appointed with clean composite stone countertops, spacious soaker tubs and oversized showers.

As mentioned, at the core of Sey lynn Village is the Denna Club, an impressive 14,000-square-foot facility currently under construction, which will offer a fully equipped fitness centre, 25-metre infinity lap pool, lounge, spa, and dedicated yoga and dance room. Billed as the “gateway to good living,” Seylynn Village is easily accessible to a multitude of amenities, including unique restaurants, shops and, of course, the boundless recreational opportunities that North Shore living affords. A transitoriented community with easy access to Highway 1, the Second Narrows Bridge and Phibbs Exchange, Seylynn Village is in the heart of Lynn Creek Town Centre, one of four town centres that the District of North Vancouver has designated for high-density development.

“Over the course of the next 10 years, Lynn Creek Town Centre will be home to about 6,000 residents,” says Askew. “It really is a hidden gem — not only will it be home to a multitude of retail and commercial amenities; it will continue to provide instant access to outdoor amenities, from Seylynn and Bridgeman parks and their network of connecting trails, to biking, to soccer and baseball fields.”

Askew also notes that Highway 1 infrastructure improvement plans in the area, such as the new Keith Road Bridge and Brooksbank Avenue exit, should be further incentives for buyers to take a closer look at this burgeoning area.

© Copyright (c) The Province

Other

The British Columbia Real Estate Association (BCREA) reports that a total of 8,553 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in September, up 12 per cent from the same month last year. Total sales dollar volume was $5.2 billion, up 18 per cent compared to the previous year. The average MLS® residential price in the province rose to $605,258, up 5.3 per cent from September 2014.

“Strong consumer demand has pulled down the inventory of homes for sale to its lowest level in eight years,” said Cameron Muir, BCREA Chief Economist. “Market conditions are favouring home sellers in some board areas, while contributing to relative balance between buyers and sellers in others.”

There was a five month supply of residential inventory province wide in September. A balanced market typically exhibits a 5-8 month supply of homes for sale.

The year-to-date, BC residential sales dollar volume increased 33.8 per cent to $49.5 billion, when compared with the same period in 2014. Residential unit sales climbed by 21.1 per cent to 79,170 units, while the average MLS® residential price was up 10.4 per cent to $624,659.

Copyright ©2015 BCREA

BCREA
Other

The British Columbia Real Estate Association (BCREA) reports that a total of 8,553 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in September, up 12 per cent from the same month last year. Total sales dollar volume was $5.2 billion, up 18 per cent compared to the previous year. The average MLS® residential price in the province rose to $605,258, up 5.3 per cent from September 2014.

“Strong consumer demand has pulled down the inventory of homes for sale to its lowest level in eight years,” said Cameron Muir, BCREA Chief Economist. “Market conditions are favouring home sellers in some board areas, while contributing to relative balance between buyers and sellers in others.”

There was a five month supply of residential inventory province wide in September. A balanced market typically exhibits a 5-8 month supply of homes for sale.

The year-to-date, BC residential sales dollar volume increased 33.8 per cent to $49.5 billion, when compared with the same period in 2014. Residential unit sales climbed by 21.1 per cent to 79,170 units, while the average MLS® residential price was up 10.4 per cent to $624,659.

Copyright ©2015 BCREA