Calgary: Conditional Sales Will Be Reported Again Beginning October 1st

It was nearly four years ago that CREB® changed the listing rules allowing sellers to decide whether a conditional sale would be reported or left as ‘active’ on the MLS®.

Understandably, many buyer agents and their clients strongly disliked the adjustment.  I  won’t rehash it here, but you can read this December 2011 post for my initial reaction.

In August 2013, CREB® announced that the hotly contested non-reporting rule would remain in effect, citing RECA’s “very clear signal” that mandatory reporting was potentially putting our members at risk of sanction.

But now, effective October 1st, all listings that are conditionally sold will have to be marked as “Pending” (no more showings allowed) or “Under Contract” (showings still permitted).   There will no longer be confusion as to whether a listing is active or conditionally sold.

The reason for the change?

No Kidding!

No Kidding!

Essentially, we’re going back to how it was years ago (don’t try to fix what isn’t broken) but now sellers will have an additional form requiring signing.

From the Calgary Real Estate Board:

On Oct. 1, CREB® will introduce the MLS® System Listing Addendum– a new form designed to protect the integrity of the MLS® System, and improve the member and consumer experience.

Used in conjunction with the Exclusive Seller Representation Agreement or Contract for Posting without Representation, the addendum strikes the right balance between providing important details about consumer responsibilities when using the MLS® System, and ensuring consumers can provide timely and informed consent to the listing agent regarding these obligations.

The addendum will work in tandem with the updated Conditional Sale Disclosure Instruction form to reinforce integrity of the active listings category. With the exception of clause sales – those properties sold subject to the sale of another home – pending and under contract properties can no longer be listed as active effective Oct. 1.

Any existing listings that receive a conditional sale after 11:59 p.m. on Sept. 30 will be expected to use the new Conditional Sale Disclosure Instruction form.   Any sellers who refuse to sign the addendum or use the updated Conditional Sale Disclosure Instruction form as of Oct. 1 will need to be advised that their listing will be terminated.

One new form in exchange for preventing wasted time, confusion, and loss of  credibility?  I think that’s an excellent trade.

One response to “Calgary: Conditional Sales Will Be Reported Again Beginning October 1st

  1. RECA just sent out a warning advisory to all CREB members prohibiting them from using this new form. Calgary agents are now stuck between a rock and a hard place:


    New creb® Rule & MLS® System Listing Addendum Places creb® members in Conflict with their Obligations under the Real Estate Act Rules

    Advisory:
    The addition of the new creb® MLS® System Listing Addendum (“New Addendum”), which takes effect October 1, creates an exclusive seller representation agreement that does not comply with the Real Estate Act Rules (“Rules”). The use of the new Addendum by a creb® member constitutes a breach of the Real Estate Act Rules.

    Explanation:
    When trading in real estate, real estate professionals in Alberta, including creb® members, must comply with their obligations and the standards of conduct established by the Real Estate Council of Alberta (RECA) through the Real Estate Act and the Rules.

    Section 60.1 of the Rules establishes the mandatory content that real estate professionals must include in an Exclusive Seller Representation Agreement (listing contract) in Alberta. While a creb® member trading in residential real estate can use any listing contract they want, they must comply with the requirements set out in the Rules. The Rules clearly state any additional content must not directly or indirectly alter the meaning or effect of the mandatory content, and must not alter the obligations or requirements of industry members established in the Real Estate Act and Rules.

    RECA’s review of the wording in the New Addendum concludes it alters the obligations or requirements set out in the Rules. The use of this New Addendum is a breach of the Real Estate Act Rules. It cannot be used by creb® members.

    It is the responsibility of brokers to ensure their associates and associate brokers do not use the New Addendum.

    Questions and Answers

    Q1: How does this New Addendum alter the obligations of real estate professionals?

    A. By requiring sellers to execute the New Addendum before marketing their property on the creb® MLS® System, creb® members will breach their obligations to fulfill their agency duties to their seller clients in a timely manner. Specifically, they will be in breach of their duties of undivided loyalty and acting in their client’s best interests.

    In some circumstances removing a listing from “active listings” or disclosing an accepted conditional offer to a third party can disadvantage the seller. What is in the best interests of a particular seller will depend on the nature of the conditions and circumstances at the time of signing the Purchase Contract not at the time of signing the listing contract.

    Q2: Does the current creb® Conditional Sale Disclosure Instruction Form meet RECA standards on this issue?

    A: Yes, it facilitates a timely discussion between the seller and their representative. It allows the seller to provide their representative with informed and timely instruction when accepting a conditional offer.

    Consumers are best served and protected when the decisions they make, and the instructions they provide to their representatives, are made after carefully considering all relevant information and the knowledge and expertise their real estate professional provides to them. Real estate professionals should give information and advice to consumers at the moment it has the most relevance to them. Through that process, consumers can provide timely and informed instruction or consent. It is at this point in a transaction that the value and expertise real estate professionals provide is most meaningful to their clients.

    Q3: creb® has stated it has a legal opinion that confirms the use of the New Addendum meets the standard of informed and timely consent by the seller. Shouldn’t this be sufficient to satisfy RECA that this new form meets RECA’s standards?

    A: RECA has not received a copy of the legal opinion referred to by creb®; however, this is not a legal issue. The issue is, what are the standards of conduct RECA requires of real estate professionals in Alberta? It is RECA’s mandate under the Real Estate Act to establish, communicate and enforce those standards of conduct. RECA has clearly communicated those standards to creb®. While individuals may have their own opinion as to what constitutes informed and timely consent in any set of circumstances, RECA has clearly communicated how that standard will be applied in the real estate industry when providing services to consumers.

    Q4: Did creb® consult with RECA prior to announcing the new Addendum?

    A: No. CREB did not consult with RECA before proceeding with this change.

    Q5: Was creb® aware of RECA’s position on this issue?

    A: Yes. As recently as August 12, 2015, RECA sent creb® a letter to communicate its position on this issue. In the past, RECA representatives have also communicated this position to the creb® Professional Standards Committee.

    Q6: Is the Alberta Real Estate Association MLS® Harmonization Committee Aware of RECA’s position on this issue?

    A: Yes. RECA has communicated its position on this issue to this committee.

    Q7: Does RECA have any other concerns?

    A: Yes, RECA is concerned that creb® has ignored the information and advice RECA has provided to it on this issue.

    RECA is concerned that creb® has placed its members in a no win situation. Because of its new MLS® Rule, complying with the standards of conduct established by RECA on this issue puts creb® members at risk. And yet, if creb® members use the New Addendum, they will be in breach of the Rules and could face disciplinary action. creb® should not place their members in a position where their MLS® Rules conflict with the standards of conduct established by RECA.

    RECA also has concerns from a consumer perspective. If creb® members are prevented from placing listings on the MLS® System, it will significantly limit their ability to market their clients’ properties and prevent them from serving their best interests.

    Q8: I’m a creb® member, what should I do?

    A: You should continue to use the Conditional Sale Disclosure Instruction form as it complies with the Rules. Use of the New Addendum is in breach of the Rules. It cannot be used by creb® members

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