In a recent article by the BC Real Estate Association, titled Due Diligence with Third-Party Referrals, lawyer Jude Chow highlights the importance of exercising caution when making third-party referrals.
Here are some key takeaways from the article, along with our insights into how these might affect Realtors when it comes to reviewing strata documents.
1. Legal and Regulatory Risk – Referring clients to third-party service providers, while common, carries potential legal liabilities and regulatory risks. Realtors must be diligent when making referrals, ensuring that the professionals they recommend are appropriately licensed and competent.
2. Encouraging Independent Expert Advice – Rule 30 (d) of the Real Estate Services Rules requires Realtors to advise clients to seek independent professional advice when matters fall outside their expertise. Neglecting to do so could be considered negligent, especially when specialized advice is necessary.
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As a Realtor, you wouldn’t typically provide financial planning advice, mortgage advice, or home inspections. Similarly, reviewing and disseminating strata documents can create potential risks if the licensee does not have an adequate understanding or high level of experience with strata corporations and strata documents. When you refer your clients to Condo Clear for a strata document review, you can rest assured that our Review Advisors have direct experience managing strata corporations and have reviewed thousands of strata documents for buyers and Realtors.
3. BCFSA Guidelines – Realtors should follow guidelines from the British Columbia Financial Services Authority (BCFSA), which recommend providing clients with at least three qualified service providers and allowing them to make independent choices. Disclosing any potential conflicts of interest, including financial gain, is essential.
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Although we’d like to see more qualified companies offering strata document review services, the reality is that this is a new service being offered in BC, with limited service providers. Many Realtors are surprised to hear that condo documents review service providers have been an established practice in other markets, such as Alberta, for many years. At this point in time, if your clients have questions about the strata documents, you can refer them to qualified professionals such as lawyers, engineers, or licensed strata document review services like Condo Clear.
4. Avoiding Promises or Guarantees – Realtors should avoid making promises or guarantees about the outcomes of the referred professional’s work. This helps shield the Realtor from liability and ensures clients understand that responsibility rests with the third-party provider.
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When advising your clients to seek professional advice on strata documents, you shouldn’t feel obligated to make any promises or guarantees. At Condo Clear, we’re confident that our track record speaks for itself. You can direct your clients to our Google Reviews, to see what others are saying about our services.
To Sum it All Up:
Referring clients to third-party service providers is a normal part of real estate transactions, but it’s crucial to do so carefully. By following BCFSA guidelines, ensuring transparency, and directing clients to licensed professionals, you can mitigate risks while providing exceptional service. If you’re looking for a trusted partner in strata document reviews, Condo Clear is here to help!
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