British Columbia’s premier, Christy Clark, has promised to step in and curb contract assignments if the Real Estate Council of B.C. fails to do something about it first.
“So what we’ve said to the [Council] is, ‘we’re going to give you some time to try to solve this,’ because that’s their job – they are a self-regulating profession, to go out there and make sure their members are observing the rules,” Ms. Clark told reporters after her recent Throne Speech.
“If they don’t fix it, we’re going to fix it for them. And we’ll do it in short order because what is happening in the housing market in the Lower Mainland, and in a lot of communities, it’s crazy. And that is fuelling part of the problem.”
Clark’s comments came on the heels of a Globe and Mail investigation into the controversial practice of contract assignments some agents are using to earn extra income.
Assignment clauses allow buyers to transfer his or her interest in a property to a third party prior to the closing date. In some cases – including one profiled in the Globe investigation – the property is transferred to the buyer’s agent who then re-lists the home at a higher price.
Such was the case for the Rappaports, a Vancouver couple who sold their home for $5.2 million to the agent of a wealthy foreign businessman who then re-listed the home for $6.58 million.
“It’s obscene,” Ms. Rappaport told the Globe. “I had no idea our house was going to be resold. We were shocked when it was flipped.”
And it’s a practice that may be playing a part in raising already-sky-high Vancouver home prices. But it’s one that soon may be a thing of the past.
Contract assignments have netted B.C.-based agents hefty profit, but the government has promised to crack down on the controversial practice.