Across Canada and throughout the world, people are being advised to remain at home whenever possible to avoid unnecessary contact with others to slow or stop the spread of the coronavirus COVID-19. This has had an impact on all industries, however, some have been able to weather the changes better than others due to the ability to keep up business as usual remotely. Many offices have sent employees home to work while practicing self-isolation, however, there are several industries that cannot operate this way due to the necessity of in=person contact.
One industry facing significant challenges in the time of COVID-19 is real estate, given the historic need for face-to-face meetings and property showings. Selling or buying a home or commercial property right now may give people pause for several reasons, including personal safety, not to mention the economic challenges brought on by the current circumstances. Further, tenant-occupied properties present an even greater challenge, in that the person in the residence is not the one seeking to sell, and yet must bear the risks of allowing viewers into the home. Below, we will take a look at various challenges and recommendations with respect to the purchase, sale and leasing of property in British Columbia during the current health crisis.
Recommendations to Suspend Open Houses and In-Person Showings for Real Estate Transactions
On March 20th, both the Real Estate Council of British Columbia (RECBC) and the British Columbia Real Estate Association (BCREA) made recommendations that all real estate agents in the province advise clients against holding open houses during the provincial state of emergency put in place in relation to the current pandemic. Further, realtors are also discouraged from showing properties in person. In an effort to avoid unnecessary personal contact and protect all parties, both associations are advising using alternative means of showing properties to potential buyers instead. Virtual home tours and 360-degree tours, already widely in use as part of the online marketing of many properties, are recommended to allow potential buyers to view a property for sale without having to put their health, or the health of the owner and realtor, at risk.
Client Identification Precautions
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) requires careful vetting of clients by collecting proper identification in order to facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities. Previously, it was generally required that realtors and other professionals verify a client’s identification in person by viewing original documents, however, FINTRAC revised the regulations in 2019 to allow for remote verification of a client’s ID. Realtors can use a dual-process method of identification, which involves checking two reliable forms of ID, such as a driver’s licence and a utility bill. While it was once a requirement to view original documentation, FINTRAC now allows realtors and other professionals to accept a fax, photocopy, scan or electronic image of these documents. This allows for remote identification, removing the need to meet face to face.
Tenant-Occupied Properties: Special Considerations
There are two primary issues with respect to COVID-19 that specifically apply to tenant-occupied properties:
Last week, Selina Robinson, the Minister of Municipal Affairs and Housing, announced a temporary freeze on evictions except in “exceptional circumstances” and also extended the right to tenants to allow them to prevent landlords from entering their property without consent during the health crisis. These proposed changes are currently under review by the Solicitor General and are not yet in effect.
Should the recommendations be implemented, this raises a concern with respect to properties that are already the subject of a contract for sale. Should a tenant refuse to vacate, this would put the seller in breach of the conditions of the contract. In consideration of this, the BCREA has requested an exemption from this policy for any property where the tenant has already been served with a Notice to Tenants for Buyers to Occupy as part of a transaction.
Showing a property in person, while not recommended, is not against any current government regulations. Currently, gatherings of 50 people or more are not permitted in British Columbia, but if individual property owners and buyers consent to an in-person viewing, this is allowed. Of course, it is recommended that all social distancing precautions be observed whenever possible. However, if the property is tenant-occupied, this puts the parties in a unique situation, as it is not simply a matter of the seller agreeing to allow a potential buyer into their home. In this case, the seller will have to obtain consent from the tenant upon adequate notice which places pressure on the third party tenant to allow strangers into their living space at a time when personal contact is to be avoided. As a result, the BCREA has sought guidance from Minister Robinson and the Residential Tenancy Branch on how this situation should be handled.
As per a statement from Trevor Hargraves, BCREA’s VP of Government Relations and Stakeholder Engagement, the situation is complex:
Realtors are often finding themselves in the crosshairs of clients’ expectations around showings and their own sense of civic responsibility during the COVID-19 crisis…We’re advocating for clear guidelines on these issues so Realtors can help protect public health while meeting their obligations to their clients.