BarTalk June 2003
Volume 15, Number 3

A duty to protect

by David A Paul

In its Real Estate Act Review Discussion Paper, the provincial government proposes changes to the Act which, if put into force, will severely limit a lawyer’s ability to assist his or her clients with the sale of real estate.

Currently, section 2(1)(f) provides that the registration and licensing requirements of the Act do not apply to “a barrister or solicitor whose name is inscribed on the rolls of barristers or solicitors in British Columbia, or to a person employed by him or her, in respect of transactions in the course of his or her practice.”

Solicitor involvement in selling real estate is not a new concept. In Scotland, it is the norm. In B.C., the exemption in our Real Estate Act can be traced back to the 1920s. I have spoken to many senior solicitors who advise that, in their earlier years, it was not uncommon for lawyers to assist their clients in the sale of real estate.

Over the past few years, both the Law Society and the CBABC have promoted a return to this area of practice, and with success. There are now many lawyers in B.C. selling real estate to the benefit of their clients and practice.

The proposed amendments will affect lawyers in two significant ways. First, they propose that the lawyer’s exemption from registration apply only where lawyers trade in real estate in the ordinary course of their practices. Second, they create a new exemption for accountants, provided they trade in real estate in the ordinary course of their accountancy practices.

The government’s stated purposes are to provide a “least cost” regime, “promote competition among participants” and “protect the public and preserve its confidence in the real estate sector.”

None of these objectives are met by the proposed amendments. To the contrary, the proposals actually conflict with the government’s stated objectives.

Minimizing costs: Many lawyers who offer this service do so at significantly lower fees than those charged by realtors.

Promoting competition: We are the competition. Reducing our involvement does not make the market more competitive.

Protecting the public interest: The Law Society has proven to be competent to protect the public interest. It is hard to imagine how the government’s proposals further this objective, given that the educational, ethical, conduct and insurance standards imposed on lawyers are higher than those for real estate agents. Lawyers are trained in contract law, property law, and legal drafting. Who better to negotiate and draft the contract of purchase and sale?

Real estate sales are a natural fit with what many of us do; negotiating and writing up a deal is part of our daily work. Additionally, we are able to benefit the public because of our networking potential. In B.C., there are approximately 7,000 lawyers in private practice. The opportunity for referrals is tremendous.

Finally, the proposed restriction to sales arising only from the ordinary course of our practice is nonsensical. Supposedly, the government wants us licensed to protect the public at large, but isn’t worried about protecting our existing clients. Why are those deals different?

Until recently, the reality has been that lawyers have had little, if any control, over the real estate transaction. Agents had the primary control of the process and often determined where much of the follow up work went (banks, property inspectors, insurance companies, lawyers). Lawyers were often the last to get called in on the transaction – when, in the public’s interest, we really should be the first.

As a profession, we can offer the public “one stop shopping.” Instead of having to deal with a realtor, a banker, a home inspector, and an in surance agent, and not see a lawyer until after the contract has been signed, the current exemption allows the client to arrange everything through their lawyer, have independent and competent legal advice from the beginning of the process (before any obligations are entered), through to its completion, and to have the deal formalized in an expertly drafted contract.

This makes complete sense particularly when considering that the purchase and sale of a home is one of the most significant legal transactions undertaken by members of our society.

Financially, the public is also well protected by virtue of the Law Society’s compulsory errors and omissions insurance program and special compensation fund.

Finally, there is no evidence to suggest the public is in need of protection by reason of the current exemption. Lawyers engaged in the area are doing so with success and their clients are happy. There has been no litigation and no public call to limit the exemption provision.

For me, the bottom line is clear – the solicitor property sales model provides public protection, at a lesser price, while at the same time increases the alternatives available to the public and promotes healthy competition.

This article was published in the June 2003 issue of BarTalk and is subject to the copyright by the British Columbia Branch of the Canadian Bar Association, 2005, all rights reserved.