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September 17, 2019

GOVERNMENT SERVICES COMMITTEE

The

Committee met at 9 a.m. in the Assembly Chamber.

CHAIR (P. Parsons):

Order, please!

Good

morning, everyone, and welcome to the Government Services Committee hearing.

This morning we have convened to review the draft bill entitled

An Act

Representing the Regulation of Real Estate Trading in the Province .

A new bill, which if passed by the House, will replace the

Real Estate Trading Act .

The

current act dates back from 1965. The bill we will discuss today is intended to

modernize and improve the legislation and regulation of the industry, taking

into account modern standards and technology, among other things. The

predecessor of this Committee in the 48th General Assembly began the review

process before the dissolution of the House. We are continuing the work begun by

that Committee.

The

last time a bill was referred to a Standing Committee was in 2002. Between 1989

and 2002, a number of bills were reviewed in this way, either in draft form or

after second reading. The procedure today will be as follows: The presenter will

have an hour and a half to speak, including time for answering questions from

the Committee. Members will have 10 minutes to speak and may do so as often as

they wish.

We ask

that you identify yourself each time you speak for the benefit of Hansard and

the Broadcast Centre. Before we start, we invite Members and presenters to

introduce themselves. We'll start with the Committee.

MS. COFFIN:

Alison Coffin, St. John's

East - Quidi Vidi.

MR. BENNETT:

Derek Bennett, MHA,

Lewisporte - Twillingate.

MS. STOODLEY:

Sarah Stoodley, MHA for

Mount Scio.

MR. O'DRISCOLL:

Loyola O'Driscoll, MHA,

Ferryland.

MR. PETTEN:

Barry Petten, MHA,

Conception Bay South.

MR. CHIPPETT:

Jamie Chippett, Deputy

Minister, Service NL

MR. DELANEY:

Michael Delaney, Assistant

Deputy Minister of Regulatory Affairs with Service NL.

MS. DYER:

Renee Dyer, Superintendent

of Real Estate.

CHAIR:

I'm Pam Parsons, MHA for

Harbour Grace - Port de Grave.

Mr.

Chippett, if you'd like to start, you can begin with your presentation.

MR. CHIPPETT:

If it's okay, Chair, I just

have a couple of opening remarks before the presentation.

CHAIR:

Sure.

MR. CHIPPETT:

I'll be brief.

Good

morning, everyone, and thank you for the opportunity to be here today. As the

new Deputy Minister of Service NL, I'm pleased to have this opportunity to speak

to this significant piece of legislation, namely the

Real Estate Trading Act . I'm equally

pleased to have the departmental experts on these matters with me: the ADM for

Regulatory Affairs, Michael Delaney and the director of Financial Services

Regulations, Renee Dyer.

The

Department of Service NL is the regulator for various professions and services

throughout all of Newfoundland and Labrador. We all know that in every region of

our province, individuals buy and sell homes every day. We know it can be the

largest transaction a person will make in their lifetime.

Our

goal as a department is to provide advice for the best possible legislative

framework in which this transaction takes place, to meet the needs of the people

of the province. We also want to ensure that real estate professionals have the

appropriate mechanisms to help them provide a service in which consumers could

have the utmost confidence.

Just a

little bit of background, in terms of the process, to get to where we are. The

current act was proclaimed in 1965, as the Chair mentioned. Since that time, no

substantial changes were made. In 2012, government engaged with industry in

reviewing the act, which reinforced the view current legislation is outdated. In

2017, Service NL launched public consultations and gathered feedback from a

number of sources. Staff met with key stakeholder groups to discuss issues of

importance and potential changes. Feedback was also gathered by email and online

at government's EngageNL portal. Ninety submissions were received during that

process.

I want

to acknowledge the contributions of the Newfoundland and Labrador Association of

Realtors during this process. NLAR conducted its own meetings throughout the

province and the feedback from these sessions was part of their submission to

government.

I'd

like to thank Bill Stirling specifically and the entire NLAR for their

tremendous support and focus on helping bring about improvements in their

industry. Through our review of this act, as well as the feedback through the

consultation processes, several areas were identified that merit significant

amendments, as well as a need to clarify language to ensure it is modern and

clear.

A very

important part of the process was trying to find the balance between the needs

of consumers and the needs of those involved in the industry. The amendments

cover everything from trust deposits and a recovery fund, to personal conflicts

of interest and the establishment of personal real estate corporations. These

are a few highlights but there are also additional amendments dealing with

orders that can be issued by the superintendent, use of the term broker instead

of agent and clarity to the act's language.

I'd

just like to take a minute to thank the minister, the executive and,

specifically, my predecessor, Sean Dutton, who would have really been involved

in all the work on this; officials of Service NL, who worked hard to help bring

about the changes we are discussing here today; and thank the staff who work day

in and day out in this field.

Lastly,

I look forward to the discussion with the Committee. We appreciate the

opportunity and look forward to any questions you may have. I'll run through the

PowerPoint.

We've

already started and stated a couple of times that the

Real Estate Trading Act was

introduced in 1965. There was a review in 2012, including some consultations,

but no amendments proceeded at that time. There was a commitment to restart or

redo the review in the minister's mandate letter and in

The Way Forward . We've talked about

already as well that the Newfoundland and Labrador Association of Realtors

conducted their own consultations, released What We Heard and provided

recommendations to government in their submission after consultations.

Through

EngageNL.ca a survey was conducted and a What We Heard document released. As I

mentioned earlier, there were 90 respondents to that particular survey.

Next

slide, please.

MS. COFFIN:

(Inaudible.)

CHAIR:

It's up to the Committee. So

are we okay with that, to go back and forth? Or did you want to …?

AN HON. MEMBER:

What's the time on this?

CHAIR:

Hour and a half.

AN HON. MEMBER:

(Inaudible.)

CHAIR:

Yes.

MS. COFFIN:

Will we save them until the

end or can do this as a back and forth, whatever works for everybody. I can save

it. That's no problem. I'm just wondering what the format is.

CHAIR:

Okay, so we will decide. Do

we want to do this back and forth or should we wait?

MS. COFFIN:

What works for you?

MR. CHIPPETT:

I'm fine with either.

CHAIR:

Nothing from the Committee,

so I guess we're fine.

MS. COFFIN:

Okay, lovely.

terms of the What We Heard, was that both industry and civilians, or individuals

who were buying homes?

MR. CHIPPETT:

It depends on – there were a

couple of What We Heard documents; one was from industry.

MS. COFFIN:

Right.

MR. CHIPPETT:

Then there were results, I

think, from the EngageNL survey that formed a part of government's What We Heard

document, if you will.

MS. COFFIN:

Okay, just wanted to make

sure that we're getting both perspectives.

Thank

you.

MR. BENNETT:

I have one quick question.

CHAIR:

Okay.

MR. BENNETT:

I'm just wondering, you say

in 2012 there was a complete review done. What was the process used in 2012

versus the process now? There were no amendments in 2012 and here we are seeing

53 recommendations that were put forward.

MR. CHIPPETT:

I don't think there's

anybody on this side this morning that could speak to why, from 2012, but I do

know there was a consultation done. There were, I think, 18 submissions through

that process, but, obviously, SNL is a department with lots of legislation, and

I can imagine you prioritize over time.

Renee,

do you have a comment on that?

MS. DYER:

At that time, there was a submission that went out. While there was great

feedback, the quantity of the feedback was low. For those reasons, based on

priorities, it didn't come to fruition.

MR. BENNETT:

Okay, thank you.

CHAIR:

You can proceed.

MR. CHIPPETT:

Thank you.

The

next slide just speaks to a change in terminology that you'll see throughout the

draft bill. It was considered to be the industry norm to refer to a broker

rather than an agent, so that's changed in the

Interpretation

section and then

throughout the bill. In particular, it's in

section 2(1)(b).

There

are changes in the bill as well with respect to licensing requirements.

Obviously, the overall objective, which was the goal of both the departments and

NLAR, was to provide more stringent requirements to register as a broker or a

salesperson. So, specifically,

section 7(1)(

a) allows the superintendent to set

the form of the applications for licence.

Section 7 would require a criminal

background check.

Section 12(f), licensees would have to notify the

superintendent of information changes.

Regulations would prescribe the requirements, qualifications and conditions for

issuing licenses and would allow the superintendent to modify licence

requirements. That's

section 47. The minister would have the ability, under

section 48, to set new fees or establish new forms.

I know

that through the EngageNL consultations, the response that got the highest

percentage in favour of any question in the questionnaire was the need for

continuing education requirements. So the act in

section 5(1)(

b) would allow the

superintendent the authority to prescribe continuing education requirements.

Next

slide, please. Thank you.

Incorporation is addressed. Again, a lot of these amendments are about

modernizing or recognizing current practice that is more common in other

jurisdictions than here. So the act allows a salesperson, or salespersons, to

establish and operate personal real estate corporations, similar to other

independent contractors in other industries. The bill allows that in

section

Section 9 says a personal real estate corporation could apply for a licence, and

a licence could be issued to such corporation through the authorities in

section

6(1)(e).

Generally speaking, the current act speaks more to an employer-employee

relationship;

whereas, in a fair number of the other jurisdictions, it speaks to

independent contractor status. This

section of the act, the proclamation would

be subject to changes to our IT system within Service NL.

MS. COFFIN:

Thank you.

terms of incorporation, I understand that you often incorporate to protect the

individuals operating in the corporation, and it gives you different legal

rights, legal responsibilities, but also legal protections. Will this have any

impact on the consumers?

CHAIR:

Just a reminder, if we could all introduce ourselves prior to speaking, every

time, for Hansard.

MS. COFFIN:

Got it. Okay.

MR. DELANEY:

Ultimately, not to a great deal. I think a large percentage of this really, as I

said, for incorporation is almost for tax purposes as well.

MS. COFFIN:

Right.

MR. DELANEY:

Really, it's allowing these individuals to change their tax set-up. The consumer

is not going to notice the difference, other than it's really going to be behind

the scenes where this individual is going to have to go and register as a

company and file different taxes and things like that. But it won't be obvious,

necessarily, to the consumer, the difference.

MS. COFFIN:

Okay.

You've

kind of opened up a slightly different path there. If taxes have changed – and I

think corporate taxes are very, very low, which is substantially different than,

say, an income tax. Has anyone done any analysis on what the effect would be on

government revenue?

MR. DELANEY:

The expected take-up of this is extremely low.

MS. COFFIN:

Okay.

MR. DELANEY:

So this is not something that really – I think the indications we got was that

there's really only maybe 10 to, maybe at most, 20 individuals that might look

to incorporate. This is not expected to have any material impact in terms of the

tax base.

MS. COFFIN:

Okay. I'm just thinking that

there might be some, just given that the rates are slightly different. So that

would be an interesting thing to watch.

Thank

you.

MR. CHIPPETT:

So we're on the slide

entitled errors and omissions insurance, and this is really recognizing a

standard that pretty much exists in a lot of the industry. So the new bill will

require real estate brokers and salespersons to maintain errors and omissions

insurance to protect professionals whose clients could claim damages as a result

of that professional's negligent actions.

Section

7(1)(

f) is the

section that gives that authority or requirement. The amount of

insurance would be set in regulations. You'll hear a few times throughout the

presentation that there are things that will come a little bit later in

regulations in terms of the details. We do say here that a million dollars in

errors and omissions insurance is what we understand to be the industry

standard.

The

next three slides actually relate in one way or another to a code of conduct.

During the consultations there was also a very high percentage who favoured the

development of the code of conduct. We do know that the local association,

provincial association, has a code of conduct for its members, but there's no

legislative requirement around that. Similarly, the national association has a

code of conduct as well.

This

bill would allow the superintendent in SNL to establish a code of conduct. The

section reference is 5(1)(a). Then, as I said earlier, further details would be

provided in the regulations, including the ability for the superintendent to

suspend, revoke or cancel a licence for a breach of the code. That is in terms

of the regulation-making clauses,

section 47.

MR. BENNETT:

Madam Chair, a quick

question. How does this relate to other jurisdictions regarding the code of

conduct and the ability of the superintendent to enforce these?

MR. CHIPPETT:

I'm going to defer to

Michael or Renee, but I do know a large number of the other jurisdictions have a

code. I'm going to say PEI may be the only one that doesn't. I'm getting nods,

so every other jurisdiction with the exception of PEI.

MR. BENNETT:

Thank you.

MR. CHIPPETT:

Next slide, please.

Conflict of interest is, obviously, closely related to code of conduct. The act

would establish restrictions on salespersons providing real estate and mortgage

brokerage services. There was considerable feedback but it was mixed on this

particular question. The bill would restrict a licensed real estate salesperson

from providing both real estate services and mortgage brokerage services to the

same client during the same related business transaction. That's in

section 28.

Lastly,

in terms of things that relate to the code, the act would establish disclosure

requirements for referrals by real estate brokers and salespersons for related

services such as mortgage or inspection services. There is no such requirement

today. In particular, in the second bullet here, we make reference to the fact

that where there's a fee involved then disclosure would be required under

section 20. Again, the code of conduct, which would be a separate exercise and

be developed outside of the act itself, would provide further details on that.

MR. PETTEN:

On the code of conduct, the

conflict of interest and whatnot – enforcement. I know you have a superintendent

of the real estate but how do you enforce real estate agents? They are

everywhere. How do you know?

All

this stuff sounds good in theory everywhere but it's all about enforcement. How

will this be enforced? How do you know the referrals – I'm just wondering,

thinking to myself, with a real estate agent it's pretty personal when you meet

the buyer buying the house – the real estate agent and the person buying the

house; it's a very personal relationship for a few weeks. They're dealing and

they're saying, well, you go get this inspector or I'll get this one.

How do

you police that? I guess that's the question with all of this stuff. Or is that

just an honour system?

MR. DELANEY:

Certainly, I think that's

the crux of the question. I think part of it will be answered in a couple of the

slides in terms of the orders and the ability to issue fines, but coming back to

the specific question, first, it's public awareness about what the rules are.

It's one thing to have new legislation, but if the public, the actual

individuals who are buying or selling, aren't really aware of the rules that

their broker or salesperson are held to account, then they're not going to know

to question things. If the public is aware, then a lot of the things we see

through the regulatory enforcement are issues that come forward from the public.

The

public will complain to Service NL maybe raising an issue that they were aware,

maybe after the fact, that there was some kickback on a referral. They didn't

know this home inspector knew this broker and they question Service NL about it.

We would do an investigation to see if the code of conduct in terms of the

disclosure was provided to the individual. Again, recognizing, in some cases,

the disclosure was there but it was buried in paperwork and the individual may

just not have read it and understood it. Again, I think it's making sure that

the public is aware around the boundaries and what's acceptable and what's not.

The

other way would be through monitoring. Certainly, we have the ability to inspect

documents or request – we review sales agreements and things like that, purchase

and sales agreements, because if money goes into a trust account and there are

some question about it, we'd be able to see the actual agreement itself and

maybe would identify issues.

there's a wide variety, but I think the key is that the public is aware about

what's acceptable.

MR. PETTEN:

How would you make the

public aware? Is there a way, when your real estate agent engages with a buyer,

some sort of handout, information sheet – these are your rights. You can do a

public awareness campaign, but if the buyer does not know these are the rules

that the real estate agent is supposed to operate under, again you are left in –

most buyers probably would not know.

I'm

just trying to get the information to the buyer that these are your rights. So

if they violate your rights, well then it's incumbent upon you to bring it to

the superintendent or whatever. I'm just wondering how you bridge the gap there.

That seems to be a gap in the …

MS. DYER:

Oftentimes in our department, even though we feel that the public isn't aware,

you just need a couple of instances and then all of a sudden news travels, but

there is a complaints process. They would call in to our department, they would

lodge a complaint and there would be a review. With the stronger legislation

now, there's an opportunity for fines, for enforcement, for publicizing any type

of contravention to the legislation. That really deters others from doing so.

One of

the first things we're going to do is, certainly, educate and work with the real

estate agents, making sure they understand the legislation and it's clear to

them and understanding what the parameters are – if legislation is in

contravention, what the fines, the administrative penalties are. So there's a

lot more substance now with the new legislation that our department can provide

a much stronger enforcement that, previously, we would have had to go to the

courts to decide.

I think

we're at a point in our department – we do have an investigative team that would

go out and do investigations as well, but I think in working with NLAR, the

association, working with the salespeople and working with the public in

educating them further, it's going to be a period of time but you only need a

couple of instances and all of a sudden everybody starts to fall in line pretty

quickly.

MR. O'DRISCOLL:

I'm just wondering on the inspection basis, would they have a sheet or a

questionnaire that they would follow, all being the same for those guys that are

doing the home inspections part of it.

MS. DYER:

Well, some of the questions

that come up are – purchasing a home is a pretty big investment, so you really

rely on a home inspection to ensure that everything is up to standard. Some of

the complaints that we get is that the home inspector didn't find three or four

things that potentially are substantial and they never would have purchased that

home had they known otherwise.

They

may find out that there was a strong relationship between this home inspector

and the salesperson. What will need to happen now under the code of conduct is

full disclosure. So if there is any relationship, any type of commission,

referrals, fees that are being paid to a home inspector or the home inspector is

paying the salesperson, it will have to be disclosed in advance.

MR. O'DRISCOLL:

Okay.

MS. DYER:

Any type of conflict of

interest will have to be disclosed in advance to the purchaser of the home. What

we're finding now is a lot of salespeople are providing three to four different

options from a home-inspection perspective. They don't want to kind of taint the

waters on any one home inspector. It's part of providing a better service to

your customer that you're providing three or four different home inspectors.

It's based on reputation, so you certainly want to make sure that your customer

is happy and that the home inspection does meet those standards.

MR. O'DRISCOLL:

Thank you.

MR. CHIPPETT:

I'll just add one thing to

that particular question. On the code of conduct piece the industry, the

association was very much in favour of that, so we do expect that a lot of –

obviously, the onus at the end of the day is on the agent, the broker or the

salespeople to follow the code. I think there's a strong interest within the

industry as well to be kind of upping their game with respect to certain aspects

of their business.

We're

on the slide entitled Recovery Fund. This really is a major consumer protection

initiative. The goal here is to create a Real Estate Recovery Fund to protect

consumers from financial loss in cases where a broker or salesperson is

convicted of an offence, has a civil judgment made against them or declares

bankruptcy. These would replace the current bond requirements that are in place

over time. Obviously, some of those existing bonds need to live out their time

before you would move to the new Recovery Fund.

The

bill would create the fund. The notion is that it would be financed by industry

participants and managed by Service NL. That's in

section 25 of the act. The

regulations, again, would set out the details on the how; in other words, how

licensees would contribute to the fund and the administration of the fund.

Again, this is used in several other jurisdictions in the country.

trust deposits, the goal here, the intent of the legislation, is to streamline

the release of trust deposits where the conditions in a purchase and sales

agreement have not been met. The bill would allow the deposit – this is really

practice. It would confirm that the deposit could be released according to the

terms of the contract signed, and that's in

section 26(4). It would also enable

the superintendent to direct the disbursement of the deposit in 26(4)(e).

Further details would be reflected in the regulations, and

section 47 is the

regulation-making clause in the bill.

Question?

MS. COFFIN:

In terms of the trust

account and the Recovery Fund, does that exist right now and we're just putting

more terms around it? I'm sorry, I'm not quite sure if I understand what's going

on there. I understand what the first one is, the recovery account, if stuff

goes wrong from the buyer's perspective or from the realtor's perspective, but

this trust account, is that established when the negotiation is happening? Just

a little more detail on that for me, please.

MR. DELANEY:

Yes, so trust accounts exist right now.

MS. COFFIN:

Right.

MR. DELANEY:

So in terms of you agree to purchase a home, you give your deposit to the

broker, who is required to place that money in a trust account, so held in

trust. And certainly, the purpose of the recovery fund is to ensure that if

something was to go awry, that the recovery fund would be able to make whole any

issues with a trust account.

But the

improvements – and it was something, again, that industry was looking for, is

that there are a lot of issues with this money that gets placed into trust and

there's an agreement that's signed, but the agreement falls through due to one

issue or another, and then there's a dispute over who is entitled to the money

that's been held in trust.

So,

right now, there's a considerable amount of money that is really in limbo

because the broker is unclear about who the money should be released to, and

really the only mechanism is to go through the courts to have that money

released. Again, the intent here is to, (a), clarify that if the agreement is

clear in terms of who the money should be returned to, then the broker should be

returning it to that party. And if not, if there's some ambiguity around that,

that the superintendent would have the ability to adjudicate and then direct who

would receive the money.

MS. COFFIN:

Okay. So it's a simplification?

MR. DELANEY:

Yes.

MS. COFFIN:

Wonderful, thank you.

MR. CHIPPETT:

So that's a perfect segue into the next slide, which is around aged trust

deposits. And so the intent of the legislation here is to establish a mechanism

for disbursement of aged trust deposits without going to court. So the bill, in

particular, would allow the superintendent to adjudicate disputes over trust

deposits. So that's in

section 27.

would also enable unclaimed trust money that had been in trust for more than two

years to be paid into the Recovery Fund that we talked about earlier. That's in

section 27 as well. Again, the regulations will put in the detail around the

superintendent making decisions on the disputed trust deposits.

CHAIR:

The Chair recognizes MHA

Bennett.

MR. BENNETT:

With regard to the decisions made by the superintendent, is there an appeal

process if the buyer or the seller does not agree with it?

MR. CHIPPETT:

Any decisions of the superintendent can be appealed to the Financial Services

Regulation board.

The

next couple of slides relate to the concept we talked about earlier with respect

to enforcement. Obviously, any good regulatory system needs to have good

enforcement and fines and penalties associated with it. In terms of

administrative fines and penalties, currently, there were no such allowances in

the act for those. So the intent of the legislation is to establish those for

minor infractions and provide authority to publish the administrative decisions.

The

bill would allow for these fines to be assessed by the superintendent for

specific contraventions of the act. That would be

section 35. The maximum fine

would be $10,000, set out in 36(1)(

c) and the regulations would outline the

specific contraventions and the time amount and manner of payment of fines.

MS. COFFIN:

In terms of the $10,000

limit, will that be sufficient or is that something – I guess the legislation

will be reviewed on a periodic basis so that could scale. So that $10,000 is

deemed sufficient to cover off anything that might be, I guess, a breaking of

those rules, but is that something that should be associated with the value of

the house or is it something that should look at being scaled or will that be

taken care of as we review the legislation into the future?

MR. CHIPPETT:

First of all, these are for minor infractions.

MS. COFFIN:

Right, okay.

MR. CHIPPETT:

I'll let Renee, I think, speak to some of the things that – this could be as

simple as reporting that the department should get that we don't get and so on.

I think it is sufficient, but in terms of the specific types of things, I'll

just turn that over to Renee.

MS. DYER:

I do think it is sufficient at present. We have to walk before we run in this

place.

MS. COFFIN:

Okay.

MS. DYER:

Most of these would be for administrative infractions. So, oftentimes, we're

challenged with certain real estate agents to file on time to get their

licensing renewal information into us and their fees, and it can create a lot of

additional work from a department perspective. So introducing an administrative

fine to pay your fees and your information on time or you will be charged an

additional fee, I'm hoping that we'll certainly get a higher submission of their

fees and their information.

could be for not disclosing the appropriate information to non-disclosure of

having relationships, referral fees, or inappropriate conduct from a salesperson

perspective. The infraction would determine the type of fine and we would

certainly look to the other jurisdictions and what they've done in the past and

follow a similar type of approach.

MS. COFFIN:

Thank you.

MR. CHIPPETT:

We're on the slide now

entitled, court imposed fines. Again, the intent of the legislation is to

increase fines under the act from the current range of $1,000 to $2,000, which

would strengthen the regulatory system and promote greater compliance.

The

bill that the Committee has in front of it would increase the maximum fine for

individuals or incorporated bodies to $50,000, where the person is found guilty

of an offence for contravention of the act. That's laid out in

section 45.

MS. STOODLEY:

section 45(3), it talks

about the fact that if an offence continues over more than one day, they're

liable to be convicted for a separate offence. I guess if it goes over three

days, they get convicted potentially three times and get three fines.

I was

just wondering if you could elaborate on how that would work and what an example

of a conviction would be where something continues over more than one day.

MS. DYER:

Sorry, what

section were you

referring to?

MS. STOODLEY:

Section 45(3).

MS. DYER:

Okay, 45(3), just to make

sure.

What I

would say is that any offence over a period of time we would certainly look at

every incident and judge accordingly. If someone's fees weren't paid for the

third day in, we wouldn't look at it as three different infractions; we would

look at it as one. It really is dependent on the circumstances, but we wouldn't

look at three different offences just because it was over a three-day period.

MS. STOODLEY:

Thank you.

MR. DELANEY:

I think this relates more so

to the offences than the administrative issues. This is where there's clearly

been contravention of the legislation. I guess the current legislation

recognizes first-time offences versus second-time offences. That has been

changed in terms of the bill that's being presented to the Committee, but still

the concept of if there has been multiple infractions that we don't want the

legislation, I guess, to limit that you can only seek an offence for that. If

they're repeating the same offence over and over again, and it refers to one

day, but I guess you can consider if there's been non-compliance and maybe money

being removed from trust accounts or something significant, and they've even

been warned by the superintendent and then they repeat the issue maybe a week

later, but you can consider it two, three months later, that there's the ability

to recognize that there's actually been multiple breaches of the legislation.

Then each infraction can be brought forward to the court as a separate offence.

Again, the court can then consider that when issuing any fines.

MS. STOODLEY:

Okay, thank you.

MR. CHIPPETT:

This speaks to enforcement

and also to some of the additional regulatory authority that the department

would be given. The goal here is to allow the superintendent to issue orders to

correct the situation deemed not in the best interest of the consumer. So this

speaks, I think, to MHA Petten's question earlier as well.

The

bill would allow the superintendent to issue an order to suspend or cancel a

licence, impose additional conditions on a licence and pay a fine of up to

$10,000 or some other order prescribed in regulations. That's laid out in

section 36. As we talked about earlier, appeals to any of the superintendent's

decisions could be made to the Financial Services Appeal Board.

This is

our last slide and it's on housekeeping and proclamation. The bill provides for

the appointment of a superintendent and deputy superintendent by the minister,

rather than Lieutenant-Governor in Council. Just to talk a little bit to the

rationale related to that, these positions are public service positions that are

hired through a merit-based competition process of the Public Service

Commission. Really, they would happen through the normal competition process and

come up through the deputy and the minister in the department.

There

have been plain language amendments throughout the act and a reorganization and

modernization generally throughout the act, just in terms of readability and

organization. At present, it indicates that the law would come into effect on

January 1, 2020, except for sections dealing with the Recovery Fund and personal

real estate corporations, which would be proclaimed once the appropriate

administrative measures are in place. And that's in

section 54.

CHAIR:

Do you have any questions?

MHA

Stoodley.

MS. STOODLEY:

When I was speaking with my real estate colleagues about this bill, they seemed

very excited, so that's good because I'm not a real estate expert. But there was

one area where they understand that the legislation is changing that I didn't

see, and I couldn't pick out in the legislation.

I was

wondering if you could speak about how this is protecting or informing consumers

and the general public if a real estate agent is both representing the seller

and the buyer. Is that covered in the legislation, and how so? What changes are

being put in place when the same person is both representing the seller and the

buyer?

MR. DELANEY:

So, yes, dual agency – in terms of the consultations, that was one of the areas

where there wasn't a clear direction, consensus in terms of whether, for

example, to restrict dual agency. So British Columbia is the only province that

actually prohibits dual agency, I believe, in certain circumstance. I'm not sure

even in all circumstances. And that was certainly something that was considered.

When you think about the rural impacts of that, there are concerns in terms of

you have some smaller regions around the province where there may only be one

broker, and then forcing one of the parties to find someone else, there are

concerns with that side of it.

So the

approach that's been taken will be to deal with that more through the code of

conduct and the disclosure requirements, just to make sure. This works well in

other jurisdictions. I used to live in Nova Scotia and I remember purchasing a

home there, and there were these disclosure requirements around the dual agency,

just to make sure that you're aware that the broker is working for both parties,

or the salesperson is working for both parties.

We'll

certainly be leveraging the disclosure requirements in other jurisdictions.

There hasn't been a lot of public – it's identified as a potential conflict of

interest, and I would speak for the department, but we haven't seen a lot of

issues come forward to the department around this. I think the industry is

accustomed to dealing with this, and really what we want to do is make sure that

the rules, the code of conduct, are clear for everybody in industry so there is

a standard approach in terms of dealing with this.

MS. STOODLEY:

Okay, good.

Just a

follow-up question then. In terms of the disclosure and the code of conduct, if

I was selling my house and my real estate agent was also dealing with the buyer,

how would I know – I guess I probably would see the same email address on my

emails. In terms of the disclosure, how would that pragmatically look like for

the buyer or the seller?

MR. DELANEY:

Some of it will have to be kind of worked out in specifics, but you can

certainly see that there would be documentation, to some extent, provided to the

individual or, certainly, that it would be verbally explained to the individual

that I'm representing the other party in this and explaining how that could

potentially create a conflict and assure the buyer or the seller that the

salesperson can assure them that they can deal with that and treat both parties

separately.

At the

end of the day, the individual would then have the choice to say no, I'd rather

deal with someone else. I think as long as they're aware, and, certainly, part

of it may be if they want to call into the department to get some information

from the superintendent of real estate around what they means and what the

potential risks are, you could envision that as part of the solution as well.

MS. STOODLEY:

Okay, thank you.

CHAIR:

Okay.

MHA

Bennett.

MR. BENNETT:

First of all, I just want to

commend the department for the great job they did in the public engagement part

of it, getting the feedback from the realtors' association and all the public

consultations and through EngageNL.

Through

the process, were there any other issues of significance identified by either of

the groups that are not being addressed now in the legislation that would

address further concerns?

MR. CHIPPETT:

I don't think so. I think everything has been addressed in one way or another. I

think, obviously, there are some things – the details will come later when you

do the regulations, but the things that got high percentages of feedback in the

survey were the things like clarity around trust deposits, the continuing

education piece and code of conduct, in particular, was a high one as well.

Anything that came up multiple times or what have you, that we would gage to be

either an issue raised by the public on a frequent basis or the realtors on a

frequent basis, I think, have been addressed.

MR. BENNETT:

Good, thank you.

MS. COFFIN:

I like this. I see what the industry has done around protecting consumers, which

is very, very important. I see what's been done around protecting the industry

and establishing a high standard within that industry, and that's very

reassuring as well. One of the quotes is: I don't want a criminal in my home.

Good, I'm very happy to hear that.

I guess

something that I'll look forward to seeing is how they roll out the professional

development training and what standards that comes from, where that belongs and

things like that. That will be a very interesting piece, but I think that will

strengthen the industry as well.

I guess

one piece that might be an issue – I didn't see anywhere in your presentation,

but does this new legislation mean that everyone buying a home must go through a

real tor ; someone certified under this? Because I know, at your own peril,

people can buy houses without going through a real estate agent. I thought I saw

one little piece there where someone doesn't have to be registered or doesn't

fall under it, but I think that was a legal person.

So is

that still possible under this legislation or does everyone have to get

funnelled through this piece?

MR. CHIPPETT:

The existing arrangements

would still apply.

MS. COFFIN:

Okay, good. That's

reasonable.

Competition in an industry is very important as well. Will this reinforce the

standards around professional conduct and relationships in terms of money and

all of those things, and relationship with government? Does it dampen the

competitive spirit within the industry? That's a concern as well.

MR. DELANEY:

No, I don't think – it's not

changing. So, I guess, one of the considerations or one of the potential models

would be, for example, co-regulation with the association or providing the

association more of a – making them responsible for the enforcement and the

regulation.

When I

say the association, the Association of Relators, NLAR. I think they had

indicated, and they certainly indicated to the department and they indicated in

their documentation, that, at this time, they're not interested in a

co-regulation type approach. They are happy enough, I guess, to be the

association and allow the legislation and the superintendent to be responsible

for enforcement.

Part of

that, I guess to go back to your question, not all of the brokers and

salespeople are part of NLAR. There are those, a relatively small percentage,

who are not and this again is not looking to require any of those individuals to

join up with the association or change, I guess, the current arrangements that

are in place.

I think

when you move towards some of the enhancements around, certainly, the continuing

professional development, code of conduct and those types of things, that's why

the department will then be responsible for rolling that out and making sure

that it is accessible. For example, training, if there's minimum professional

development requirements, that it's accessible to brokers and salespeople in all

regions of the province. Again, you can envision not maybe having it in person,

but there's more online availability in allowing that.

It's

not to prohibit any individual from becoming a professional. I think there will

be – and it's something industry is looking for – enhanced standards and,

certainly, there is a licensing requirement now and an examination in terms of

becoming a salesperson. Again, not looking to necessarily open it up to

everyone, but allowing those who have the qualifications to operate a business.

MS. COFFIN:

Okay, good.

I think

you've answered that quite reasonably. What I was worried about was there would

be undue barriers to entry to the industry, but that doesn't seem to be the

case. There are higher standards, but as long as you can meet those standards

you can get in. So, yeah, that's quite reasonable.

Thank

you.

MR. O'DRISCOLL:

Just a question on the

salesperson.

A new

person going in getting some help from another salesperson, is that actually in

the legislation? I don't know how someone that's already – that was in this when

I was reading this information before; I don't know how that person that's

already there is going to help someone else. Sometimes that doesn't happen as

easily as you would think, from being a former salesperson.

MR. CHIPPETT:

There was certainly

discussion of that throughout the process. Again, when you think about the

conversation we had about do you eliminate, for example, the notion of dual

agency. There's some concern when you put a rural lens on things that an

experienced person in a given area might not even be in existence.

I think

the association was certainly talking about the value of that, but concerned

about the limitations in some areas of the province. I think you'd see that

mentorship happening in, obviously, the different organizations between more

senior salespeople and newer people, but there's no requirement in the

legislation for it.

MR. O'DRISCOLL:

Okay, good enough.

CHAIR:

Okay, any further speakers?

You

guys are all good?

Okay,

on that note, I guess we can recess until 10:45 for our next group.

Okay,

thank you.

Recess

CHAIR:

Okay, I think we're ready to

get started.

Good

morning everyone and thanks for coming.

The

procedure today will be as follows: The presenter will have an hour and a half

to speak, including time for answering questions from the Committee. Members

will have 10 minutes to speak and may also do so as often as they wish; however,

last time we kind of had open dialogue all the way through, so if that's okay we

can certainly proceed the way we did last time.

We ask

that you identify yourself each time you speak for the benefit of Hansard and

the Broadcast Centre.

Before

we start now, I'll ask members to introduce themselves.

We'll

start with the Committee.

MS. COFFIN:

Alison Coffin, MHA, St.

John's East - Quidi Vidi.

MR. BENNETT:

Derek Bennett, MHA,

Lewisporte - Twillingate.

MS. STOODLEY:

Sarah Stoodley, MHA, Mount

Scio.

MR. O'DRISCOLL:

Loyola O'Driscoll, MHA,

Ferryland District.

MR. PETTEN:

Barry Petten, MHA,

Conception Bay South.

MR. STIRLING:

I'm Bill Stirling, I'm the CEO of the Newfoundland and Labrador Association of

Realtors.

MR. HOLLETT:

Ed Hollett, Manager of Communications and Member Engagement.

CHAIR:

I'm Pam Parsons, Chair of

the Committee and MHA for Harbour Grace - Port de Grave.

Now, we

will get started.

MR. STIRLING:

I just have some opening comment, I guess, to begin with and then ready to

answer whatever questions the Committee may have.

Before

I begin, I'd just like to start by offering my congratulations to anybody who's

been elected for the first time, and for those of you coming back,

congratulations on your re-election. We were out during the recess looking at

the previous roles and I'm reminded my own father was a Member of this hon.

House back in 1979 and, for a period, actually sat in this seat, although it was

upstairs at the time. Congratulations. It's an honourable profession and I look

forward to seeing you serve the people well.

Good

morning, we really appreciate the opportunity to be here this morning. The

Newfoundland and Labrador Association of Realtors represents 650 real estate

licensees in the province. We're pleased to be here to talk about the new

legislation.

Modernization and renewal of our governance system for the real estate industry

in this province has been an advocacy priority for our association for many,

many years. As you know, the current legislation, the old legislation, dates

back to the mid-1960s when this building was a brand new building.

We are

an industry association representing most licensees but not all licensees. We

provide supports to our members, educational programs and services for our

members across the province. We are an industry association not unlike

Hospitality Newfoundland is the tourism industry association and CME would be

the manufacturing industry association. Oftentimes, people in the public confuse

us with the regulator and the role that we play in ethics enforcement, but we

are not a regulator, obviously, as you'd be aware.

operate the only Multiple Listing Service in the province; we offer technology

products, insurance products and services and educational programs for our

members. We also require that our members abide by the realtor Code of Ethics,

the Standards of Business Practice. With our relationship with Service NL, with

the regulator, we deliver the pre-licensed training programs for people who want

to write the salesperson licence or the broker's licence. We deliver that on

behalf of Service NL, and we coordinate the exams with the College of the North

Atlantic for that.

When

the department announced the review of the

Real Estate Trading Act in 2017 we

very quickly mobilized. We had done a lot of work over the years on our

recommendations and our thoughts on where the legislation needed to go, but we

also wanted to hear from members, we wanted to hear from consumers. So we went

on the road and we did 16 meetings in eight locations around the province in

January and February of 2018. We were in St. John's, Bay Roberts, Clarenville,

Grand Falls, Corner Brook, Goose Bay and Lab City. We did public meetings and we

did meetings with our members.

Out of

that we heard from a couple of hundred people. From that, we compiled two

reports, which were shared with the Committee prior to this, and was shared with

the department. One report was a compilation of what we heard from our public

engagement and then there was a series of recommendations in the second report.

What we

heard when we were on the road clearly was a call for modern regulation. The

real estate industry has evolved in the digital economy in ways that we could

never have foreseen and trying to manage the industry with a set of rules that

were written in 1964 just doesn't work. We heard a loud call for better

enforcement tools for the regulator, for more modern education, for a variety of

improvements and so we put all of that in our 53 recommendations. We worked

closely with the department as part of that consultation process. They had

representation at a number of our meetings.

We're

thrilled to see that a lot of our recommendations have made it into the

legislation. We're particularly pleased to see a streamlined process for dealing

with disputes over deposits on transactions that don't close. The establishment

of a Recovery Fund I think goes a long way in terms of protecting not only our

members and licensees, but also consumers from situations where right now the

protections are not there in the legislation.

We are,

I think, the only jurisdiction currently in the country that does not have a

requirement for continued professional development for anybody who has a real

estate licence. We have a professional development program requirement for our

members, so it's great to see a requirement for professional development for all

licensees in the province.

The

addition of a code of conduct and the requirement for certificates of conduct

for all licensees is something that we were recommending and we're glad to see

it. We're glad to see the ability for licensees to self-incorporate. For the

most part, real estate agents, salespeople, while they're licensed under a

broker, they work for a company. For all intents and purposes they are

self-employed, independent contractors. In the eyes of the law, in the eyes of

Revenue Canada and workers' comp they are self-employed individuals, yet they

can't take advantage of any of the benefits of being able to incorporate. So

we're glad to see that is in the new legislation.

I think

what's really important is the range of enforcement tools that the

superintendent will have to deal with matters. Right now, the only tool that the

superintendent has is to cancel somebody's licence. We often see, for example,

somebody might be a week late in filing a report or renewing their bond and, as

a result, their licence is cancelled. That means they have no livelihood, they

have no ability to generate income, they're not allowed to talk to their clients

about their listings. Everything comes to a grinding halt simply because of an

error in filling out a form or renewing a bond.

The new

legislation gives the superintendent the ability to charge a fee or a fine or

impose a less severe penalty for something that's really a minor administrative

thing. We're glad to see that. We're really pleased to see the maximum fines

being increased beyond the current level. That's the single-largest deterrent

for behaviour is the financial deterrent, so we're pleased to see that.

Just in

conclusion, we're pleased to see that the regulators listened to consumers

across the province, they've listened to members of our industry and we see that

new legislation looks across the country at where the best practices are and

adopts a lot of the best practices that we see in other jurisdictions and we're

glad to see the department moving ahead with it.

We'd

like to thank the minister for her efforts, and her officials for their efforts

and their co-operation with us. With that, if there are any questions, we're

pleased to take them.

CHAIR:

Any questions from our

Committee?

MHA

Stoodley.

MS. STOODLEY:

One of the issues you

raised, I think, rightfully so in your book here, you called Modernization and

Clarity in the Information Age, under Digital Revolution, and you go through

that in the first and second volumes of your recommendations.

When I

read this again and now think back through the legislation that we're reviewing,

I'm not sure that we're covering this. I'm just wondering, I guess, from your

perspective, is that a big deal. Are there gaps still in terms of legislation

around aggregator sites pulling information from your MLS system? Do you see any

big gaps there, immediately?

MR. STIRLING:

The short answer is no. Some of those kinds of issues, when you dig into them,

are not really issues that can be governed through a broad piece of legislation.

It's more around data protection and intellectual property protection that we

have, as the operator of an MSL database with 300,000 listings in there. That's

part of our responsibility is to protect that data on behalf of consumers.

There

is an issue that we see where consumers aren't necessarily aware when they're

looking at a website whether or not that is a website of somebody who is

licensed to trade real estate in this province or somebody who is not. There are

services out there that are available to consumers and it's not always clear

that you're looking at something that is a licensed website.

I think

there is a consumer education program that we can do around that to create

awareness. Again, that's not something that we would see as being legislated,

that's more about a consumer awareness campaign.

MS. STOODLEY:

Are you aware, just by

chance, of any other jurisdictions doing any legislation around modernizing the

real estate sector?

MR. STIRLING:

Not particularly. Again, part of the challenge that we had with the old rules –

and I'll use Facebook as an example – our rules were written in a time when the

only way you knew a property was for sale is if you saw a sign on the lawn or

you saw a printed ad in the newspaper. There was very specific rules around what

that ad had to contain.

If you

move into today's world, where everything is online and consumers know so much

about a neighbourhood or so much about a property long before they ever call a

real estate agent, it's hard for us to enforce advertising rules and standards

that were written for a print era in a digital world, because advertising is

advertising whether it's on Facebook or on the Internet on a website or it's in

an ad, we're trying to apply the same rules to the same advertising.

For

example, for our members, we have a rule that says you cannot advertise a

property until it has an MLS number, which means it's in our database, which

means everybody who's a member of ours has access to the information, and that's

about fairness of competition.

Is an

Instagram post an ad? That's something that we struggle with all the time is how

far do we go in policing all these online points of presence?

It's a

lengthy answer I know, but the wording in the old act couldn't conceive of those

kinds of applications, right? So that's the kind of thing we're trying to move

towards.

MS. STOODLEY:

Okay, thank you.

CHAIR:

Good? Okay.

MHA

Petten.

MR. PETTEN:

Thank you.

Just a

couple of questions. When you did your consultations – I know a lot of things in

the legislation when Service NL was just in previously like code of conduct is

one big one I guess – did all the agents agree?

seems like both parties are happy with this legislation, but it's bringing new

rules in place for relators. Did they all agree when you had your consultations?

Is the

industry very happy about this legislation because it's going to create a lot of

good in this for the buyer and for the public, but it's going to put a whole new

layer for your association and your realtors? I know it's more about

transparency and accountability, too, but, I guess, generally, are they all

welcoming this change to the legislation? There's an increase in penalties,

obviously, as well.

MR. STIRLING:

The short answer is yes,

absolutely. The more we can do to improve professionalism in this industry the

better off our members are served and the better off consumers are served.

Like

every profession out there, our industry is a microcosm of society. There are

people who are licensed who are the utmost professionals and, at the other end

of the scale, there's a continuum that goes the opposite direction.

Our

members are strongly in support of improved enforcement, strongly in favour of

improved educational standards, making it harder to get into the industry. I

don't mean harder in terms of more difficult financially or whatever, but making

the level of professionalism higher. You have to clear a higher height bar to be

licensed and maintain your licence than we currently have. Most people in the

industry absolutely support that kind of improvement in our regulation.

MR. PETTEN:

In the code of conduct as

well – I asked this question earlier so I just want to get your side too.

Educating the buyer of their rights, this disclosure or whatever, form, handout,

certain thing you'd have to sign to acknowledge that the buyer has rights,

outside of what realty was many years ago, you'd see a sign on a lawn or you

knew this person that was in real estate. As an association is this something

that – I'm curious about the policing part of it, actually.

It's

all good, and every piece of legislation that comes to this place there's always

an enforcement or follow-up or accountability piece to any piece of legislation.

That's as good as any legislation is.

I know

we have the side from Service NL with the superintendent, but from your end of

it, it's a role for both sides to play in keeping everyone above board.

MR. STIRLING:

Yeah.

MR. PETTEN:

What you just said, I agree

with you, you're raising the bar. The level of professionalism, you can't go

wrong; it helps any industry, any group.

From

that end of it, do you have any plans in place for that part?

MR. STIRLING:

It's interesting. The law

has evolved. Consumer law has evolved over the years. What we refer to as agency

law has evolved since the time of our legislation. Following through the lead of

the Canadian Real Estate Association, our members have been operating using

agency and agency representation for many, many years.

When

you list your house with an agent, they will have a discussion with you about

your rights as their client and what their responsibilities are, what their

fiduciary responsibilities are and how they represent you and represent your

interests and the level of confidentiality and that. Similarly, when you're a

buyer and you're working with an agent, there will be a discussion around

representation. I know you had some questions this morning; I was listening to

the live stream about dual agency. We can probably have a chat about that after.

We have

operated very clearly and within our code of conduct. Our members know very well

their responsibilities as a buyer's agent or a seller's agent, or if they're in

that dual-agency kind of representation, how they have to protect both sides.

We've been operating that way for many, many years. It's in our code of conduct.

It's in our Realtor Code, our Standards of Business Practice.

The

difference though with the legislation is that our rules, our code of conduct,

apply to our members and we forget oftentimes that not everybody who is licensed

is a members of ours. We're not like the College of Physicians where everybody

is a member; we are not the regulator. There are licensees that are not captured

by that, so they don't have the same tools to guide them. I brought along a

couple of examples I can share with the Clerk of our agency disclosure forms and

the information that is required to be disclosed to clients.

We've

done a lot of work and, again, through the Canadian Real Estate Association, we

use the same agency – kind of buyer-seller dual-agency language right across the

country. What's nice about the legislation is that it will bring that same level

of responsibility to everybody who's licensed.

MR. PETTEN:

It's interesting, as you

say. Those groups I remember because I was on the Committee the last go around;

I remember this conversation. Wouldn't it be important or wouldn't it be worth

considering having everybody make it mandatory to be part of this association?

It's

not unlike many other groups in the province. It keeps the regulations tight and

it protects the consumer, which is, again, the most important thing that we try

to protect. You're trying to protect everyone's interests. If you have this

group that are not really holding to any association rules, they're separate

entities, so it brings –

MR. STIRLING:

Yeah and that's the model in New Brunswick.

In New

Brunswick they actually have two pieces of legislation: They have the equivalent

of the Trading Act,

but they also have the New

Brunswick Real Estate Association act. It requires that everybody who is

licensed be a member of the association. Then the association takes on a

co-regulator kind of role, particularly around education and Realtor Code

enforcement.

We had

some discussion about that when we were putting together our recommendations.

Our board of directors and our membership felt that membership should be an

option, it should be a choice. Members join us because we have a value

proposition and we offer services that help support them in their career. We

felt at this point that we wouldn't – we can have a discussion with the

regulator about that sort of mandatory membership, but at this point we weren't

comfortable in recommending that because it fundamentally changes the nature of

our association.

As an

industry association we want members to be members of ours because they choose

to be, because there's a value proposition and we provide services and they're

engaged in (inaudible). If everybody is a member because they have to be, that

changes the perspective, changes the language, changes the interaction we have

with our membership as well, and we weren't prepared to go there right yet. Now,

whether we get there five years from now, it could be an option.

already have a mandatory education program that we deliver online throughout the

province. We have members in Lab City and we have members in Goose Bay who do

our online education program. We'd be interested in having a discussion with the

department about having our educational offering qualify as part of the required

professional development, or we could offer training to non-licensees and that

might achieve the same thing.

licensees, who are not members of ours, have to do our education program, have

to use our E and O insurance, they may choose to join us, but then it's them

choosing as opposed to us dictating. I think that was the same answer I gave you

last time.

MS. COFFIN:

Can I jump in?

Education; I'm always interested in education. How are the programs working

right now? I know very little about the licensing part. I know that you're

licensed with the province.

MR. STIRLING:

Yes.

MS. COFFIN:

Your programming – I guess you're licensed with the province, so you have to

write a standardized test and that standardized test is, of course, regulated by

the province. Does that sit under AESL do you know?

MR. STIRLING:

No, it doesn't. It's a curriculum that was developed through Service NL. All of

the regulators across the country collaborated. It's sort of a common curriculum

right across the country for all pre-licence training in terms of the basic

fundamentals of real estate we call it. Other jurisdictions have other courses

you also have to do to get a licence. Ours is probably the easiest place in the

country to get your licence.

deliver that training; it costs $1,500 plus HST. We send you a kit and we send

you the books. When you're ready, you let us know and you can write the exam at

the College of the North Atlantic in a number of locations around the province.

It's an

old way of delivering educational materials. We would like to see that all

delivered online. I think that's something that we will move forward with, with

the department, once we get through the rollout of the legislation. I think

that's one way they're interested in modernizing education delivery.

There

are two courses. There's a salespersons course and there's a broker's course.

You sign up with us; we send you the package of information. When you're ready,

you write the exam. Then you go talk to a broker about getting licensed.

MS. COFFIN:

Okay.

I'm

just wondering about the mechanisms for who establishes the program. You are the

conduit. If I wanted to be a real estate agent tomorrow, I need to come to you

and you would set me up in the program, but I don't have to be a member of

yours.

MR. STIRLING:

No, that's right.

MS. COFFIN:

Okay, and then, if I pass my

exams and everything works well, I get my licence. I could become a member or I

can operate independently.

MR. STIRLING:

Yeah, that's right.

MS. COFFIN:

Okay, that's quite

reasonable.

The

curriculum now – there's going to be a fair bit of work involved with putting

all of your materials on – well, you can put a PDF on and say good luck –

MR. STIRLING:

Yes.

MS. COFFIN:

– but it's a different beast to develop a course, which is being offered online,

compared to the materials are online and good luck to you, your exam is in six

weeks.

MR. STIRLING:

Yeah.

MS. COFFIN:

How do you envision that?

Are you thinking about making it a course online, or kind of similar to what you

get right now of: Here are your materials and good luck, Sir?

MR. STIRLING:

Taking the existing stuff

and making that available so that we don't have to print off a binder that big –

MS. COFFIN:

Yeah.

MR. STIRLING:

– and put it in the mail –

MS. COFFIN:

Right.

MR. STIRLING:

– is one way of at least moving in the right direction.

MS. COFFIN:

Right.

MR. STIRLING:

But, again, there are best

practices in other jurisdictions across the country. We have our own learning

management system, our own platform that our members do training on. We could

make it available, certainly, through that, through a series of modules or

whatever.

We had

made some recommendations around there being sort of an introductory course, so

here's what you're getting yourself into in the real estate industry, and then

do a second course that's more sort of the fundamentals of what you need to

know.

One of

the challenges that we've seen in our industry in the last – well, I guess going

back many years now, there's a lot of people who look at our industry as a

career choice, as a career opportunity; they think they're going to make a lot

of money real quick. It's not real expensive to get your licence. It's not a

real high height bar in terms of educational requirements, so they get their

licence and then they realize, geez, I might not make any money in my first

year, and in their second year they might make two or three sales, right.

So, we

get a lot of churn, we get a lot of people come into the business for a year or

two. It's not the panacea they think it's going to be and they get out again.

One of

the things that our members have said loud and clear during our consultations

was maybe we should weed those people out before they actually make the

commitment to join the industry, because once you're in, you've kind of invested

all of that time and money and you owe it to yourself to at least give it a try.

If we

had an introductory course that might be $500 or $600 as opposed to $1,500,

where, at the end of that, they might realize just what they're getting

themselves into, might eliminate some of that churn, might eliminate people who

get into the business and it's not the right career for them.

MS. COFFIN:

I totally understand that.

I've seen so many people take courses and go: This is not what I'm supposed to

do. Part of that is life.

MR. STIRLING:

Yeah.

MS. COFFIN:

But it's also good because I

can see why you want to do that introduction of this is what your life is going

to be like. You want to help people make better life choices, which is

excellent.

terms of numbers, how many members do you have? How many relators are there? I

guess, your relators in total, numbers who are your association and give me some

sense of how many you see running through in the course of a year.

MR. STIRLING:

Just a little bit of

trademark protection. Relator is actually a trademark of the Canadian Real

Estate Association so anybody who is a member of ours or the Canadian Real

Estate Association is actually a relator. They're the only ones allowed to use

that term.

MS. COFFIN:

Okay.

MR. STIRLING:

However, just like escalator and Kleenex, it's kind of become a little bit of a

catch-all kind of phrase. So, there's probably, I haven't looked at the numbers

this week, but there are probably close on 700 licensees in the province and we

have about 650 of those as members of ours.

MS. COFFIN:

Okay, interesting.

MR. STIRLING:

There's really only one

significant brokerage in the province that's not a member of ours and that's a

company in Labrador City. Most of the brokerages around that are doing

residential real estate would be members of ours because they want to

participate in the MLS system.

Most of

the brokers that are not members of ours would be some of the larger commercial

companies who don't need our services, and a few restricted or a few people who

are doing construction and construction of new home sales. They might do a

subdivision and sell the properties directly to consumers so they don't need our

services, but we have about 650 members and there are probably close to 700

licensees in the province.

MS. COFFIN:

Interesting, thank you.

CHAIR:

Any further questions?

MR. O'DRISCOLL:

When it comes to the MLS

numbers, that's going to help you with the legislation in regard to advertising

on Facebook compared to the other avenues that you have?

MR. STIRLING:

No, there's nothing specifically in the legislation that would apply to our MLS

system. Our recommendations around that were more, as I was saying earlier,

about clarifying the rules around advertising as opposed to anything that would

regulate our MLS system.

MR. O'DRISCOLL:

Okay.

CHAIR:

MHA Stoodley.

MS. STOODLEY:

In your recommendations,

again, you talked about dual agency, and you mentioned that already. You

mentioned that this definition needs to be clarified so that it mirrors the rest

of the country and refers to one individual and not everyone in the brokerage.

MR. STIRLING:

Yes.

MS. STOODLEY:

I know that dual agency is

not a definition in the legislation. I'm just wondering if that's been handled,

or are your concerns there handled or are there still any outstanding.

MR. STIRLING:

A lot of that detail, I think, will be in the regulations, which are still yet

to be developed, and in the code of conduct that comes out of that. We have our

definitions of agency.

What

we're referring to specifically in that recommendation is under our current act,

the broker – and the broker might have 70 salespeople – is the agent under our

current legislation. So that means that if I have my house listed with ABC

company and they have 70 agents, I might have it listed with one particular

agent, but everybody in that office would be considered a dual agent under our

current legislation because the broker is the agent. The rest of the country

doesn't see it that way.

So,

because, for the most part, agents are self-employed, independent contractors,

the rest of the country views dual agency as attached to that individual, so

that one individual representing both sides as opposed to two people in the same

office.

MS. STOODLEY:

I should've asked this, I

guess, when we had the staff in this morning, but do you know if that's covered

in the new proposed legislation, changing the definition? Or will it still be

two salespeople within the same brokerage, will they still be considered …?

MR. STIRLING:

The legislation itself is

pretty well silent on agency.

MS. STOODLEY:

Oh, okay.

MR. STIRLING:

It doesn't refer to it at

all. I think that will be in the regulations and in the code of conduct.

The key

with dual agency is making sure the consumers are fully aware. The code of

conduct and the regulations, I would expect, would be where you would see the

requirements around disclosure of those kinds of relationships. We haven't seen

the regulations yet. I don't know where the department is in terms of drafting

those. We haven't been a part of that.

MS. STOODLEY:

Thank you.

CHAIR:

No further questions?

Anything else that you'd like to add?

MR. STIRLING:

I don't think so. I know I

was listening to the stream this morning and, MHA Coffin, you were asking

questions around how the professional development could roll out. We're curious

about that as well.

I would

like to see us working closely with the department. We do have a learning

management platform that our members use; we have professional development

materials that our members have to do on a regular basis. That's not sales

training, that's not how to do an open house, that's things like economic

forecasting, legal issues, how to better protect your client, those sorts of

things. It's more about truly professional development than how to make more

money. We see that as the broker's role.

We'd

like to continue the kind of partnership that we have now around the pre-licence

training. We'd like to see that as well with the professional development

program for licensees as well.

I don't

think there's anything else we'd want to add. Thank you again for the

opportunity. If there is anything else that we can provide in terms of clarity

or more information, just let us know and we'll make it available.

CHAIR:

Okay, thank you very much –

MR. STIRLING:

Thank you.

CHAIR:

– to our Committee, of

course, and to you guys.

On that

note, I guess we will conclude.

Thank

you.

Recess

The

Committee resumed at 1:30 p.m. in the Assembly Chamber.

CHAIR:

If we're all ready, we'll

get started.

Welcome

back to the public hearings of the Government Services Committee on its review

of the draft bill, Real Estate Trading

Act , 2019.

This

afternoon the Committee will hear in-person submissions from members of the

public. As indicated in our press release of September 4, 2019, those wishing to

present to the Committee were required to pre-register via email by Thursday,

September 12.

Following the deadline, there was one individual who indicated an intention to

appear before the Committee today, Mr. Ted Whelan. Welcome.

The

Committee is also accepting written submissions from the public until Friday,

September 20. Those can be submitted via email to HOAGovServicesComm@gov.nl.ca.

Mr.

Whelan will have 10 minutes to present, followed by five minutes of questions

from the Committee. For the purposes of recording audio and Hansard, please

state your name each time you speak.

On that

note, I'll have the Committee introduce themselves.

MS. COFFIN:

Alison Coffin, MHA, St. John's East - Quidi Vidi.

MR. BENNETT:

Derek Bennett, MHA, Lewisporte - Twillingate

MS. STOODLEY:

Sarah Stoodley, MHA, Mount

Scio.

MR. O'DRISCOLL:

Loyola O'Driscoll,

Ferryland.

MR. PETTEN:

Barry Petten, MHA,

Conception Bay South.

MR. WHELAN:

Ted Whelan.

CHAIR:

I'm Pam Parsons, Chair, and

MHA for Harbour Grace - Port de Grave.

Mr.

Whelan, we're ready for you.

MR. WHELAN:

Thank you very much, first of all.

mentioned before, my name is Ted Whelan; I'm a realtor with Royal LePage Vision

and a member of the Newfoundland Association of Realtors. I've also been a

mortgage broker with Dominion Lending Centres for the past 10 years. Previous to

that, I held several roles with HSBC Finance, which was then HSBC Canada. One of

my roles with HSBC was branch manager where I worked closely with the national

regulatory and compliance departments for HSBC.

reason for being here today is to relate some of the concerns I have regarding

some of the recommendations proposed to the

Real Estate Trading Act ,

specifically, one recommendation made in regard to providing both mortgage

broker services and real estate services to the same client on the same

transaction. I feel my experience in operating on both sides of this industry

gives me a unique perspective and insight on potential conflict of interest or

lack thereof. My concern with these recommendations is they were made with

insufficient education and understanding of the mortgage broker industry, and

the level of due diligence that the lenders and banks hold mortgage brokers to,

as well as the high level of regulatory oversight that both banks and lenders

face from the federal government.

Our job

as mortgage brokers is to know lenders' policies, products and procedures, then,

based on that knowledge, find the best product and interest rate for our

clients. Our level of commitment, the relationship and fiduciary duty to our

clients, does not reduce at any point in time. All the underwriting, due

diligence, support documentation review and sign-off is done first by the

mortgage broker, then by the bank or lender and finally is subject to audit by

various federal agencies, all of which report to the Minister of Finance.

As a

mortgage broker, our job starts with an application. Its details include

demographic information, employment information, credit history, net-worth

information and source of our client's down payment. The application is

submitted to a bank or mortgage lender for approval. It is the underwriting

department that reviews the information and either approves or declines, based

on their own policies.

Similar

to a lawyer, we get to plead our case and provide evidence, but it's the bank's

underwriter who gets to make the decision. Mortgage brokers do not have the

ability to approve a mortgage application. Assuming an application is approved,

the next step is to provide the support documentation that the lender has

requested. Most of the time this includes: a letter of employment, recent pay

stub, tax returns, it could be notice of assessments, T1 Generals, maybe

financial statements for a client's corporation. As mortgage brokers, we provide

what it is a lender has requested and they fully verify these documents. Again,

we have no power to approve the actual application, and the bank reviews in

detail all documents that we've submitted.

The

banks are then subject to supervision from the Financial Institutions

Supervisory Committee, the Bank of Canada, the Office of the Superintendent of

Financial Institutions and the Financial Consumer Agency of Canada. All these

agencies report to the Minister of Finance. In other words, the mortgage

industry is heavily regulated with the federal government.

When it

comes to this area of concern, this specific concern regarding one individual

providing mortgage broker services and real estate services to the same client,

my understanding is that both Service NL and NLAR assume that there is a

potential for conflict of interest. Service NL's consultation questionnaire

filed that question, actually, under the topic of conflict of interest, and both

of NLAR's proposed solutions still assume that there is a conflict of interest.

The

problem here is that there is no conflict of interest. I've spoken to dozens of

realtors and mortgage brokers, and we've failed to conceive of any situation

where the possibility of a conflict would exist, or where restricting the

individual's ability to provide both mortgage and real estate services would be

better served or better protect the general public.

When

one person is providing both real estate services and mortgage broker services

to the same client on the same transaction, there still is only one client. My

fiduciary duty to my client never diminishes. My duty to provide the best expert

advice never diminishes. The duty to provide professional guidance never

diminishes and my responsibility and ability to do that as a realtor is not

diminished by acting as the client's mortgage broker. I'm simply providing two

different services with the utmost care to the same individual.

In one

role, I want to ensure that the client gets the best price when buying or

selling their property, and in one role I want to ensure that the client gets

the best mortgage product and interest rate for their purchase. When building a

house, your painter and your plasterer can be the same person. Chances are when

you bought your car from a dealership, more likely than not you got the vehicle

financing from that same dealership.

I'd go

so far as to argue that being able to provide both services to my client

empowers the client and leaves them better educated about the transaction;

better protects them from financial difficulty in that I fully understand their

financial situation and I'm better able to advise them on their real estate

transactions; and helps them to avoid financial missteps by better understanding

their mortgage and their market.

I agree

with Minister Gambin-Walsh, buying and selling a home is perhaps the largest

transaction a person will make in their life and it's imperative that we have

legislation that protects consumers. If I'm a member of the general public, I

want a realtor who's fully versed on my financial situation and well educated on

what impact the financing of that purchase could have on the well-being of my

family. I understand NLAR has learned some painful lessons recently, and I agree

with Mr. Stirling that we do need stronger accountability and I agree with most

of the proposed legislation. Unfortunately, this particular point of the

proposed legislation is a great solution to a problem that simply doesn't exist.

unnecessarily reduces consumer choice and only helps to further mystify the

process of buying or selling a home to the general public. In no way does it

provide additional protection to Newfoundlanders and Labradorians looking to

make, what will likely be, the largest and most significant investment.

The

ability to provide both real estate and mortgage broker services has been

approved by all major banks and lenders in the broker channel. These

institutions are not known for taking unnecessary risk and, as highlighted

earlier, they are heavily regulated at the federal level.

closing, I understand that the government and NLAR's intention is to protect

Newfoundlanders and Labradorians but this is protecting them from something that

doesn't exist. It will only provide unnecessary limitations to the level of

guidance and expert advice that we, as industry professionals, can provide while

reducing customer choice and further complicating an already intimidating and

overwhelming process to the general public.

Thank

you.

CHAIR:

Thank you.

Okay,

now, we'll move to our Committee. Are there any questions?

Ms.

Coffin.

MS. COFFIN:

A couple of quick questions

here. I completely understand where you're coming from and I understand the

separation of the two services. I'm trying to get my head around why the

association would make a slightly different recommendation.

I guess

they're concerned about manipulation of the process if you are involved in both.

I understand the regulations around mortgages, but a couple of things you

touched on were: What would be the payments from both services? Would those both

be a percentage of the value of the mortgage and/or the sale of a house?

MR. WHELAN:

Yes, that is correct.

MS. COFFIN:

Okay. So the relationship

between the mortgage and the house I guess would be – and I'm not saying you do

this, but is there any incentive for a mortgage broker, knowing the finances of

individuals, to maybe manipulate, like if I know you can afford a house that's

$500,000 versus you're only looking at something that's $300,000, and this would

still perhaps happen if you weren't a broker. If you were a broker, would there

be any potential for manipulation saying, well, I know you can afford $500,000

so let's go look at $500,000 houses? Would there be any incentive on the part of

an individual in this situation to do that type of thing?

I guess

then the secondary question would be: What possibility exists for a manipulation

within that? Not saying that you do that, we're just being prudent about it.

MR. WHELAN:

When the banks look at you

for approval, they basically look at two things: They look at your ability to

pay and your willingness to pay.

MS. COFFIN:

Yes.

MR. WHELAN:

Your willingness to pay is

your credit score, how you paid things in the past. That's of your own control.

Your ability to pay is just straight math. It is two ratios they look at: Your

gross debt-to-service ratio and your total debt-to-service ratio. Those you

can't manipulate. You have a certain level of debt; you have a certain level of

income. The banks will allow 42 per cent of your gross income to go towards

covering off those debts and that's it. I'd like to be able to manipulate math

sometimes, but, unfortunately, math is math.

MS. COFFIN:

Yeah.

MR. WHELAN:

When it comes to what the

banks will usually approve a client for, I find myself more often than not

talking them back from what the bank will do. The bank will oftentimes let you

go a little further than maybe you should and if you're depending on things that

are outside the application, if you're a young couple and you're planning on

more kids in the future, those are going to be life-changing events that the

bank doesn't look at and doesn't understand.

They

may say, yeah, we'll approve you for $500,000, but my conversation with my

client is going to be what's your plan for the future? Are you planning more

kids? Are you taking another job? What's going to be those factors that apply

later? Maybe we should look at $420,000; maybe we should look at $380,000 and

kind of roll it back from there.

My duty

to my client is not just one transaction and out the door. In this industry,

it's your repeat clientele that pays the bills, so you want to make sure you

have a long-lasting relationship with these people.

MS. COFFIN:

Okay, that's great.

Can I

have one more question?

MR. WHELAN:

Sure.

MS. COFFIN:

How many people are in the

same situation as you where they have these dual roles or dual abilities? Are

there many?

MR. WHELAN:

I think the answer is Ted

Whelan. I'm pretty sure I'm the only one. There's a handful around, I think, who

have done it in the past. There's a gentleman in the Carbonear area, actually,

who does both, but is finding the mortgage side of it more and more difficult.

concern with stuff like that is I do a fair bit of this in the Harbour Grace

area as well and there's not a lot of mortgage brokers out there, so people

don't have a lot of choice. So, now, if I have somebody who I've developed a

relationship with over the years, they want me to list their house or help them

with the purchase of their house, now I can't help them on what I've done best

my entire career and why they trust me and why they've contacted me to begin

with.

MS. COFFIN:

Right.

MR. WHELAN:

No, I don't think it's a big

problem. I'm pretty sure I'm the only person who truly does it. There are a few

other realtors who are in and out of it. I mentioned Al Stacey in Carbonear. I

think there is an individual with their real estate broker licence who is also a

mortgage broker, but I don't think he does any sales on the real estate side.

MS. COFFIN:

Okay.

Can I

have one more?

sounds to me as if the recommendations that came out of the Volume I was based

on best practices and it doesn't seem to reflect what you're saying is the

situation here. Is there a way that we can perhaps adapt, maybe, the regulation

or what we're talking about in the legislation? Do you see a way where we can

eliminate any potential for a conflict of interest? Because upfront you'll say I

can do this and do this, instead of saying I can do this and my wife, child or

good friend can do this other thing. So, even just disclosure would address

that.

Do you

think that would be a reasonable thing? Maybe some of the mechanisms that

they've proposed where you can't have a conflict of interest, like you can't

represent both buyer and seller. There is another fix around this that would not

be unnecessarily punitive to you and others in your situation.

MR. WHELAN:

Yes, that's correct. I keep drawings parallels from the dual-agency situation on

the real estate side. There is actually a disclosure designed just for that

purpose.

MS. COFFIN:

Right.

MR. WHELAN:

I guess it's just both sides signing and saying that you know that your agent is

representing both the purchaser and the seller in a given situation. I think

something like could set everybody's mind at ease a little bit. Again, I don't

think this is a huge problem. I'm pretty sure I'm the only person doing it.

So yes,

I'm open to other suggestions from NLAR as well.

MS. COFFIN:

Okay, good.

Thank

you.

CHAIR:

Mr. Petten.

MR. PETTEN:

Ted, did you say you don't

know of any more people at that same thing you're doing, is that what you're

saying? Are you the only person in this boat?

MR. WHELAN:

Yes, I believe I am. I know there was another real estate agent who was doing

this, but I think his daughter now runs his mortgage business and I don't think

he has any direct ties to it. There are some other brokers who I think own

mortgage brokerage franchises, but I think I'm the only dual agent, we'll say.

MR. PETTEN:

Interesting.

Now,

I'm listening, there's no doubt, at face value I take your word on it. I guess

in your case I have no reason not to believe you, you're above board, but some

of this legislation has prevented it because not everyone will carry the same

principle and it won't be as principled. It's like everything.

Alison's point, during these consultations, it is best practices and there was

feedback from both, with the public consultations and whatnot, so obviously,

there was a concern raised by one group or another to make this dual-agent

issue. Obviously, someone made this an issue for it to be in this legislation. I

guess that's where I am kind of in my mind. I'm thinking if there are not many

of you doing it, then why is this an issue? Obviously, it's an issue because

it's in the legislation, so you know where I'm trying to …

MR. WHELAN:

Yeah.

MR. PETTEN:

It seems a bit muddy to me.

I don't know if you can clarify it or pass your views.

MR. WHELAN:

Yeah, so my understanding is

that this issue did come up during the public consultations. I'm happy to say

that they were between January 22 and February 8 of 2018 and I got my licence in

May of 2018, so it wouldn't be directly tied to myself.

theory is that the questionnaire that was given out – the question was a little

leading in my opinion. I don't have the actual wording for the question but I

had the description of the question from Service NL. It said something to the

effect of when asked if customers were being harmed by practices where there was

a potential for a conflict of interest, 62 per cent of people responded yes. If

there's a potential for a conflict of interest, I think the answer should have

been 100 per cent of people say yes. No one wants to put themselves in some sort

of conflict of interest.

I have

talked to NLAR a little bit about this as well but, again, because I came along

so late in the process, the public consultations had already happened. I didn't

have much of a voice at that point in time to shoot holes in those theories.

Really, I don't know where it came from but, yeah, it's been floating around

there a little bit.

CHAIR:

Ms. Stoodley.

MS. STOODLEY:

I'm just curious, do you

also sell those customers home insurance or do you offer to be their insurance

broker as well.

MR. WHELAN:

No.

MS. STOODLEY:

No, okay.

In a

former life of mine, I worked very closely with insurance and mortgage broker

deals, actually, so I guess I just have a huge appreciation for how legally

complex the Canadian financial services industry is. You have the

Bank Act and these big, monstrous,

really strong pieces of legislation that is like this huge financial services

framework, so I'm just not sure that we can have an educated discussion on this.

I take

your point. It must be very frustrating for yourself, as a mortgage broker and a

real estate agent, where this legislation is going to change the amount of money

you have in your pocket at the end of the year and it's going to change your

business. We'll have to take it away.

Anyway,

thank you very much. I do have a strong appreciation for how complex the

legislation is around some of this, federally and provincially. It's just a very

complex thing.

Thank

you.

MR. WHELAN:

I understand the complexity

of it, certainly. My concern is that because I came along so late in the process

that I won't be able to change the direction of the ship, but I do feel not just

for my own personal benefit but for the benefit of Newfoundlanders and

Labradorians who are looking to purchase – I talked about the situation in

Harbour Grace where there's not a lot of choice in the way of mortgage brokers,

so we're reducing that.

When it

comes to the fact that I'm also a realtor, I still fall under what Mr. Stirling

talked about earlier, the Code of Ethics that will still apply, whether I'm in

real estate or a mortgage broker. I keep drawing parallels between what I do and

dual agency. The difference with the two and how I feel that sort of establishes

the standard of care, if dual agency is okay, why isn't this? Dual agency where

I can represent two people in – and as NLAR says in their training manual an

impossible situation where you're representing both the buyer and a seller in a

fiduciary duty. How can you represent both of them when they have opposing

positions on a topic?

For

what I do as a mortgage broker and a real estate agent, there are no opposing

views. It's one client. I don't have to worry about anyone else's issues. It's I

want to get my client the best purchase price for the property and the best

mortgage interest rate for their purchase.

CHAIR:

Mr. O'Driscoll go first and

then –

MR. O'DRISCOLL:

No, I appreciate, as a car

salesman myself, we would represent the customer and do the financing as well.

So I know building a trust relationship is what it's all about and that will get

you referrals and get your side of that story for sure. I certainly wish you

good luck with it.

MR. WHELAN:

I appreciate that.

MR. BENNETT:

Ted, you mentioned that you

had a few meetings. You came in after a lot of this consultation process was

done. You said you did have some meetings with NLAR. Are they open to the idea?

What was the conversation or feedback back and forth? Is it something they feel

that we can work together with to be able to accommodate? Or are they steadfast,

no, this is something they feel would be negative towards the legislation?

MR. WHELAN:

When I came on it had

already hit, I think, the first and maybe second reading in the House at that

point in time. I contacted my MHA and the Minister of Service NL at the time. I

didn't contact NLAR at that time because the recommendations had already been

submitted.

Since

the bill died on the floor after the last sitting, I think this last Thursday

was the first notification that we knew there was going to be another public

hearing. So I did reach out to NLAR earlier this week and was unable to have a

real good conversation with them. I did sort of ambush Bill Stirling in the

lobby here earlier this morning and we had a quick conversation.

Nothing

against Mr. Stirling, I think he's great and his leadership has been great for

our association, but the lack of education is certainly there. He's not a

mortgage broker; he doesn't understand that side of the business and what we do

and the oversight that we go through.

I think

he'd be willing to talk about some solutions, for sure. I think, as Alison

mentioned earlier, the disclosure might be a great idea, because if all it takes

for a dual-agency situation to be okay and the standard of care to be met, is

that disclosure needs to be signed, then I feel like the risk for any sort of

conflict of interest is so much less in what I do, that disclosure statement

should be more than enough. It's a suggestion we could certainly make.

MR. BENNETT:

No, I definitely appreciate where you're coming from on it. I think it's

something we definitely can take back for review.

MR. WHELAN:

Okay.

CHAIR:

Thank you.

Mr.

Petten.

MR. PETTEN:

Yes, Ted, I want to thank you as well. It's put a different perspective than

what I think we had as a Committee. This is my second go, though, because I was

on the previous Committee prior to the election in May. It's been twice I went

through the same presentation, but it's different.

One

question – and I know you probably already said it – the services you provide to

the buyer, you're providing the mortgage services and realty, like selling the

home. What about inspection? What about all those other – surveys, like all

those other added features? Do you have any input into that to the buyer? If I

go to deal with you to get a house, are you going to be the one-stop shop for

everything, or is it just the financing and the actual sale?

MR. WHELAN:

I thought about going back to school and getting my law licence but no, it's

just –

MR. PETTEN:

That's all that's missing, and the lawyer's fee.

MR. WHELAN:

Real estate and mortgage broker is it. When it comes to the home inspection,

appraisals, all that stuff, we can make recommendations of professionals who we

value in the industry, industry professionals, but no, that is not something we

do.

MR. PETTEN: I'm

not saying you do it but you'd offer a suggestion, like Alison Coffin does great

surveys. Do you know what I mean, just referrals.

Some way of thinking, if you want to try to minimize

directing or just keeping everything, you could offer a list of inspectors, a

list of reputable surveys as a – so save me or anyone from going to the Yellow

Pages or going online or whatever you want to do, right? I mean mostly online

now, of course, but just the point of not leading into your own little empire.

I think that's something that I know has been discussed. I

know last time around it was discussed, the one-stop shopping. It was a little

bit alluded to – less this time than it was last time, actually – about one

realtor dealing with everything. I think if my memory serves me right, that came

up a lot in our first go in

April when we had Committee meetings on it and there was a lot of discussion

about the realtor controlling everything. Maybe that's where this all evolved

into, where we're to today. Maybe it was more on the department side, more so

than the NLAR.

No, I

do appreciate it. It gives me a different perspective, too. I get where you're

coming from, I really do.

Thanks.

MR. WHELAN:

Yes, I get what you're saying about referring home inspectors and appraisers and

what not. The best practice that I think NLAR has kind of suggested that you do

give a list. The reality of the situation is that this is a small province.

There are not a lot of people out there who do these jobs. I have been around

for a while and you get to know who's good at their job and who's not so good at

their job. So, while you could paint this as I want to keep it to my group of

people, but, really, those group of people – there's a high level of service

that I expect from those people.

So,

yes, I do make one or two recommendations on a home inspector, but I've used

them on multiple, multiple occasions. Same thing with lawyers, I know that they

can deliver a level of service and guidance to, especially, first-time home

buyers, that's decent for sure.

CHAIR:

Thank you.

Any

further questions from our Committee?

Okay,

Ms. Stoodley.

MS. STOODLEY:

So the real estate association or your company that you're associated with or

the mortgage broker association, neither of them have concerns that you're doing

both, or they're all fully aware and okay with that?

MR. WHELAN:

Yes, that's correct.

MS. STOODLEY:

Okay.

MR. WHELAN:

My real estate brokerage, I had a lengthy conversation with him before I

started. He had no issue with it.

Where

the problem would've or could've laid is with the lenders. I work for an

independent brokerage, Dominion Lending Centres, but the lenders that we use – I

think there are 90 of them across the country, we don't use that many, but most

of the big banks are there as well. If they don't want to use you because you're

a realtor, then obviously you're not going to do a whole lot of business because

you don't have many lenders to use.

So, no,

they've all approved it. There are a load of people in Ontario who do this. The

only stipulation is most want you to disclose upfront when you submit the

application to the lender that you will be acting as both the realtor and the

mortgage broker.

MS. STOODLEY:

Okay, thank you.

CHAIR:

Mr. Petten.

MR. PETTEN:

That triggered one question when you came back that time, Ted.

How

many other provinces allow what you do? You said Ontario, so do you know how

many other provinces across Canada allow the same thing you're – the dual

representatives?

MR. WHELAN:

It's a little tougher to find out than I thought it was going to be. I do know

that Ontario – and this comes from most of the lenders that I used when I first

started asking are other people across the country doing this. One of the

lenders that I use most said, yeah, we've got a dozen in Ontario for sure. I

know there's a couple in BC and Alberta. I don't know what the situation is with

the rest of Atlantic Canada.

The

problem we have on the mortgage broker side is that we're not a huge industry

and then especially in Atlantic Canada, we get even smaller and smaller. So,

right now, we're members of CMBA, Canadian Mortgage Brokers Association, but

then we don't even get a provincial

section of that, we get the Atlantic

Canadian

section of that. Out of those four provinces, we then have a one-person

director here in Newfoundland.

What

their stance is on it, I don't know, but, again, because there's not a whole lot

of us out there, you have to kick up an awful stink to get someone to give you

an answer.

MR. PETTEN:

Thanks.

CHAIR:

Okay, Mr. Bennett.

MR. BENNETT:

Ted, how long did you say

you've been practicing both as a relator and a broker? You started in May 2018?

MR. WHELAN:

Yes, May 4, 2018.

CHAIR:

Okay.

Any

further questions? Anything else you'd like to add?

MR. WHELAN:

No, thank you.

CHAIR:

Okay, well, on that note, I

thank you for coming and, of course, thanks to our Committee.

Thank

you.

motion, the Committee adjourned.