Auctioneers have a limited exemption to the Real Estate act

Thu, 07 May 2009 22:31:22 GMT

At the 2009 Auctioneer's Association of British Columbia’s Annual Conference & Meeting, I said I'd look into clarifying what an auctioneer is permitted to do when it comes to selling real estate.

The Real Estate Act is a series of laws created by government in order to protect members of the general public when it comes to trading the interest in real property. An auctioneer has a limited exemption from this act. In order to explain what an auctioneer can and cannot do when it comes to selling homes, and land, I must first explain why these restrictions exist in BC. Once we understand the restrictions, as auctioneers, we can operate freely within them.

For many people the most valuable asset they own is real estate. The Real Estate Act requires that individuals, who offer trading services, meet a certain standard of reputation and education in order to protect the general public.

For example, imagine the following scenario: your car is not running properly and your neighbour tells you to replace the transmission which you have done. Later it turns out that the transmission was fine, only you were low on transmission fluid. It is unlikely that any court would find your neighbour liable and get him to pay bill, because it was only an opinion. Now if in the same scenario it was a mechanic that recommended changing the transmission, the courts would find that as a mechanic his opinion is viewed as expert advice and that a member of the general public is likely to be influenced by it, and therefore the mechanic may be found accountable for the unnecessary expenses. It is in the same capacity that the Real Estate Act was created. It is designed to prevent anyone involved in a real estate transaction to be in a position where a member of the general public would accept their opinion as expert opinion without that individual being licensed.

Furthermore, by requiring all transactions to follow the licensing rules, it provides further safeguards to protect the general public; all licensees must carry errors and omissions insurance.

An auctioneer can however operate within the scope of the Real Estate Act. There exists a similar provision made for accountants and lawyers who in the scope of their business deal with real estate. The provision simply states that the auctioneer can in no way indicate that he is licensed, make representations about the property, show the property, talk about the property or in any way influence the general public with regard to the property and its value.

"A limited exemption exists that permits auctioneers to provide trading services. An auctioneer is not, however, permitted to show the property, provide information relating to the property to a party to the trade, or receive deposits."

According to the Real Estate Act an auctioneer can sell the property and then have a lawyer create the contract of purchase and sale. There may be circumstances where that would be sufficient, although from a practical stand point you will most likely benefit from having a licensee at the sale. Getting the seller the best price for his/her property will probably require showing it, representing it, and answering questions about it. The only people who can make those representations are the owner or a licensee. Real estate is an investment, so an explanation of the market and an analysis of market trend should be given to prospective buyers.

The Real Estate Act was not created as an exclusive club that prevents auctioneers from selling property in the due course of their day to day operations, but as a safeguard to protect the public.

Auctioneers’ Association of BC: Real Estate Info

Auctioneers have a limited exemption to the Real Estate act