Ending real estate regulator dysfunction

Overview

A third party review, completed in late spring 2019, found significant concerns with the performance of the Real Estate Council of Alberta (RECA) and identified the need for urgent governance reform. It was the first formal review of the RECA conducted under the authority of the Real Estate Act since it was established in 1996.

To address this dysfunction:

• Real Estate Amendment Act, 2019 (Bill 15) came into force in October 2019 to address immediate performance concerns and enabled the transition to a more effective governance structure.
• Real Estate Amendment Act, 2020 (Bill 20) passed in June 2020 to restructure and refocus RECA with a mandate on licensing and regulating Alberta’s real estate sector – a continuation of action addressing severe problems with the council’s governance.

The amendments in these acts are supported by the recommendations of the review.

Key reforms

Real Estate Amendment Act, 2020 (Bill 20)

Bill 20 will restructure the RECA:

• The new structure would consist of a board of directors and four new industry councils:
  • residential real estate agents and brokers
  • commercial real estate agents and brokers, and commercial property managers
  • mortgage brokers
  • residential property managers and condominium managers
• These new industry councils would identify and address emerging issues in the real estate sector, setting standards and rules and determining licensing requirements.
• The board of directors would oversee the RECA’s strategic direction and operations of the organization, and help coordinate the industry councils.

Bill 20 will also:

• remove services beyond the scope of the RECA’s newly focused mandate, including:
  • education
  • professional advice beyond regulatory information
  • promotion of the real estate industry
  • setting standards beyond the minimum for licensing and transactions
• end oversight of real estate appraisers, as they are already self-regulated through their own industry associations
• introduce new business and financial reporting requirements to improve the RECA’s transparency and accountability
• require mandatory governance training and dispute resolution procedures be established for all board of directors and industry council members to improve the identification and resolution of issues
• create improved intervention measures allowing the minister to ensure the RECA meets its commitments and performs its duties

Real Estate Amendment Act, 2019 (Bill 15)

The Real Estate Amendment Act 2019 allowed measures to stabilize the RECA's governance, including:

• dismissing the current council members
• enabling the Minister of Service Alberta to appoint an official administrator to provide direction and oversee the RECA’s affairs and continue its critical functions such as hearing and appeals processes
• enabling the transition to a new council

Next steps

• Bill 20 received royal assent on June 17, 2020 and will take effect upon proclamation.
• The real estate industries will elect representatives to the industry councils. We will work with industry members to support representative elections and continue working with RECA and industry stakeholders to ensure a smooth transition.
• A process will be established to make public member appointments to each industry council and the board.

RECA review

Summer 2018

• A preliminary assessment was conducted by an independent consultant following significant complaints about the RECA’s leadership to the Minister of Service Alberta.

• The consultant recommended a full review as authorized by the Real Estate Act.

January 2019

• A full review of the RECA’s governance and operations was started by KPMG.

June 2019

• The Governance Review found the council was not governing effectively, affecting its regulatory role and the confidence of industry.
• To reform governance of the RECA, the review recommended:
  • dismissing the current council as its issues were not expected to be resolved without changing the current roster of council members
  • considering amendments to the Real Estate Act that would improve governance, such as potentially increasing public representation on the council

October 2019

• The Real Estate Amendment Act, 2019 was introduced and passed.

November 2019

• An interim administrator was appointed to continue the RECA’s critical governance functions and ensure continuation of day-to-day activities such as licensing, education and evaluation of professional conduct.

November 2019 to January 2020

• Meetings were held with stakeholders to discuss further governance-related amendments to the Real Estate Act.

News

• Building a better real estate regulator (June 3, 2020)
• Administrator appointed to real estate regulator (November 8, 2019)
• Ending real estate regulator dysfunction (October 9, 2019)