The recent Independent Advisory Group recommendation to amend the Contract of Purchase and Sale is offside. The recommendation reads as follows:
#6 - Government implement the changes it made to contracts used by licensees, requiring seller consent to contract assignments by the buyer, to all forms of contract for trades in real estate whether or not the contracts are prepared by licensees.
Why would the regulatory powers favour one voter and tax payer over another by skewing paperwork in their favour? If the intent is to bring the risk to the Seller's attention, then information pertaining to that should be included in the Information Page of the Contract of Purchase and Sale, not in the "fill in the blanks" contract of purchase and sale form prescribed by the BCREA and recommended by the Real Estate Council of BC.
While I appreciate that taking advantage of an unwitting Seller is problematic, putting the Buyer at a disadvantage isn't the answer. The additional clause reads as follows:
20 A: The Buyer and Seller agree that this contract: (a) must not be assigned without the written consent of the Seller and (b); the Seller is entitled to any profit resulting from the Assignment of the Contract by the Buyer or any subsequent assignee.
What happens when markets shift and Buyers are forced to assign contracts at a loss? If the parties are becoming some kind of partners in the transaction, in that the Seller automatically gets all the profits in the event of a lift, shouldn't there be some responsibility on the part of the Seller to participate a loss.
By including the wording in the body of the contract and suggesting a buyer can strike it out, automatically raising suspicions on the part of the Seller, the regulators are sitting squarely on the side of the Sellers... and that just isn't fair. Furthermore, Buyers hire REALTORS® to act as their Agents, the meaning of which is drummed into new licensees from the minute they sign up for the licensing course. An agents responsibility is to take care of their principal's interests as though they were there own. How is that possible when we automatically disadvantage a buyer by using a standard form which favours the Seller.
Oh, and if you wanted to go to the effort of preparing an unbiased contract for your Buyer, the Council has a new form which a Buyer's agent must provide to a Seller that outlines everything in the additional clauses above. Not doing so, even with the instructions of the Buyer, would leave the REALTORS® having to answer to regulators and face penalties.
This recommendation, in my opinion, was a hasty response to a challenging situation which winds up putting Buyers in a negative position. My suggestion would be to include the warning to Sellers in the Information Page where it belongs. The government should stay out of our bedrooms... and our contacts.