An eight-person panel will investigate “shadow flipping” in Metro Vancouver’s overheated real estate market and how the Real Estate Council of B.C. has handled concerns about misconduct by its members.
Shadow flipping is formally known as contract assigning – essentially, arranging a property sale and then finding a new buyer willing to pay more before the deal closes. The practice has been under scrutiny after a Globe and Mail investigation that detailed its use in the Vancouver housing market. In response, the Real Estate Council of B.C., the self-regulating body for the real estate industry, promised a review.
Carolyn Rogers, Superintendent of Real Estate, is leading the advisory group that also includes lawyers, a banker, an agent and the head of the BC Securities Commission. “These are independent thinkers from across a broad range of public and private organizations, with a clear understanding of good governance and the public interest,” Ms. Rogers said in a statement Monday.
The panel is expected to produce a final report by the end of May – extending the initial deadline set by the province. Premier Christy Clark demanded the Real Estate Council step in to address the dubious practice of shadow flipping. “If they don’t fix it, we’re going to fix it for them,” she told reporters two weeks ago. “And we’ll do it in short order, because what is happening in the housing market … in a lot of communities, it’s crazy.”
Last week, the province announced measures to collect more data about foreign ownership of real estate in response to concerns about the escalating cost of home ownership. But it has left the council to examine shadow flipping.
Because contract assignments happen before a property’s title changes hands, the provincial government could be losing out on hundreds of thousands of dollars that would normally be collected through the B.C. property transfer tax.
Joining Ms. Rogers on the panel are: Howard Kushner, lawyer with the Kushner Law Group; Don Wright, president and CEO of Central 1 Credit Union; Audrey Ho, commissioner with the B.C. Securities Commission; Bruce Woolley, lawyer with Stikeman Elliott; Carol Geurts, broker with Century 21 Veitch Realty; Tony Gioventu, executive director of the Condominium Home Owners Association of BC; and Ron Usher, general counsel for the Society of Notaries Public of British Columbia.
Editor’s note: An earlier version of this story incorrectly identified Audrey Ho as the commissioner of the B.C. Securities Commission. In fact, she is one of a number of commissioners for the agency.Report Typo/Error