The provincial government will announce details on Tuesday about how it intends to crack down on so-called "shadow-flipping" in the hot Vancouver real estate market.
A government source confirmed Finance Minister Mike de Jong will roll out specifics on new rules the Premier promised in March, after a Globe and Mail investigation that exposed the practice.
"The minister will be providing an update on how government is proceeding to implement the Premier's commitments though revised regulations," the source said.
In the typical shadow flip, a real estate buyer assigns – sells – a sales contract to another buyer or buyers in the period before the deal with the original seller closes. At completion, the end buyer pays more for the property than the initial seller receives. The difference (profit) is shared between the middlemen who arranged the deal, sometimes including real estate agents.
In March, Premier Christy Clark called the practice "greedy" and said her government would bring in new rules requiring the permission of the seller for any contract assignment arranged by a realtor. She said the seller should also receive all profits from any price increases.
"The shady practice we have seen around shadow flipping in Vancouver we all know has been driven by greed – pure, naked greed – and the way to end that shady practice for greedy people is take the profit out of it. That's how we know we'll be able to make a difference in what's going on," Ms. Clark said in March.
The details of the new regulations were not clear at the time of that announcement, but Ms. Clark indicated real estate agents who did not abide by the new rules would face serious penalties.
Many B.C. residents were outraged to learn homes were being flipped at the sellers' expense, even before their contracts closed.