In October 2021, I wrote “Conflicts of Interest: Sound Judgment Required,” a Legally Speaking article, where I reviewed many decisions and consent orders from the the Real Estate Council of BC (the regulator at that time, now the BC Financial Services Authority or “BCFSA”). I was assessing the type of penalties meted out generally, to find any common threads in cases receiving the harshest penalties.

My conclusion was:

“… the penalty for simple errors, as evidenced by reviewing discipline decisions and consent orders for the past year, is far exceeded by the penalty and sanctions for matters where a licensee puts themselves in a conflict placing their own interests ahead of their client, the industry, or the public (a looking glass into what the regulator likely values).

Conflicts of interest hurt clients and appear to be a source of higher sanctions from the regulator.

Put simply, clients come first. As a professional, your interests are always secondary.”

Even today, I couldn’t have said it better myself.

So what’s happened in the last 3+ years? Unfortunately, the more things change the more they stay the same.

To shed some light on recent rulings and reinforce the message of putting client interests first, I’ve identified three more examples of cases where agents put themselves and their own interests — and in some cases, their family’s interests — ahead of those of their client.

1. Buying a property out from underneath your buyer

In Zhong v. Hu, the court found the following in an unusual case:

• The agent agreed to help a buyer and located a property.
• The buyer made two offers for the property, neither of which were successful.
• In the same timeframe and while the agent was vacationing with a friend, that friend purchased the subject property, and then assigned the contract to the agent.
• Several years later, the agent sold the property for a profit of $1.2 million.

The court found that the buyer’s agent was in a conflict of interest and had breached his fiduciary duty to the buyer. The agent was ordered to disgorge all his profits and commissions earned.

This is a clear example of putting your own interests ahead of your client and the consequences of doing so.

2. Undue pressure to sell

BCFSA handed down a December 13, 2024 disciplinary decision in Jinnah (Re), 2024 BCSRE 51, followed by a decision on sanctions where the agent’s license was cancelled along with a $10,000 penalty and enforcement expenses levied of more than $67,000. It should be noted that some of the misconduct took place before the Real Estate Services Act was amended to increase discipline penalties, and accordingly, the pre-amendment penalties ($10,000 maximum) were applicable.

The regulator found that the agent had a personal relationship with the client during the transaction and failed to act in her best interest and make all appropriate disclosures. Further, he pressured the client to sell a property they would not otherwise have sold. The regulator condemned the agent’s behavior as predatory.

3. Using the client as your bank

In Rahil v. Chand, 2025 BCSC 106, the court dealt with a situation where an agent used money advanced for him to invest in properties on behalf of his clients to instead purchase property for himself. The court found this was a clear breach of fiduciary duty.

This case provides an excellent summary of the scope of fiduciary duties owed by an agent, which includes:

“a) To act loyally and transparently, in the best interests of the client;

b) To act in accordance with the instructions given and within the authority granted by client;

c) To maintain the confidentiality of information respecting the client;

d) To assiduously avoid a conflict of interest and to promptly disclose any that arise in the course of the fiduciary relationship; and

e) To make full and fair disclosure of all material circumstances and of everything the agent knows about the subject matter, including all facts within the agent’s knowledge which might affect the value of the property or the client’s decision.”

Assiduously, a great word, meaning working with great care and perseverance. Again, I couldn’t have said it better myself.

The court found there was a breach of these various duties in a myriad of ways. The court ordered a disgorgement of all profits and interest earned by the agent as well as punitive damages of $25,000. Punitive damages are rare and meant to express denunciation and deterrence.

Learning from the experiences of others, rather than the hard way

While all three of these incidents may seem clear to many of us, we’re still continuing to see cases of agents putting their interests ahead of their clients. The next time you find yourself in a situation that you’re unsure about whose interests you’re putting first, consider what a judge might say if the facts were put before them. And then act accordingly, so you can avoid finding yourself in one of these situations.

I’ll report back again in another few years, hopefully with better news!

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Introducing E&O’s new Cyber Guard loss prevention program

March 2025

E&O is launching new complimentary Cyber Guard services to help real estate agents and brokerages in BC protect themselves against cyber attacks.

With the view that the best protection starts with claim prevention, E&O’s Cyber Guard services are offered in partnership with DynaRisk, a proven cyber protection platform designed to help reduce the risks of cyber attacks through a simple process.

E&O’s Cyber Guard services will not provide further insurance but are a comprehensive set of loss prevention tools accessible online and by phone at no cost to individual agents and brokerages.

“We’ve identified cyber risks as an increasingly dangerous threat to real estate professionals, so we’re excited to be able to deliver new loss prevention tools to help individual agents and brokerages avoid becoming the victim of cybercrime that may lead to claims against them,” says E&O Executive Officer Leslie Howatt.

“We’re able to provide this service at no additional charge to our insureds so they’ve got protection from a growing risk of attacks like phishing, hacking and social engineering.”

A cyber-nightmare becomes reality for some

For many professionals, losing access to their key business systems is a story that plays out in a variety of different ways across Canada on a daily basis. It’s why the Canadian government has deemed March Fraud Prevention Month and is offering a range of resources and information.

When hackers succeed in cracking into the computer system of a small- or medium-sized business, that business is typically disrupted for a minimum of two to three weeks. In many cases, it’s even longer before a company is back functioning like they were before the incident.

Real estate agents and brokerages facing a cyber breach could be unable to access information needed to help their clients complete deals or may be tricked into paying money into a fraudster’s bank account. These scenarios may lead to lawsuits against them.

First step to protection is recognizing weak spots

One of the reasons E&O’s Cyber Guard is such a user-friendly tool is because it takes a straightforward, step-by-step approach to helping real estate professionals protect their online presence by:

• Assessing online threats – helping users understand their online vulnerabilities and denying hackers the chance to take advantage of these opportunities by taking personalized steps based on their assessment.
• Offering expert guidance – with personalized advice on topics like how to secure your data, as well as how to follow safe practices and management of your online activities.
• Detecting breaches – through ongoing monitoring of Cyber Guard user accounts, e-mail addresses, passwords, etc.
• Delivering real-time insights – if a breach occurs, Cyber Guard users will be notified with an e-mail as soon as it’s detected.
• Providing 24/7 support – around the clock support for E&O licensees who use the service. In the event they’ve become a victim of a cybercrime, they can call the E&O Cyber Guard Help Line at 1-855-701-9985 or e-mail the team at REEOIC@dynarisk.com.

Taking 10 minutes now can save hours of time and frustration

Agents and brokerages can save themselves time, frustration and a hit to their good reputation with clients by protecting themselves now.

Individual agents can either learn more about the first few steps with E&O Cyber Guard or start the E&O Cyber Guard registration process now.

Protecting brokerages
Cyber Guard also provides a product specifically geared to small- or medium-sized brokerages that includes:

• monitoring
• employee training
• customizable Information Technology policies
• webinars to help brokerages protect themselves against cyber attacks.

Brokerages that want to sign-up and take advantage of the protection can learn more about the many resources available through E&O Cyber Guard pages or they can start the registration process here.

E&O’s Cyber Guard does not provide cyber insurance. It does not cover the damages that may result from cyber attacks but rather provides a set of loss prevention tools to help you avoid a cyber attack in the first place. Brokerages should discuss cyber insurance coverage with their insurance brokers.

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New Indemnity Plan maintains coverage and premiums, takes effect April 1

March 2025

As we prepare to kick off E&O’s 38th policy year, we’re happy to issue our annual update, with Indemnity Plan RE0425 replacing Indemnity Plan RE0424 and applying to any new claims reported to E&O on or after April 1, 2025.

Some of the highlights of your 2025 E&O coverage are:

• annual premiums of $315 and the $2 million coverage limit remain unchanged – this illustrates the benefits of stable and cost-effective coverage through E&O’s self-insurance program, made even clearer when compared to insurance premiums in private markets.
• ongoing loss prevention efforts – maintaining these low premiums depends heavily on the continuing care that you take to avoid causing losses. Doing things right works to the financial benefit of you and everyone else in the profession.
• NEW cyber security tools – we’re excited to introduce E&O’s Cyber Guard loss prevention tools to help real estate agents in BC stay cyber safe and avoid claims that may result from lax cyber security. These services are available at no charge to 100% of our insureds, both individuals and brokerages.

Indemnity Plan RE0425: What to know

There have been no changes to the wording of the Indemnity Plan compared to last year’s Plan other than a housekeeping change to reflect our new office address at Unit 1590, 320 Granville Street, Vancouver, BC, V6C 1S9.

We strongly encourage you to take a few moments annually to familiarize yourself with the terms in the Indemnity Plan, the coverage you have and the responsibilities you have in reporting a potential claim on a timely basis. You can find the following key info on the E&O web site:

• Plan wording and general information
• Plan FAQs
• instructions on reporting a claim

KEY: To access this password-protected information on the site, use the password eno.

We continue to save resources by not mailing printed copies of the updated Plan to licensees, but you can download or print a copy from the web site at any time.

Explore whether you need excess insurance to ensure you’re fully protected

We’ll continue to remind you of the importance of periodically reviewing your overall insurance needs. Depending on your particular situation, you may need excess insurance coverage that exceeds the $2 million in coverage provided by the Indemnity Plan.

Confirm with your managing broker what kind of insurance your brokerage has and, if additional coverage is appropriate in light of the risks to which you are exposed, the brokerage can purchase this type of coverage, not the individual licensee.

Depending on the type of transactions you’re involved in, you’re at greater risk of facing claims that exceed the Indemnity Plan’s $2 million policy limit if, for example, you:

• provide real estate services involving multiple similar properties
• sell commercial, development or waterfront properties
• work in areas where real estate prices are particularly high.

Remember that there may be significantly less than $2 million available to pay damages in a complicated or hard-fought claim, because the legal fees incurred in defending you are paid first against the limits of coverage.

We continue to recommend licensees at higher risk consider purchasing excess insurance and we offer further information on our Excess insurance page.

Excess insurers should be provided with a copy of the E&O Indemnity Plan to ensure that they are aware of the terms of coverage.

Excess insurance policies may also provide additional coverage, such as cyber insurance or limited protection against the legal defence costs of disciplinary proceedings.

CGL insurance is vital for all brokerages and agents

Comprehensive general liability (CGL) insurance is essential for every brokerage and agent. CGL provides coverage for bodily injury and physical property damage to third parties, including risks arising from your premises as well as any showing or listings.

TIP: Ensure that the brokerage CGL policy extends coverage to independent contractors and not only brokerage employees.

Licensees acting as strata and property managers may or may not have coverage for bodily injury claims under their clients’ insurance policies. Brokerages providing strata or property management services should ensure that their licensees have this coverage under the brokerage CGL and/or excess policies and that these policies also extend to independent contractors.

For additional coverage, we recommend that you consult with an insurance broker who has experience in placing insurance for real estate brokerages and who can advise you about your needs and options.

You may also find these resources useful:

• Your Indemnity Plan – a three-minute video overview of Plan basics
• “Risks and insurance for the real estate licensee” by Bill MacLeod, K.C. and Rob McLeod

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Client backing out of a deal? You probably have some questions…

There’s no easy way around it – being told by a client that they won’t be moving forward with a firm deal is never a stress-free moment. You might find yourself wondering, “Did I do something wrong?”, “Can I fix this?” or “Should I fix it?”

Don’t worry, we’ve received calls from other real estate agents with those very questions, and here’s what we think you should – and what you definitely shouldn’t – do when you get the dreaded news that your clients are “backing out” of a deal.

Step #1: Tell your clients to get legal advice (do this quickly and in writing)

We get it—alarm bells are sounding in your head, and it’s hard to know exactly what your next move should be. But the very first thing you should do is advise your clients in writing that there can be serious legal consequences to not completing the deal and that they should immediately seek legal advice before taking any further steps.

Contract law is complex, and only a legal professional should be advising your clients on the potential legal consequences, any legal remedies that may be available, and the legal position that your clients should take. After all, your clients can only make an informed decision if they’ve been advised of their options and the potential outcome of those options.

Step #2: Be mindful of what you say and who you talk to (you CAN make it worse)

Some people are used to talking their way out of sticky situations, but sometimes saying less is more. Without your clients’ express instructions, you should NOT be telling the opposite side of the deal that your clients are unable or unwilling to complete the transaction, or that they want to renegotiate the terms of the deal. There have been cases where this type of communications has formed the basis of an “anticipatory breach” and given the other party an immediate option to terminate the contract!

Remember, you owe a duty of confidentiality to your clients, and disclosing your clients’ confidential information (e.g. that they are unable or unwilling to abide by the terms of the deal, their reasons for not completing the transaction, etc.) can make things worse for them and inadvertently put you in the position of having to defend yourself in possible legal action later.

Step #3: Don’t play lawyer

Your clients may want you to be their lawyer and have you solve their contractual problem. However, it’s a real challenge to navigate a deal gone sideways without falling into the many legal traps.

Your clients may have legal remedies or none at all. There may be legal arguments that allow your clients to walk away without consequences, or there may be steps they can take to mitigate their losses. Either way, it’s important that you don’t put yourself in harm’s way by stepping outside of your expertise (e.g. by acting as your clients’ lawyer or providing legal advice).

Remember, it is NOT your duty to be a “jack of all trades”, but it IS your duty to act with reasonable care and skill and in the best interest of your clients. Knowing where your expertise begins and where it ends is a key part of that duty.

Step #4: Stay somewhat out of sight, out of mind

After you’ve advised your clients to seek legal advice and avoided dispensing any legal advice or opinions of your own, stay clear of what is likely a complicated legal issue. Continue to follow your clients’ lawful instructions and deliver messages that they’ve asked you to deliver (preferably after they’ve received legal advice). However, be mindful not to contradict the advice/guidance that your clients have received from their legal professional or provide unsolicited commentary or opinions. Unnecessarily injecting yourself into a legal situation can put you and your clients at risk and can bring unwanted attention to yourself.

Step #5: Don’t admit liability

While you may feel like you’ve had a hand in creating a situation where your clients are contemplating stepping away from the deal, there can be many reasons why you may not be legally responsible. So, it’s important that you don’t admit any fault or liability as this can affect your E&O coverage if a claim is made against you. While expressing sympathy for a less-than-ideal situation can be appropriate, admitting that you should’ve or could’ve done something differently usually isn’t helpful. Instead, channel that energy into ensuring that your clients have the appropriate professional support that they need to make their next move!

Stick to your lane, tell your clients what they need to hear

As a real estate agent, it’s not your role to ensure that the parties complete the deal. The best way to support your clients may be by telling them what they need to hear and not what they want to hear. Being mindful of your role as a real estate advisor and not a lawyer will help you and your clients avoid trouble.

If you’d like to learn more about anticipatory breach or what might “open up” a contract see:

• “Anticipatory breach: words matter” Morgan Stern’s September 2024 Risk Report article
• Asked and answered – What opens up a contract? December 2024 Risk Report

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Supporting Strata and Property managers with quick claims prevention tips

E&O’s latest foray into making our claims prevention messages more accessible is now on our website, in the form of two new short videos featuring staff lawyers Oana Hyatt and Jude Chow.

Each of the two new videos — one focused on issues faced by strata managers while the other was developed for property managers — are designed to provide quick and easy suggestions for busy real estate professionals.

Strata management insights

In this three-minute video, Oana Hyatt highlights the most common claims allegations we get against strata managers and offers effective tips for helping strata managers to reduce their risk. Following Oana’s thoughts on how to limit your liability and avoid taking on unnecessary risks will help strata managers stay in good stead.

Property management insights

After recording a previous video on Avoiding Misrepresentation, Jude Chow is back in action with this three-minute overview of how property managers can help avoid finding themselves facing the most common claims from clients. Whether it’s minimizing your risk through the Property Management Agreement or ensuring you’re keeping clear records, there are quick and direct tips available.

Exploring the growing video library

As our video library has grown to five videos this past year, we’ll be continuing to expand our offerings again in the new year. Look for more quick takes on key topics that will be good complements to:

• Misrepresentation prevention video
  With misrepresentation claims making up more than half of all E&O claims, it’s important to know how licensees can avoid finding themselves in this kind of predicament. Staff lawyer Jude Chow offers some quick tips and an overview of how licensees can reduce the odds of having this type of claim filed against them. (3 mins)
• Indemnity Plan overview
  While all licensees pay their annual fees for professional liability insurance, do they know what protections they’re getting? E&O Executive Officer Leslie Howatt provides a short summary of the key points of coverage, including how and when to contact E&O for support. (3 mins)
• Implied agency overview
  Claims Manager Chris Johnston explains the of the risks of implied agency and offers tips on how to avoid the hazards of accidentally becoming an implied agent and finding yourself in a difficult situation. (3 mins)

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Introducing new leadership to the E&O Board of Directors

As we prepare to ring in the New Year, here at E&O we’re also preparing to ring in new leadership for our E&O Board of Directors.

As a key support to E&O staff, the E&O Board has been vital to overseeing and governing our operations for decades now. It’s why we’re proud to introduce:

Chair – Peter Kelly

Previously serving as vice-chair, Peter Kelly became the new E&O chair on December 5, 2024. He’s been in the insurance industry for more than 45 years and was instrumental in the design, implementation and management of the original E&O program before it became self-managed. After that, he continued as a member of the Claims Committee and advisor to the Board for several years. His area of expertise is professional liability insurance, and his clients have included the Real Estate Insurance Exchange (Alberta), the Real Estate Council of Ontario and the Law Societies of both BC and Alberta.

Vice-Chair – Susan Forbes, KC

At the same time, Susan Forbes, KC, became vice-chair. Su is the Chief Operating Officer of the Lawyers’ Indemnity Fund (LIF), Law Society of BC, and has more than 40 years of experience in the legal profession and the insurance industry. She’s been a lawyer since 1982 and practiced in a broad range of areas, including real estate licensee errors and omissions, before joining LIF where she manages E&O claims against lawyers. Ms. Forbes has twice been the President of the National Association of Bar Related Insurance Companies.

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Supporting Strata and Property managers with quick claims prevention tips

E&O’s latest foray into making our claims prevention messages more accessible is now on our website, in the form of two new short videos featuring staff lawyers Oana Hyatt and Jude Chow.

Each of the two new videos — one focused on issues faced by strata managers while the other was developed for property managers — are designed to provide quick and easy suggestions for busy real estate professionals.

Strata management insights
In this three-minute video, Oana Hyatt highlights the most common claims allegations we get against strata managers and offers effective tips for helping strata managers to reduce their risk. Following Oana’s thoughts on how to limit your liability and avoid taking on unnecessary risks will help strata managers stay in good stead.

Property management insights
After recording a previous video on Avoiding Misrepresentation, Jude Chow is back in action with this three-minute overview of how property managers can help avoid finding themselves facing the most common claims from clients. Whether it’s minimizing your risk through the Property Management Agreement or ensuring you’re keeping clear records, there are quick and direct tips available.

Exploring the growing video library

As our video library has grown to five videos this past year, we’ll be continuing to expand our offerings again in the new year. Look for more quick takes on key topics that will be good complements to:

• Misrepresentation prevention video
  With misrepresentation claims making up more than half of all E&O claims, it’s important to know how licensees can avoid finding themselves in this kind of predicament. Staff lawyer Jude Chow offers some quick tips and an overview of how licensees can reduce the odds of having this type of claim filed against them. (3 mins)
• Indemnity Plan overview
  While all licensees pay their annual fees for professional liability insurance, do they know what protections they’re getting? E&O Executive Officer Leslie Howatt provides a short summary of the key points of coverage, including how and when to contact E&O for support. (3 mins)
• Implied agency overview
  Claims Manager Chris Johnston explains the of the risks of implied agency and offers tips on how to avoid the hazards of accidentally becoming an implied agent and finding yourself in a difficult situation. (3 mins)

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Asked and answered…

What opens up a contract?

We were recently asked by a managing broker if we could help clear up some confusion he sees amongst his agents about what might “open up a contract” after the parties have already reached an agreement.

• Could it be from a request for a brief extension to completion dates or subject condition removals?
• Could a small price reduction request do it?
• What if you use a clause where the parties state that an amendment is not intended to be a counter-offer or a repudiation of the contract – does that prevent opening the contract?

The Court of Appeal has been clear that a proposed amendment must be of the type which affirms and does not reject the original contract.

Seems clear as mud right?

It’s complicated

In short, there’s no definitive answer and it’s best to think about the possibility of an amendment to a contract opening up the contract on a continuum.

On one end of the spectrum, it may be that anything proposing to significantly amend and add significant additional terms (such as adding new parties, significant changes to price or changes to the property included in the contract) may be significant enough to open up a contract, depending on the context.

On the opposite end of the continuum, a simple extension of the completion or subject removal date – be careful if a back-up offer is lying in wait – where the parties are clear in the contract that such a small change is not an amendment amounting to a counter-offer or a repudiation of the contract may not re-open the contract. Again, the answer depends on the context.

Dealing with amendments to contracts, subject conditions, and the like are complex legal matters. When in doubt, you should recommend that your client take legal advice to ensure that their simple efforts to change or keep the agreement alive do not kill it.

Take a look at these great articles for more detailed information and examples:

• Pandora’s box – opening up a contract – Risk Report, December 2019
• Anticipatory breach: words matter- Risk Report, September 2024
• Wait, one more thing – amending real estate contracts #565 Legally Speaking

Do I have coverage if I list my own property for sale?

The answer is no. 

And to provide a little more context to the response, you’ll be without coverage (through Exclusion 9 of the Indemnity Plan), if:

• you,
• your spouse, or
• a corporation or other legal entity in which either of you either separately or together, directly or indirectly, have or may acquire a 10% beneficial interest or more in the property,

get sued for professional negligence.

This exclusion applies even if you have complied with your professional obligations under the Real Estate Services Rules for disclosure of your interest in the transaction and this exclusion is strictly applied.

If you’re sued in relation to the purchase or sale of your own property, you’ll not only have to pay a judgment if you’re found liable, you’ll also have to pay for your own lawyer to represent you.

That can be very expensive and a major hassle, even if you’re able to prove that the claim against you is unmerited.

The Indemnity Plan does provide that your brokerage may be covered for such a claim if the brokerage is brought into the suit against you (Insuring Agreement 3.6), but if a payment is made by E&O on behalf of the brokerage, then E&O has the right to recover from you what they had to pay out.

Any way you look at it, this will be a bad situation for you; it’s far better to have someone else act as the professional real estate advisor where you or your spouse are involved in a transaction in which you have or may acquire an ownership interest.

Retaining a non-team member is the wisest approach

Using a member of your own team to list your property for sale is also not recommended. As a member of the team, you must be listed as a seller’s agent on any disclosures and service agreements. Your team members will not lose coverage as long as they have no ownership interest, but the risk of a claim against you, your team members and your brokerage are increased when you are both the seller and the seller’s agent.

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Looking back at 2024’s most expensive claims

As we prepare to turn our calendars ahead to a New Year, this is the time that we traditionally look back at the year that was and see what we can learn that will serve us well in the coming year.

This year’s top five most expensive claims of 2024 is our annual wrap-up of the year’s claims activities and offers related links to tips on how to avoid being one of the claims featured next year.

While we haven’t reached the end of 2024 yet, we’re expecting about 247 claims this year compared to 263 last year, a decrease of approximately 6% (see chart). Going forward into 2025, we expect there will be some claims against licensees who have not kept up with changes in the laws about tenant notices and changes in industry practices such as the inclusion of GST in the purchase price in standard form contracts. One key way to avoid being the subject of a claim is to stay current in the ever changing real estate landscape.

While the cases below are our top five most expensive claims for 2024, we encourage you to take some time to scan the Risk Report archives for a treasure trove of loss prevention advice on how to avoid claims in the first place.

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Taking terrifying tales on the road

September 2024

The E&O team are taking a new twist of their claim prevention messages on the road very soon, presenting at the 2024 PacificWest Conference being held at the Vancouver Convention Centre early next week (Oct. 1 & 2). The Conference is a joint venture between the Fraser Valley Real Estate Board and Greater Vancouver Realtors^®.

Leslie Howatt, Chris Johnston and Jude Chow will be presenting “Terrifying tales from the trenches: war stories from E&O” at 3:10 pm on Tuesday, October 1, 2024.

This year’s conference features a new Managing Brokers’ Stream, sponsored by the BC Real Estate Association, highlighting best practices and the latest regulatory changes. You can find more information and register at the PacificWest Conference website.

If you’re interested in coordinating a claim prevention presentation from the E&O team at your own brokerage, contact us at reception@reeoic.com.

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