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Donaldson Digest – Dual Agency Banned and Flood Insurance on the Brink
The Donaldson Digest – News and Notes for Industry Pros
Canada Bans Dual Agency in Real Estate Transactions
On June 15th, the Real Estate Council of British Columbia banned the practice of “dual agency” (also known as “double ending”) in order to ensure that real estate agents serve their clients without any potential conflicts of interest. In Canada, dual agency means that an agent can represent both the buyer and the seller in the same transaction. However, in the United States, “dual agency” often refers to a transaction involving two agents of the same company, not necessarily one agent representing both sides of the aisle.
British Columbia’s Superintendent of Real Estate, Michael Noseworthy, said to Realtor Magazine: “These changes have been designed to reinforce a real estate agent’s duties and obligations to their clients and to ensure that agents are always acting in their client’s best interests. We want to make sure that the advice consumers receive is solely for their benefit and that consumers have confidence that their agent is undoubtedly on their side.”
The ban applies to an agent representing:
The buyer and seller in a single transaction.
Two buyers bidding on the same property.
The landlord and the tenant at the same rental property.
(An exception has been made, however, for rural or remote areas where multiple agents may be scarce or unavailable.)
Originally announced in February and set to be effective March, the ban was delayed to June in order to give Canadian real estate licensees time to make adjustments. Some critics of the ban fear that it may jeopardize their relationships with previous clients. Also, they say that is unclear on whether real estate agents (who must recuse themselves from a transaction) can refer clients to a colleague at the same agency. The ban doesn’t differentiate residential and commercial properties, so agents must follow the same rules no matter what properties they deal with, no matter if it’s a mobile home or a marina.
Even though dual agency is allowed in the United States, the practice is sometimes frowned upon. So, the ban’s supporters say that many agents would not be affected if the U.S. followed suit. The National Association of Realtors does not have a position on the issue since states decide regulations on dual agency in real estate transactions. There are some states like Colorado, Kansas, Florida, and Wyoming do not allow it.
The National Flood Insurance Program is on the Brink of Expiration (Again)
Congress is still on the hook for reauthorizing National Flood Insurance Program (NFIP) by July 31, 2018. The NFIP was temporarily reauthorized by the $1.3 trillion spending bill in March; however, a permanent solution has yet to be executed. In November, the House of Representatives passed legislation, which would serve as a long-term solution, but the Senate has stalled on its progress. Supporters of the proposed legislation claim that it would stabilize rates and improve choices, whereas critics fear that prices in flood-prone areas would skyrocket.
The Smarter Safer Coalition, which is a group composed of environmental, insurance, taxpayer, and housing organizations, is calling on Congress for a long-term reauthorization of the flood insurance program. Maxine Waters (D-California), a member of the House Committee for Financial Services, is also encouraging the Senate to put the issue to rest. She tells HousingWire.com, “It’s time for Congress to do its job and pass a long-term reauthorization that will ensure Americans are protected this and every hurricane season to come.”
At least in the short-term, the recent spending bill enables two important programs, according to Laura Lightbody from Pew Charitable Trusts. She told the Insurance Journal that it will not only intend to improve the accuracy of risk assessment with better mapping technology but also seeks to reduce the severity of future storms.
The Federal Emergency Management Agency (FEMA) made a statement saying, “In the unlikely event the NFIP’s authorization lapses, FEMA would still have authority to ensure the payment of valid claims with available funds. However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation. Nationwide, the National Association of Realtors estimates that a lapse might impact approximately 40,000 home sale closings per month.”
Industry professionals such as real estate agents, mortgage lenders, and insurance agents should continue to monitor the situation. Bookmark Donaldson and never miss a story!
Superstars 2.0 Real Estate Training Now Earns GRI Credits!
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