Eight months after he “began the work of cleaning up a dysfunctional real estate regulator by firing the Real Estate Council of Alberta,” Minister of Service Alberta Nate Glubish is moving to restructure and refocus RECA with a mandate on licensing and regulating the province’s real estate sector. The move comes after a scathing independent report last year, which cited major concerns with the regulator.
The province has introduced the Real Estate Amendment Act, 2020, which proposes to restructure RECA to consist of a board of directors, as well as four new industry councils: residential real estate agents and brokers; commercial real estate agents and brokers and commercial property managers; mortgage brokers; and residential property managers and condominium managers.
The province says these new industry councils will be responsible for identifying and addressing emerging issues related to their parts of the real estate sector, setting standards and rules and determining licensing requirements. The RECA board will be responsible for oversight of RECA’s strategic direction and staff and help to facilitate co-ordination between the industry councils.
“Ultimately what these changes are going to do for the real estate regulator and the industry is this is going to increase transparency, improve accountability and restore good governance to the regulator,” Glubish told REM.
“We spent a ton of time with a lot of the different industry associations to make sure that we could really listen to them and understand what went wrong, what are the problems and what do you think are some ideas on how we can move forward in a positive way. I’m confident that this bill brings about the reforms that are needed to move forward in that positive way and to ultimately restore the faith and trust of Albertans and the Alberta real estate industry in the regulator,” he says.
In early 2019, prompted by complaints from the real estate industry, Service Alberta tasked KPMG to review the operation of RECA. A report concluded that “the Council is not governing RECA effectively, and personality conflicts within Council, and between Council and Administration, are unlikely to be resolved without changing the individuals involved. Council has spent considerable resources attempting to improve its governance with minimal effect.”
The report, entitled Governance Review of the Real Estate Council of Alberta, also said, “It would appear that the most effective and timely way to resolve Council’s governance challenges would be to dismiss all Council members. There are too many issues with the current composition and operations of Council to enable an effective governance body.”
In a statement, Duane Monea, administrator of RECA, said: “Last fall, the minister appointed me to oversee the functions of RECA and help restore regulatory oversight and prepare for transition to a new council. This is an exciting time for the industry as we see the minister incorporate the feedback he received from the many industry stakeholders and implement a positive new beginning for RECA.”
Other proposed amendments by the provincial government include:
- Services beyond the scope of RECA’s newly focused mandate will be removed from RECA’s purview, including education, professional advice beyond regulatory information, promotion of the real estate industry, and setting of standards beyond the minimum for licensing and transactions.
- Real estate appraisers will be removed from RECA oversight because they are self-regulated through their own industry associations.
- New business and financial reporting requirements to improve RECA’s transparency and accountability to industry, government and the public.
- Mandatory governance training and dispute resolution procedures for all board of directors and industry council members to improve the identification and resolution of issues.
- Improved intervention measures that will give the minister the tools needed to ensure RECA meets its commitments and delivers its duties; and
- Condominium managers will be added to the groups overseen by RECA when the new industry council model comes into force.
Glubish says there were some “people issues” related to RECA but also structural problems.
“The most significant problem was the fact that you’ve got a number of different sectors of the real estate industry . . . all regulated by the same organization and you had a single board with some representation from each but significant representation from one. Each of these groups have important priorities and needs that are specific to their sector and their licensees,” he says.
“And when one board focused on all of these things, you can’t be all things to all people. You can’t do everything well. And that leads to frustration, which leads to a breakdown in communication and relationships, which just causes a steady spiral downward to disruption. That’s why I’m so excited about this industry council concept. We will still have a board of directors, if you will, that is responsible for the overall strategic direction and leadership of the regulator,” says Glubish.
“But we will now have four industry councils . . . What that’s going to do is, it allows for each of those industry sectors for their respective licensees to elect the best people from their industry that they can possibly choose to be their voice and to represent them on these councils. Those will be balanced with some public members that I as a minister would be selecting.”
Glubish says each council would have the full mandate and authority to focus on the most urgent and important priorities and needs of their respective licensees without the distraction of what’s important to their counterparts on other industry councils.
“This is the most significant change we’re making. It follows the feedback that I received while listening to the different industry participants and industry groups who had unprecedented access to me as a minister, to my staff, to my department over the last eight months as we worked through what this would eventually become,” he says.
“This is going to give them what they want most – the control over their own destiny, the ability to really influence the overall regulatory framework of their respective industries and to make sure that nothing falls through the cracks out of distraction by having to be all things to all people.”
In a statement, Kristie Kruger, chair of the Alberta Real Estate Association, said, “Realtors are pleased the Alberta government has heard our concerns and is taking action to improve regulation of the real estate industry. This legislation demands greater openness and transparency, which will help rebuild eroded trust in the real estate regulator.”
Mary Swaffield, executive director of the Alberta Mortgage Brokers Association, said in a statement, “We’re pleased that the minister has addressed our major concerns and specifically that mortgage brokers will finally be regulated by mortgage brokers when the new council is in place. We look forward to working closely with RECA as they transition to the new structure.”