Homeowners Protection Office Question Is a home on the MLS® an Invitation to treat or offer for sale?

On Monday 5 March 2012 I received a stern call from the Homeowners Protection office demanding I pull one of my listing off the MLS®. She said I was breaking the law and had to comply with the law asap. Listing don’t grow on trees, it takes a lot of hours to put one up, I wanted more info on the reasons why I had to give up a listing. This is what I found out about the Homeowners Protection Act and how the Homeowners Protection Office thinks the act reads. IMHO they are wrong I do not need to pull my listing off the MLS®.

If you live in BC you fall under the  BC Home owners Protection act.  Homeowner Protection Act 1998 Which was passed to appease the masses after the leaky condo debacle.   The Act makes it mandatory to have licensed builder build your home unless you opt out as a home owner builder.

According to the act section 4.1 (2) (b) the person must intend to use the new home for personal use for at least one year from the date of first occupancy of the new home.

The Homeowner Protection act say in section 20.1  (1) Subject to subsection (2), an owner builder must not sell or offer to sell a new home

However in the Homeowner Protection Office brochure it says; Section 20.1(2) of the Homeowner Protection Act allows an owner builder to apply to the Homeowner Protecton (typo in brochure) Office registrar
for permission to sell or offer for sale a new home under construction or within the prescribed period of time (12 months)…  Notice the difference in the act and on their brochure.  This is their interpretation of the act.

IMHO The main reason this is in the act is because

of schedule 3  Minimum standard of coverage

(a) in the first 12 months, for other than the common property, common facilities and other assets of a strata corporation,

(i)  coverage for any defect in materials and labour, and

(ii)  subject to subsection (2), coverage for a violation of the building code;

The first year of the warranty period is the most onerous on the builder.

The Home Owners protection office has a nice brochure for people who want to build their own home.  In the brochure you can find reference to the act that states;

Q: What if I want to sell my owner-built home?
A: An owner builder is not permitted to offer to sell
or sell the new home during construction or until at
least one year after their home is built (which will be
based on the occupancy permit or actual occupancy
date if there is no permit).

This is the point of this blog post listing a home for sale on the MLS is not an offer to sell it is an invitation to treat.  How could one possible expect to sell their home one year and one day after they finished it unless they advertise it before hand.   Here is an definition of invitation to treat (from Wikipedia)is a Contract law term. It comes from the Latin phrase invitatio ad offerendum and means “inviting an offer”. Or as Andrew Burrows writes, an invitation to treat is “an expression of willingness to negotiate. A person making an invitation to treat does not intend to be bound as soon as it is accepted by the person to whom the statement is addressed.”

I have spend to much time on the MLS® and have never seen a buy button.  There is no such thing.   IMO and an opinion I received from the Real Estate Council of British Columbia a home on the MLS® is an invitation to treat can have terms which in the case of a new home would be possession date after a pre determined date that would comply with the act ie one year after completion of home.  Just because a home is on the MLS® you can not just buy it you have to put in an offer to purchase the home.

This brings us to the case law Canadian Dyers Ass. Ltd vs Burton (1920) 47 OLR 259 (HL)  There can be no contract of sell unless there can be found an offer to an offer and an acceptance of the offer.  A mere quotation of price does not constitute an offer to sell is is no more than an  invitation to treat.

Take that BC Homeowners Protection Office.  I’m may have to pull the listing off the market because I merely do what my clients want but will not be finished with this.

This will make a good future radio real estate show topic,  stay tuned.  I suspect HPO will say I’m wrong.

Here are their supporting documents they send the home owners. BuyingOrSellingOBHomeBulletin   Permission_to_Sell_Application This one would apply if some wants to sell within the 12 month period.

My clients do not want to sell within 12 month of completion of their home but do want to advertise it now, hence the “invitation to treat” on the MLS®,  so that when that day comes the home can sell.

For more info about BC HPO check out this cbc article http://www.cbc.ca/news/canada/british-columbia/story/2010/03/15/bc-unifinishedhomes.html or this one

http://www.cbc.ca/news/canada/british-columbia/story/2010/11/15/bc-homewarranty.html these people thought they had a warranty coverage.

Cheers
Scott

PS one of my fav all time lines; we are with the government we are here to help (help themselves)

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Comments

  1. Thanks I’m going to get a friend to proof read this. It is a problem when your a one man band. I have always had a tough time proofing my own stuff. Could not find the contrast.

    This is all I have received from HPO
    Hi Scott,
    I would like to confirm receipt of your email and voice mail. I will review both with the Manager of Licensing tomorrow and will back to you. She was not in the office today so this will have to wait until tomorrow.
    Thank you
    That was two days ago and no word back.

  2. Received a call from Doug who works for HPO this afternoon. He said they have judgments about this. I have asked him to send me a copy of the judgments and or reference to the case law. I will be sending a email to the RECBC to get it in writing that a listing is an invitation to treat.

  3. Update Doug from the HPO has called to say he was misquoted. I guess I can not jog with the dog (6km) and take accurate notes. It would have been nice to get an email instead of a call. Doug has said he will not be sending me any judgments or case law as he put it the cases they have are not about this specifically. I said if they send me the case law and or judgments that prove I’m wrong I will pull down this blog post.
    I have a canceled the listing and it is off all my sites and will be off the MLS asap. My clients signed the cancellation form tonight. They were told by HPO they could not have the house for sale.

  4. I have read over the HPO web site and found these compliance orders http://www.hpo.bc.ca/compliance-orders-2009
    This one below is about this issue;

    Leo Ronse (“Ronse”), contrary to subsections 20.1(1)(a) and 20.1(1)(b) of the Homeowner Protection Act (the “Act”), built a new home in Langley, B.C., (the “New Home”), for which an Owner Builder Authorization had been issued, offered the New Home for sale between March 31, 2009 and July 6, 2009, while the New Home was being constructed and again after the New Home was built between August 27, 2009, and November 27, 2009, within the prescribed 12-month period after the New Home was built. On October 28, 2009, Compliance Order 09-0022 was issued to Ronse, directing that he immediately cancel the marketing effort on the New Home and either become a Homeowner Protection Office (“HPO”) Licensed Residential Builder and obtain home warranty insurance for the New Home by December 18, 2009, before renewing any marketing efforts for the New Home, or immediately personally occupy and own the New Home for the prescribed 12-month period. Complied.

    This is a compliance order that was given by the HPO. HPO believes they have the power to stop people from putting out an “invitation to treat”

    I have suffered monetary damages due to HPO’s liberal interpretation of the act.
    In the morning I will be filing in small claims court, for $7728, against HPO for damages. I would prefer to let a judge decide if they are reading the act right or making it up to suit their needs. If the act says “sell and offer to sell” and their brochure says “sell and offer for sale” they are not following the act as written by the legislature.

    I don’t want to put words in Doug’s mouth but was totally insulted when he said I should not be writing this don’t you have a code of ethics and all or words to that effect. Yes we do have a code and it states;
    1.1 A REALTOR®
    shall be aware of current legislation
    and, wherever reasonably possible, be aware of pending legislation (including zoning, government programs, etc.) which could affect trading conditions in the marketplace.

    I have worked with clients buying and selling homes with the following issues; ALR land, foreshore leases, first nations burial sites, contested building schemes, in foreclosure, court ordered sales, pending litigation, remedial work, strata complexes, stump-age fees not paid, building leans, all forms of zoning, septic legislation, mining claims, right to farm act, riparian rights, development permit areas, even the infamous Red and Yellow zones on Mayne Island, …
    We (REALTOR®) get to see all kinds of interesting problems and that is why I look at the Act’s not some bureaucrats whimsical interpretation of such Acts.
    If HPO is so firm on no one selling in the first year why don’t they simply make everyone pull the indefeasible title certificate for their property and send it in to the HPO. At the end of the year one could go pick it up the certificate and sell. That is the goal not to have someone sell in the first year. The system HPO has now based on a loose interpretation of the law and bully tactics is wrong and probably costly to enforce.

    See you in court HPO. I’m willing to settle before court. Everything in life is negotiable. Please make payment to my brokerage see address below.
    Cheers
    Scott

  5. Wes Smith says:

    Well written and I applaud your fight with HPO.

    I agree with your point of view on this situation.

    I think if I were in a similar situation, i would have refused HPO’s demands. As far as I know, they have no authority over us as REALTORS®, nor our real estate boards, CREA, or BCREA. In other words, there is no consequence to leaving the property listed.

    Likewise, I don’t believe that your clients would have any legal consequence unless they actually sold the house (and it completed) within the 1 year period. Even then, depending on the situation, selling the property within the 1 year period could be defended: death, bankruptcy, financial hardship, foreclosure . . .

    I think I would have also told “Doug” that I would not have taken any more of his calls and that all future correspondence would have to be by fax and in written form.

    What would have happened (according to HPO) if you just told them to go jump in a lake?

    Wes

    • Hi Wes thanks for your comments. The HPO would and can issued a Compliance Order. Which is their own ticketing system. This does not mean it would hold up in court if challenged. I do agree really do prefer to get everything in writing all the time.

  6. Ray Mayer says:

    Hi Scott.
    Quite interesting. At first blush your “invitation to treat” argument has some appeal and there is authority for it, but it remains to be seen if would have application in the circumstances of this particular situation. I say this because it’s important to keep in mind that this property is subject to the Homeowner Protection Act (the Act); a powerful piece of Consumer Protection Legislation. Based on the Homeowner Protection Office’s (HPO) apparent stance on the issue, your perception of what “offer for sale” means and theirs would appear to be at odds and the real question is why? I agree that this matter would largely come down to a question of statutory interpretation and right off the top, one thing that stands out for me is the fact that the Act refers to “sell or offer to sell”. “Sell” and “offer to sell” are two distinct terms and given that in matters of statutory interpretation there is a presumption against tautology (i.e. using superfluous or meaningless words); I would have to assume, that for purposes of the Act, “sell” and “offer to sell” were clearly intended to carry different meanings. With that presumption in mind, you might want to ask yourself two questions; (1) from a contract law perspective, when is a sale a sale, or phrased differently, when does a sale become a sale (i.e. binding at law) and; (2) once you’ve answered (1) what then, for purposes of the Act, might the term “offer for sale” mean? Viewed in that light, “sell” might mean having some type of contract of purchase in place, and “offer to sell” might be taken to mean any type of action to simply even “market” the property. As can be seen this could then lead to a different interpretation than the “invitation to treat” type of definition you have ascribed to the situation. It’s worth noting that in the compliance order you referred to in your blog, the HPO twice refers to “marketing effort”. I would think that this type of situation has come up before and find it hard to imagine that the HPO would not have been challenged on this already, but who knows? And then again perhaps the HPO is correct and is acting on some established authority that “offer to sell”, for purposes of the Act, carries an interpretation of simply even “marketing” the property. If that’s not the case, then “marketing effort” might have been a better term for them to use in the Act as such a term would be fairly broad in scope. Curiously, if you look at another piece of Consumer Protection Legislation, the Real Estate Development Marketing Act (REDMA), it does use the term “market” and defines it:
    “market” means
    (a) to sell or lease,
    (b) to offer to sell or lease, and
    (c) to engage in any transaction or other activity that will or is likely to lead to a sale or lease;
    Perhaps another approach would be to confirm whether or not a clear disclosure made on the listing that the listing appears as a matter of information only and offers will not be entertained until “X” date would satisfy the HPO; after all they do maintain some control over any activity on the property to the extent that they are in possession of the Disclosure statement that would have to be provided to any purchaser.

    Ray

    • Thanks you Ray for your well thought out reply. I have not heard back from Doug or anyone at HPO today. It would be nice if they could send me the case law he stated they had reference to and or similar cases and or judgments on or about this topic. Unfortionalty my wife spend the night in the Lady Minto Hospital and I did not have time to file in small claims court against HPO. I will be doing so asap. At that time they can argue contrary to my argument that a listing on the MLS® in a simple “invitation to treat” not an offer to sell.

      To answer your question when does a sale become a sale? When one has an accepted offer. The offer has to be made first and then accepted. Advertising a property has nothing to do with the actual offer to sell. The offer makes reference to the legal description of a property and PID number as per the legal title. I have never seen a MLS® write up and or MLS® photos on an offer. If the MLS® was part of the offer to sell how could a REALTOR® sell and exclusive none MLS® property or a FSBO or a private sale. I would have to check but last year I sold 4 or 5 exclusive none MLS® properties. This next week I’m hopping to sell a private sale using a fee agreement. The MLS® is an advertisement vehicle owned and operated by REALTOR® and a darn good one at that. One can not buy right off the MLS® one has to make an offer on a place. If one has a home on the MLS® they are not bound to sell. Seller do not even have to respond to an offer, which would be my advice if I had a home listed that was subject to the HPO act. Gotta go Thanks Ray great comment.

      • Ray Mayer says:

        Hi Scott,
        My comment of asking yourself when a sale would become a sale was meant to be rhetorical and was really intended as a means of taking a logical approach to breaking down the two conditions that appear in the Act (a process of elimination) to establish if under any common interpretation mere marketing/advertising would (or could) meet the definition of the term “offer to sell”. In any event it will be interesting to hear what HPO has to say in support of their position.
        Kind regards,
        Raymond Mayer
        MAYER MORTGAGE CORPORATION
        Tel: (604) 862-4977

  7. Update I have drafted my Notice of Claim using the BC Gov Filing Assistant which is a very slick system. I have up to one year now to File the Notice of Claim to the small claims registry. The fee will be $156. I’m going to hold off until August to see what happens. I will be in a better position to claim damages if the sellers list with another agent. Over the next few weeks I have to be in Victoria and will be spending part of that day at UVIC in the outstanding Diana M. Priestly law library. Not a word so far from HPO.

  8. Milla Renouf says:

    I’m late to the party, but I find HPO to be a racket. Just found out I have to pay ~$500 to build my own home on my own property. What do I get for this pleasure? Nothing.
    This all started because some folks bought leaky California style homes in Vancouver, a rainforest. So, now I have to pay for their mistake. Absolutely ridiculous. I have no intention of selling until I die. Although, I would have no problem telling prospective buyers, should a situation befall me that forced me to sell, that I built it and it has no warranty. This racket only benefits insurance companies. My home is my castle, and having another regulatory body tell me what is good for me is absurd. Show me a licensed contractor built home, and I can show you defects. There should be an opt out clause for owner builders. If the government wants to nanny contractors, go for it, but leave owners out of it.
    My eventual home will be far superior to a contractor hack job, no question about it. Now, I am forced to live in a RV until I can pay all the fees.

  9. Hi Milla it is a racket. They do nothing for anyone ever but collect money to cover their bloated expense accounts and big salaries. Call them and try and haggle over the $500 ask them what they are going to do for the money?

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