Province agrees to shadow-flipping investigation by BC Real Estate Council

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VANCOUVER (NEWS 1130) – The “assignment clause” is being blamed for our out-of-control housing market.

It allows a contract to pass hands between sellers before the closing date.

Even though it’s not illegal, questions have been raised about the ethics of it.

Now the province agrees that so-called shadow-flipping has become enough of an issue to spur an investigation by the BC Real Estate Council.

Some have suggested stripping out certain language from contracts, but is the solution even that complex?

“Many commentators have assumed that somehow there is special wording in the contract that allows assignment. The reality is that standard residential contract is silent. For any contract, including a real estate contract, it can be assigned, unless there is prohibition,” says Ron Usher, a lawyer with the Society of Notaries Public of British Columbia.

Meaning you need to add, not subtract.

He says there are already existing clauses that work well for that and can easily be inserted in a contract, giving control over assignability to the seller.

“The only way to get control over assignability is to make sure the contract does in fact mention assignments. Typically you’ll want a clause very similar to what every developer does that gives the seller control over what happens to the contract after it’s signed,” says Usher.

The clauses have been around for quite a while but until now, have never been much of an issue for houses.

“In a normal market, this doesn’t come up very often in the residential world but we can certainly look at what the developer has done for decades,” says Usher.

He adds, there is literature on the subject and your realtor should be able to discuss the issue with you.

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