B.C. Introduces New Rules To End Real Estate "Shadow Flipping"

The British Columbia government has announced new rules aimed at ending the recently decried practice of shadow flipping of real estate contracts.

Shadow flipping has recently become a focus of the hot real estate market in B.C. and involves a purchaser entering into a contract of purchase and sale (usually for residential property) and then assigning that contract to a third party for a fee, sometimes several times, driving property price up to the benefit of the middle men. The seller does not benefit from the higher price and is often shocked to learn of the final selling price. Real estate agents or "licencees" under the Real Estate Services Act, often obtain commissions for each of the shadow transactions as well, which has given rise to public discontent. This process is possible because the standard forms of purchase and sale agreements used in most residential transactions do not prohibit assignment of the agreements and do not require notice or consent of