Agreed.

--- Agreed

Clause 3. Agreed?

Agreed.

--- Agreed

Thank you. The bill as a whole. Agreed?

Agreed.

--- Agreed

Does the committee agree that Bill 18 is ready for third reading?

Agreed.

--- Agreed

Bill 19, Real Estate Agents' Licensing Act

Thank you. Bill 19, An Act To Amend The Real Estate Agents' Licensing Act. Mr. Patterson.

Minister's Opening Remarks

Thank you, Mr. Chairman. I have some opening comments about this bill. It contains an amendment to the Real Estate Agents' Licensing Act which will provide that a security other than a bond may be provided by an agent to the Superintendent of Real Estate when the agent applies for, or wishes to obtain, an agent's licence. This alternative security will be in the amount of $25,000, the same as the bond. It also adds powers to make regulations respecting those other securities.

Mr. Chairman, applicants for a real estate agent's licence, in addition to other requirements, must furnish a bond in the amount of $25,000. The bonds are issued by insurance companies for an annual premium. Although consultations over the amount of the bond and the wording of the bond form took place with a representative of the insurance industry prior to the legislation coming into force, real estate companies experienced some difficulty in obtaining the required bond. This was partly due to the newness of the legislation, but also companies that had been in business for less than two years found that insurance companies were not

interested in writing this type of bond. Another factor is the small number of insurance companies licensed in the NWT who are prepared to write this type of bond.

This amendment will permit the superintendent of real estate to accept another form of security which may be more easily accessible to the agent. Regulations will prescribe the form of security which will be acceptable as well as any conditions respecting the forfeiture or surrender of such security and the payout of money as a result of the forfeiture or surrender.

An irrevocable letter of credit from a financial institution is one alternative which the local industry would prefer over the bond. Firstly, they can be obtained locally from a bank, and the criteria used by banks is slightly different from that used by insurance companies. They are also a little cheaper to obtain, and the government can access the funds more quickly than with a bond in the event of a claim. Bonds issued by insurance companies are also subject to a two-year discovery period, which means that no money can be obtained until the two year period has expired, but letters of credit can be drawn on by the government by simply a letter once the government is satisfied there is a legitimate claim. This amendment will not lessen consumer protection available with a bond. Thank you, Mr. Chairman.

Thank you. Mr. Arngna'naaq.

Comments From The Standing Committee On Legislation

Thank you, Mr. Chairman. The standing committee on legislation dealt with these proposed amendments to the Real Estate Agents' Licensing Act at its public meeting on May 27, 1992. Bill 19 would amend the existing act to deal with the types of securities that can be posted by persons who apply for a real estate agent's licence. Currently, real estate agents must furnish a bond in the amount of $25,000 to cover certain classes of loss to customers. The standing committee understands that due to limitations within the insurance industry here in the Northwest Territories, some real estate companies and agents have encountered practical difficulties in finding firms capable of, or interested in, writing the required bond. The committee recognized that in certain cases it would be easier for an agent to obtain other forms of liquid security, such as a letter of credit from a lending institution. Bill 18 would amend the Real Estate Agents' Licensing Act to provide that these alternative forms of security would be posted by current or prospective agents. The amount of the alternative security would be required to be $25,000, the amount that is necessary when someone currently posts a bond. This amendment would not eliminate the option of using a bond if that was the form of liquid security the agent wished to furnish; however, it would allow the government superintendent of real estate to approve and accept other forms of credit in addition to the bond. The types of acceptable alternatives to bonding would be established in regulations made under the Real Estate Agents' Licensing Act, and all bonds and other securities would be in the hands of the government superintendent of real estate.

Mr. Chairman, the standing committee on legislation appreciated the appearance of the Minister of Safety and Public Services, the Hon. Dennis Patterson, at its public meeting on May 27. The Minister and his officials presented the bill for committee consideration and responded to Members' comments and questions. Members of the standing committee spent a good deal of time with the Minister to consider whether protection presently afforded the public under the existing legislation might be compromised through the use of alternative forms of security by real estate agents. In the end, Members were satisfied that this bill would make licensing requirements more flexible for agents while still maintaining a very adequate level of public protection.

Mr. Chairman, at its public meeting on May 27 the standing committee on legislation carried a motion to report Bill 19 to the Legislative Assembly as ready for committee of the whole. Thank you, Mr. Chairman.

Thank you. Are there any general comments? Mrs. Marie-Jewell.

Thank you, Mr. Chairman. First of all, I want to commend the Minister for bringing forth this change. I have had numerous concerns expressed to me by real estate agents in respect to, at times, the inability to secure a bond, the difficulty in obtaining a bond, and using such an easier method in basically obtaining the same type of collateral in respect to a bank credit line or other types of methods, producing the same results. However, I did want to ask the Minister, under what criteria do they use the limit of $25,000? Is it necessary to use an amount of $25,000?

Mr. Minister.

Mr. Chairman, I appreciate the Member's comments. The figure is arbitrary, but it was set looking at the real estate market and the average transactions involved, and it was also set in consultation with the insurance industry when the bill was first introduced. It is an arbitrary figure, but it was felt it would provide adequate protection considering the size of most transactions.

Mrs. Marie-Jewell.

Mr. Chairman, since that is an arbitrary figure, and looking at a general transaction, I guess I have some concern in agreeing with that. When you look at the smaller communities that may have transactions that may not cost as much in respect to real estate, I wonder if there can be some kind of flexibility in the regulation that may want to be flexible in the amount that is set forth. It may not be $25,000. I know that in the smaller communities the transaction to do real estate would not get near $25,000. I wonder if this type of concern can be taken into consideration.

Mr. Patterson.

Thank you, Mr. Chairman. I should point out that this bond actually covers the agent and not just a particular transaction. So it could be, heaven forbid, if you had problems with an agent involving several transactions, that you could have complaints that would be larger than the liabilities involved with a single transaction.

It would be possible to consider variations, as she has suggested, considering that there may be different situations between communities, since this figure is actually set out in regulations and in fact it will be regulations that will spell out the detailed requirements for a bond. So we have a bit of flexibility to make adjustments, if they are appropriate in a particular situation, through regulations. So it is an easier method of making changes to respond to those concerns than if it were a current legislative change. So that flexibility is there if required in future.

Mrs. Marie-Jewell.

Mr. Chairman, I recognize that this covers the agent, and I also recognize that in addition to this, agents carry insurance to cover whatever concerns or problems they may have, as an additional protective measure. However, my fundamental concern is the fact that we ask these agents to carry on and to acquire this amount for a bond in order to do their transactions. What I am basically

saying is that these transactions in the smaller communities may not require that full amount of bond coverage for an agent. I would like to know if the Minister would consider some flexibility in comparison to the larger communities like Yellowknife where $25,000 is acceptable and could possibly be the cost. But I doubt very much that the cost would be that in the smaller communities, and therefore it is an extra impediment on the agent to access this bond requirement of $25,000.

Mr. Minister.

Thank you, Mr. Chairman. Yes, we could review that question with regard to smaller communities. There are real estate agents in Fort Smith, Iqaluit and Hay River where there is a different real estate market. So I am certainly prepared to review the appropriateness of this amount, looking at the nature of transactions in those smaller communities.

General comments. Is it the wish of the committee that we go clause by clause?