Mortgage brokerage registration on a sale in British Columbia

Selling a mortgage brokerage in British Columbia is not only a contract between two owners. The Mortgage Brokers Act sets the registration rules, and the Registrar of Mortgage Brokers, who is appointed by the board of the BC Financial Services Authority (BCFSA), administers them. A buyer that is neither registered nor exempt cannot simply start trading under the seller’s name on closing day. This guide explains what the Act says about registration, names and addresses, employed submortgage brokers and record retention, and where BCFSA’s sale-of-business guidance adds a separate real estate question. For the national picture, see selling a mortgage brokerage in Canada. This page is about the British Columbia rule only.

Registration is held by a person and is required to trade

The Act provides that, unless exempted under section 11, a person must not carry on business as a mortgage broker or submortgage broker unless the person is registered under the Act. “Person” is defined to include an individual, corporation, firm, partnership, association, syndicate, any unincorporated organization and an agent of any of them. The Registrar keeps the Mortgage Brokers Register, recording the name of every registered mortgage broker and submortgage broker, the name under which the business is carried on and the address or addresses from which it is carried on. Nothing in the Act as cited here says a registration passes to a buyer on a sale, so a buyer should ask BCFSA how its own registration is to be in place at closing.

The Registrar decides who is suitable

An application for registration is made to the Registrar in the form and with the information the Registrar specifies, with the prescribed fee. The Registrar must grant registration or renewal if, in the Registrar’s opinion, the applicant is suitable and the proposed registration is not objectionable, and may attach terms, conditions or restrictions considered necessary. The Registrar must not refuse registration without giving the applicant an opportunity to be heard. For a buyer, the practical point is timing: an application is a process with its own decision-maker, so ask what the Registrar needs and how long BCFSA expects it to take before fixing a closing date.

Names, addresses and advertising

The Act also says that, unless exempted under section 11, a person must not carry on business as a mortgage broker otherwise than in the person’s registered name, or elsewhere than at or from the registered address, and must not advertise or indicate that the person is a mortgage broker other than under the registered name. A mortgage broker must notify the Registrar promptly after a change of business address or address for service. A sale that brings a rebrand or an office move therefore touches the register. A mortgage broker must also publish the name under which it is registered in every advertisement, circular, pamphlet or similar material used in its business. Ask both sides to list every sign, website, brochure and email signature that will change.

Employed submortgage brokers

Unless exempted under section 11, a person must not employ as a submortgage broker anyone not registered under the Act. A mortgage broker must promptly deliver the Registrar a list of the names and addresses of the submortgage brokers it employs, and promptly notify the Registrar of each new one or each who ceases to be employed. Where a submortgage broker’s employment with a mortgage broker ends, the Act treats that as a suspension of the submortgage broker’s registration until the Registrar has written notice from another registered mortgage broker of the new employment and has approved it in writing. If a buyer plans to keep the seller’s team, ask what has to be filed for each person, and whether the buyer’s own registration is needed first.

Records that outlast the sale

British Columbia’s Mortgage Brokers Act requires a mortgage broker who must give an information statement under section 17.1, or a disclosure statement under section 17.3 or 17.4, to keep a copy for at least seven years. On an inquiry under the Act, and if satisfied it is necessary and in the public interest, the Registrar can enter the business premises of a person registered, or required to be registered, to inspect records. The buyer’s due diligence should therefore ask where those statements are kept and who holds them after closing. A seller can ask the same question, since the Registrar’s inspection power covers records of a person registered or required to be registered.

Where the real estate rules come in

BCFSA also regulates real estate licensees, and its guidance for them says a business sale can include real estate, such as the sale of real property or the transfer of a lease. The Real Estate Services Act defines a trade in real estate to include a transaction for the purchase or sale of real estate, for its leasing, or for any other form of its acquisition or disposition. BCFSA’s consumer guide says an asset sale with no real estate component is not a trade in real estate. If the brokerage’s office lease is part of the deal, ask counsel whether that question arises. It is separate from the registration rules above.

• Who will carry on the business after closing, and is that person registered or applying?
• Does the registered name or address change, and who tells the Registrar?
• Which submortgage brokers move over, and what has to be filed for each?
• Where are the retained information and disclosure statements kept?
• Does the deal include a lease or other real estate, and has counsel considered it?