Originally posted by RECO

June 15, 2018 Bulletin #2018-1

Overview

This bulletin is to explain the Registrar’s position on the procedures registrants must follow, and obligations they must uphold, when using lockboxes. The use of lockboxes requires mutual trust between registrants and consumers and that trust must never be compromised.

Registrants must get advance consent from the listing brokerage, or the owner in the case of homes being sold by the owner directly, before each visit to a property. This includes visits to properties accessible by keys in a lockbox. If a registrant enters a property without the seller’s consent or allows someone else to enter a property without such consent, the registrant should expect to be prosecuted. Unauthorized access, including access outside of scheduled appointment times, is unacceptable, because of the potential risk to real and personal property, privacy, safety and security of both buyers and sellers.

Lockboxes are a convenience. However, sellers are not required to provide lockbox access to keys for their properties. Sellers can require private appointments to see the property with either the owner or the owner’s representative present.

Registrants must fully explain the risks to the seller before a lockbox may be installed, whether the property is occupied, unattended or vacant. The seller may authorize a lockbox only if they understand and are prepared to accept the risks. The seller’s representative should document the seller’s authorization in a written direction to the listing brokerage, signed by the seller, and the seller should be provided with a copy before a lockbox is installed.

Registrants are reminded of their legal obligations to promote the best interests of their clients and to provide conscientious and competent service to the buyers and sellers with whom they work.  Registrants are also encouraged to take advantage of the latest technology in electronic lockboxes. Advanced technology allows for the identification of the parties who access the property, the time and duration of the visit, and automatic code changes.

For example, it is a leading practice for registrants to routinely change their lockbox codes. The US-based National Association of Realtors requires of its members that, when sharing lockboxes codes with buyer representatives, “temporary codes/access must expire within seventy-two (72) hours after being issued.” This is a reasonable minimum standard for Ontario’s real estate professionals to follow.

Brokerages are expected to have clear lockbox policies in place that reflect the interests of both the seller and the buyer, and comply with rules established by their local board or association. The following sections outline some key responsibilities of the listing brokerage and the buyer’s brokerage that should be captured in the policies.

Listing brokerages

Lockboxes are to be installed only with the homeowner’s written consent, and after a full explanation of the risks and benefits of placing a key in a lockbox that can be accessed by other registrants. Sellers need to make an informed decision about the use of lockboxes.

At minimum, the explanation of risks should include the possibility that:

• The lockbox may be broken into to gain access to the property, which could result in theft or damage to the property;

• An unauthorized person could use the lockbox to enter the property by gaining access to the code or breaking into the lockbox;

• Keys may be lost or the lockbox may be improperly closed, allowing unauthorized access to the property; and,

• Use of a lockbox on the property may void or limit coverage under the seller’s property insurance policy. Sellers should be encouraged to contact their property insurers before agreeing to install a lockbox.

Sellers should also be advised of the type of lockbox to be used, how frequently the code to the lockbox will be changed, and where it will be placed. Lockboxes should be located in a safe, well-lit, secure and accessible place.

Brokerages representing buyers

The following guidelines should be observed by registrants who represent buyers when showing properties that can be accessed by a key in a lockbox:

• All appointments, whether for registrant inspections, consumer showings, home inspections, or access by other service providers, must be made and confirmed through the listing brokerage before entering the property;

• If a registrant anticipates being late for an appointment or cannot make the appointment, the registrant should communicate any change of plans to the listing brokerage as soon as possible to cancel or reschedule the appointment. The buyer’s representative may also ask the listing brokerage if a registrant employed there is able to attend the appointment instead;

• Registrants who have booked and confirmed appointments with the listing brokerage to see a property that has a lockbox installed must only enter the property during the time specified in the appointment booking confirmation;

• Under no circumstances should a registrant communicate or provide a lockbox code to a non-registrant, including a buyer, for the purpose of having the non-registrant open a lockbox; and

• A registrant who makes an appointment to show a property that has a key secured in a lockbox must remain in attendance for the duration of the appointment, must ensure that the property is secured, and must return and secure the key in the lockbox at the end of the appointment. Under no circumstances should a registrant leave the property while other people remain unsupervised on the property. Nor should a registrant give the key to another registrant who may be following them into the property. If the other registrant is authorized, he or she will already have the lockbox code.

Regulatory Oversight

RECO regularly receives complaints from consumers and registrants relating to early or unauthorized access to properties. Most complaints involve inappropriately providing access to keys stored in a lockbox. Providing someone with unauthorized access to somebody else’s home is a very serious breach of trust.

Complaints regarding registrant lockbox conduct will be reviewed on a case-by-case basis with full consideration of all relevant facts.

Although RECO takes a progressive approach to discipline, registrants will face serious sanctions for lockbox and other infractions that demonstrate a disregard for the protection of home buyers and sellers.

Relevant sections

Code of Ethics: Sections 2, 3, 4, 5, 38, 39 and 41.