MLA David Eby demands inquiry into shadow flipping of Vancouver homes

The B.C. NDP's housing critic is calling for an inquiry into Metro Vancouver's real estate market over a technique known as shadow flipping, under which sales contracts are reassigned, in some instances multiple times, before a deal is closed.

Flipping drives up real estate prices in an already overheated market, NDP critic says

NDP housing critic David Eby holds up a copy of a real estate industry report that says financial corruption is not a problem in the Vancouver market. He believes otherwise. (Belle Puri/CBC)

The B.C. NDP's housing critic is calling for an inquiry into Metro Vancouver's real estate market over a technique known as shadow flipping, under which sales contracts are reassigned, in some instances multiple times, before the sale of a home is closed.

Vancouver member of the legislative assembly David Eby outlined his concerns on Monday at a news conference, where he said some realtors are using the technique to avoid paying taxes and, in some cases, to avoid controls established to prevent money laundering.

"The provincial government has been asleep at the switch on this issue, and it's time for them to step up and begin a formal arm's-length investigation into what's happening in our real estate market in British Columbia," said Eby.

A Globe and Mail investigation revealed that those involved in the shadow flipping can avoid paying the property transfer tax by reassigning the sales contract before the final sale. 

Suggestions of money laundering

Eby said several people came to him in January with specific instances where forms were fudged, with implications for money laundering as well as tax avoidance.

Eby said he wrote letters to the Real Estate Council of B.C., requesting it investigate the allegations. He said the organization denied his request, citing insufficient evidence.

However, Eby maintains he has specific information of a foreign buyer listing a Realtor's Canadian address as his own on a Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) form. He said he shared that information with the real estate council and FINTRAC in January. 

FINTRAC is Canada's financial intelligence unit.

Real estate council criticized

Eby said the real estate council is not living up to its responsibility of protecting the public from Realtors who don't follow the rules. He said a few corrupt agents are hurting the reputation of the whole profession.

"Clearly, something needs to happen to address the fact that people are told that they cannot trust real estate agents," said Eby. It is up to the B.C. government to ensure watchdogs are doing their job, he said.

Shadow flipping is helping to push housing prices upward, sometimes by millions of dollars, in an already overheated market, Eby said.


To hear the full audio, click the link labelled: B.C. NDP calls for  real estate inquiry.

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.