Alberta has long been the economic engine of the country and as a born and bred Albertan, I can honestly say that the heartbeat of entrepreneurism is alive and well in this beautifully industrious province. With the sheer volume of economic activity in the major sectors of Alberta’s economy, there naturally spins off a huge can-do spirit in the people to start, operate, and expand small businesses for the benefit of families and neighbors. With an estimated one small business for every 20 Albertans over the age of 18, it stands to reason that these businesses change hands through a sale and that some of them need the services of a REALTOR® to help. Let's consider what can and can’t be done in this arena.
Licensed to Sell
In Alberta, the real estate regulator licenses real estate professionals in five different disciplines, residential, commercial, rural, property management, and condominium management. Without a sociology degree, most folks can figure out which license designation would be necessary to help individuals buy or sell a business with a real estate component, obviously, it's commercial. This means that a REALTOR® licensed in Alberta without a commercial designation cannot help in the purchase and sale of businesses where there is a real property component.
Real Estate Component
If there is no real property component to the sale or purchase, such as in the case of a food truck, or website-based business, the Real Estate Act and its rules do not apply, and such things are not considered trades requiring a license. This is important to understand since where the act does not apply, a real estate professional who wanted to help could help as could any adult person licensed or unlicensed. The difference for REALTORS® is that if they do help in such situations, they are still required to meet the standards of practice expected of them as real estate professionals and they invite liability to themselves as the courts would likely hold them to a higher level of care as professionals.
The Real Estate Insurance Exchange does currently bind insurance for trades of businesses with property or some real estate component such as leasehold. The coverage however would likely only be extended to the real estate portion of the trade and not the goodwill, assets, or shares, so REALTORS® who trade in these types of properties need to ensure they have additional coverage from a 3rd party insurer for the business brokerage portion of the transaction. Where the transaction does not include a real estate component, or the transaction ends up being a share sale instead of an asset sale, REIX will not bind coverage for such trades.
Where a business is being sold through a share sale only, even if the business owns real property, no license is required to trade in these cases, so no insurance is available through REIX, and the Real Estate Act does not apply. It should be noted that some large share sales may even require a securities license to be able to represent the transaction, so legal advice should be sought in the case of share sales to ensure that the transaction does not require an additional license.
MLS® System Access
The MLS® system in Alberta is operated through the cooperation of 10 local real estate boards and these boards all agree on provincially harmonized rules for REALTOR® members. The provincially harmonized rules define a listing as “a record of a property for lease or sale by a Brokerage Member” which means any listing that does not have a real estate component is not permitted on the MLS® system. This does not mean the member cannot list it exclusively to their brokerage with broker permission, but it cannot be listed in the MLS® system.
Provincial Practice Advisor
Bryan has many years of experience in the real estate industry including over 10 years as a former broker in the Edmonton Region.
Email: email@example.comPhone: 403-209-3619