February 5th - 2006

RECO decision: Dishonesty proves costly

The following RECO Complaints, Compliance and Discipline Appeals decision has been condensed and can be viewed in its entirety on the RECO website at www.reco.on.ca.

The following RECO Complaints, Compliance and Discipline Appeals decision has been condensed and can be viewed in its entirety on the RECO website at www.reco.on.ca.

The case
This case involves violations of several rules regarding ethical behaviour, primary duty to client, outside professional advice, misrepresentation or falsification and unprofessional conduct under the RECO Code of Ethics.

The violation occurred when Registrant S listed and advertised a property on the MLS featuring a basement apartment with wood flooring and a separate entrance.

Buyer B, the complainant in this case, retained the services of a Buyer Representative to help him locate and negotiate the purchase of a property. When the complainant viewed the property he noticed what appeared to be water stains on a wood floor in a basement room. When asked about this, Registrant S indicated that the sellers had a dog that repeatedly knocked over its water dish. In addition, she indicated there had been previous minor water damage in the north-west corner of the house due to improper run-off from a downspout, but said this was not a current problem. The complainant did not make an offer to purchase at this time.

Meanwhile, another salesperson, Salesperson A, presented an offer to buy the property on behalf of a client, Buyer A. The offer was accepted and an agreement of purchase and sale was made conditional on Buyer A obtaining a home inspection report satisfactory to her. The home inspection revealed a number of problems including evidence of a current and ongoing problem with water leakage in the basement as well as water drainage problems on the land around the house. Buyer A withdrew from the agreement of purchase and sale based on the findings of the home inspection. Registrant S was made aware of the results of the home inspection, including the ongoing water problems in the basement.

Registrant S re-activated the MLS listing with a lower asking price. The Buyer Representative notified Buyer B, who eventually became the complainant, that the property was available again and the complainant instructed him to present an offer to purchase it. That offer was made subject to a home inspection, but in the course of negotiations, the complainant agreed to remove the condition relying on the information represented by Registrant S. In the spring, the basement flooded substantially resulting in several thousands of dollars worth of repairs.

The RECO Panel determined Registrant S acted in an unprofessional manner and violated Rules 1, 2, 7, 10 and 46 of the RECO Code of Ethics.

Rule 1 – Ethical Behaviour – A Member shall: (5) deal fairly, honestly and with integrity with the public, other Members and third parties.

Rule 2 – Primary Duty to Client – A Member shall endeavour to protect and promote the best interests of the Member’s Client. This primary obligation does not relieve the member of the responsibility of dealing fairly, honestly and with integrity with others involved in each transaction.

Rule 7 – Outside Professional Advice – A Member shall not discourage the Parties to a Transaction from seeking outside professional advice.

Rule 10 – Misrepresentation or Falsification – A Member shall not make any statement or participate in the creation of any document or statement that the Member knows or ought to know is false or misleading.

Rule 46 – Unprofessional Conduct – A Member shall not engage in an act or omission relevant to the practice of the profession having regard to all the circumstances, would reasonably be regarded by Members or the public as disgraceful, dishonourable or unprofessional.

Penalties and costs

  • Registrant S was ordered to pay a penalty of $12,000 within 180 days of the date of the decision.
  • She was also ordered to complete and pass the “Agency Practice” continuing education course within six months of the decision date.

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Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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