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Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

January 1st - 2009

RECO Decision: Disclose nature of interest

Seller A and Seller B listed a property located at 1-AB Street for sale with Brokerage A. The listing salesperson was Seller Representative A. The sellers reduced the asking price from $349,995 to $337,995. Two days after the price reduction, an offer was received and presented by Seller Representative A under dual agency.

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, financial disclosure, obedience to law and competence under the RECO Code of Ethics.

Seller A and Seller B listed a property located at 1-AB Street for sale with Brokerage A. The listing salesperson was Seller Representative A. The sellers reduced the asking price from $349,995 to $337,995. Two days after the price reduction, an offer was received and presented by Seller Representative A under dual agency.

The buyer in the first offer was Buyer A, who is a relative of Seller Representative A. At no time did Seller Representative A provide the required disclosure under the REBBA and the RECO Code of Ethics, declaring his direct or indirect interest in the purchase of the property.

The price offered in the first offer was $323,000. The sellers made some changes to the offer and signed it back at $337,000. The first offer subsequently lapsed as the buyer did not accept the counter offer.

Shortly after, another offer was presented by Seller Representative A on behalf of his relative, Buyer A for $328,000. The second offer was signed back at $332,000 and accepted by the buyers.

Even with the second offer Seller Representative A did not disclose the nature of his interest in the purchase of 1-AB Street. The sellers only discovered the relationship between Seller Representative A and the buyer when the transaction was about to conclude.

THE FINDINGS
The RECO panel determined that the registrant acted in an unprofessional manner when he failed on two occasions, to provide to the Sellers with written statements and have the Sellers acknowledge in writing, his registration status and interest in the purchase of 1-AB Street.

The RECO Discipline Panel concluded that the registrant breached the following Rules of the RECO Code of Ethics:

Rule 1 (2) – Ethical Behaviour – A member shall endeavour to protect the public from fraud, misrepresentation or unethical practice in connection with real estate transactions.

Rule 5 – Financial Disclosure - A Member shall disclose the financial aspects of a Transaction and any personal interest of the Member in a matter to the Parties sufficient to enable them to make an informed decision.

Rule 23 – Obedience to Law - A Member shall practice in accordance with all federal, territorial or provincial law or municipal by-law relevant to the Member fitness to practice.
Real Estate and Business Brokers Act, R.S.O. 1990, chap. R. 4
Statement where broker or salesperson purchases for resale
31. (1) No broker or salesperson shall purchase, lease, exchange or otherwise acquire for himself, herself or itself or make an offer to purchase, lease, exchange or otherwise acquire for himself, herself or itself either directly or indirectly, any interest in real estate for the purpose of resale unless the broker or salesperson first delivers to the vendor a written statement that he, she or it is a broker or salesperson, as the case may be, and the vendor has acknowledged in writing that the vendor has received the statement.

Rule 42 Competence - A Member shall render conscientious service with the knowledge, skill, judgement and competence, in conformity with this Code of Ethics and the standards which are reasonably expected of Members. When the Member is unable to render such a service, either alone or with the aid of other Members, the Member shall decline to act.

PENALITIES AND COSTS
Seller representative A was ordered to pay a $5,000.00 penalty within 90 days of sending this decision of the Discipline Committee.

DISCIPLINE under REBBA 2002
This decision was rendered under the old RECO Code of Ethics, which has been replaced by the Code of Ethics under REBBA 2002. A majority of the rules under the old Code have equivalent sections in the new REBBA Code. Consult the explanatory notes for the provisions of the REBBA Code of Ethics in RECO’s Guide to REBBA 2002.

Relating to this matter, see:

Section 4 – Best Interests
Section 5 – Conscientious and competent service etc.
Section 18 – Disclosure of Interest

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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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The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.

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