IN THE MATTER OF. THE REAL ESTATE ACT, C. R-l.3 AND IN THE MATTER OF REGINALD KOTLAR DECISION OF THE SASKATCHEWAN REAL ESTATE COMMISSION

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1 IN THE MATTER OF THE REAL ESTATE ACT, C. R-l.3 AND IN THE MATTER OF REGINALD KOTLAR DECISION OF THE SASKATCHEWAN REAL ESTATE COMMISSION Commission File: # Before: Appearances: A Saskatchewan Real Estate Comn1ission Hearing Committee comprised of the following: Randal C. Touet - Chairperson Larry Gingerich Phillip Mack Ed Miller, on behalf of the Investigation Committee Hearing Date: April 12, 2010 Written Decision: May 11, 2010

2 The Mitigation Hearing was held April 12, 2010 at the Upper Lounge of the Saskatoon Club, Saskatoon, Saskatchewan before a Hearing Committee ("the Committee") of the Commission. The Statement of Facts and Admissions dated February 2, 2010 provided particulars of Reginald Kotlar's violation and admissions. CHARGE and ADMISSION OF J\tIISCONDUCT The registrant was charged with and has admitted, in the Statement of Facts and Admissions, to professional misconduct as follows: Contrary to Section 39(l)(c) of The Real Estate Act he breached Bylaw 711 of the Act in that: Between April 30, 2008 and September 2, 2008 (both dates inclusive), Mr. Kotlar failed to adequately review and understand the real estate transaction between two of the registrants for his brokerage where the brokerage represented both the prospective buyers and the seller before authorizing the return of the prospective buyers' deposit. LEGISLATION Section 39(l)(c) of The Real Estate Act: "Professional misconduct is a question of fact, but any matter, conduct or thing whether or not disgraceful or dishonourable is professional misconduct within the meaning of this Act, if it is it is a breach of this Act, the regulations or the bylaws or any terms or restrictions to which the registration is subject." Bylaw 711 states: "A broker or branch manager shall adequately supervise the activities of the registrants and other personnel for whom he or she is responsible. In determining the adequacy of the supervision, the Commission will consider the following factors, but will not be limited to making a determination on these factors alone: (a) whether the broker or branch manager was physically available to supervise; (b) whether the broker or branch manager had established written policies and procedures; (c) whether the broker or branch manager held regular staff meetings to determine that policies or procedures were properly implemented; (d) whether the broker or branch manager had undertaken all reasonable steps to ensure compliance by all salespersons and other personnel; and (e) whether the broker or branch manager took corrective and remedial action when a violation by a salesperson or other personnel was discovered. " FACTS In accordance with subsection 9(4) of The Real Estate Regulations ("the Regulations"), the Committee accepted Reginald Kotlar's Statement of Facts and Admissions, which include the following relevant points: 2

3 1. Mr. Kotlar has practiced real estate for slightly more than 26.5 years out of the last 34 years and have been registered under the provisions of The Real Estate Brokers Act, 1987 and The Real Estate Act in the Province of Saskatchewan with the Saskatchewan Real Estate Commission as follows: Salesperson - April 11, 1975 to June 30, 1976; Salesperson - August 3, 1978 to December 15, 1987; Salesperson - April 6, 1993 to November 30, 1994; and Broker - Decerrlber 1, 1994 to Present. 2. He has taken the following real estate courses: Pre-March 1976 Licensing Course and Real Estate He completed the continuing professional development senlinars each registration year since Mr. Kotlar is registered under the provisions of The Real Estate Act as a broker with Norland Realty Ltd. 0/A Sutton Group - Norland Realty (hereinafter "the Brokerage"). 5. During the period of this transaction and commencing April 30, 2008, Mr. Kotlar's brokerage operated under an Exclusive Seller's Brokerage Contract with the Seller, prepared by Agent B. 6. On April 30, 2008 Agent A of the Brokerage assisted the prospective Buyers to write a Residential Contract of Purchase and Sale. Some of the details included: purchase price of $785,000.00; deposit of $10,000.00; $275, by new mortgage; $500, balance of cash; subject to Building Inspection by May 10, 2008; subject to Buyers' approval of PCDS by May 10, 2008; and a possession date of September 1, On April 30, 2008 the Seller signed acceptance to the contract. 8. On May 2, 2008, the prospective Buyers submitted a $10, deposit cheque in consideration of the contract and the administration team within Sutton Group Norland Realty deposited into the brokerage's real estate trust account on May 5, On May 6, 2008 between 7:30 and 8:00 p.m., Agents A and B of the Brokerage assisted their respective clients to write and sign acceptance to an Amendment to the Residential Contract of Purchase and Sale form as part of the contract. The amendment listed six (6) repairs to be conducted upon the Property by the Seller and stated: "for details see inspection report." Agents A and B failed to write into the contract a completion date for the Seller's repairs to the Property. 3

4 10. On May 6, 2008 between 7:30 and 8:00 p.m., Agents A and B assisted their respective clients to write and/or sign acknowledgement to a Notice to Remove Conditions on Residential Contract of Purchase and Sale form that in part stated: "All conditions are removed when the Amendment to the Residential Contract of Purchase and Sale form is signed by the seller and repairs are reviewed by the buyers." 11. Unknown to all parties at the time; the May 6, 2008 docunlents remained unclear as to whether or not the prospective Buyers removed conditions given that the prospective Buyers added an additional term to the Notice to Remove Conditions on Residential Contract of Purchase and Sale form stating that "and repairs are reviewed by the buyers. " 12. On August 29, 2008 Agent B facilitated a viewing of the Property for Agent A, her prospective Buyers and their home inspector. 13. On Sunday, August 31, 2008 (one day before possession) the prospective Buyers signed and subnlitted a Notification Conditions Have Not Been Satisfied Or Removed In Writing form stating in part that "the conditions have not been satisfied and have not been waived in writing" and demanding immediate return of the $10, deposit. 14. On the morning of Tuesday, September 2, 2008 (the first business day after the long weekend), Agent A delivered a copy of the Notification Conditions Have Not Been Satisfied or Removed in Writing form to the Brokerage's fornler conveyance officer. The said conveyance officer telephoned Mr. Kotlar with the information and the request for the immediate return of the deposit. Mr. Kotlar further spoke by telephone with Agent A who conveyed to him the fact that the prospective Buyers had not removed conditions as the Seller had not completed the required repairs. 15. At no time from August 31, 2008 and through September 2, 2008 did Mr. Kotlar speak with Agent B or receive notification from Agent B that the Seller intended on contesting the return of the deposit. 16. Based on the best available written information available to Mr. Kotlar and the Brokerage on September 2, 2008, he authorized the return of the prospective Buyers' deposit. At no time before authorizing the deposit return did Mr. Kotlar make an effort to contact Agent B to discuss the file status nor was he in a position to personally review the file prior to authorizing the deposit return. 17. Some days after Mr. Kotlar released the deposit to the prospective Buyers, he received a telephone call from the Seller who stated he had a dispute with the return of the deposit. 18. Mr. Kotlar acknowledged that the May 6, 2008 Amendment To Residential Contract Of Purchase And Sale and Notice To Remove Conditions On Residential Contract Of Purchase And Sale forms should have been more clearly written. During the times that Mr. Kotlar or the Brokerage's management team reviewed the file between May 6, 4

5 2008 and Septernber 2, 2008 they failed to catch the nlistakes that ultimately led to the release of the prospective Buyers' deposit. REPRESENTATIONS The Investigation Committee representative, Ed Miller, confirmed that the Complainant was the Seller, as represented by Agent B of the Brokerage. He confirmed that the facts were not in dispute. The problem occurred on May 6 th, 2008, when the unclear documentation was created. Mr. Miller said that the error was not caught by a review of the documentation by Mr. Kotlar's advisory staff. He stated that the issue was not about the return of the deposit, but rather the unclear documentation that led to the problenls between the Buyers and the Seller. The Investigation Committee recommended a letter of reprinland and a fine in a minimum amount of One Thousand ($1,000.00) Dollars. Mr. Miller suggested that this would impress upon Mr. Kotlar and all registrants the importance of preparing clear and concise documents. Mr. Miller suggested that the mitigating factors for Mr. Kodar were his co-operation in the investigation, his admission of his error and that he plead guilty to the charge. The aggravating factor is the unclear contract which canle into being under his supervision. Mr. Miller suggested that Mr. Kotlar should have noticed the problem earlier and should have taken steps to resolve it before the deposit was released. Mr. Miller referred the Hearing Committee to the Kevin Wouters file ( ) where Mr. Wouters received a $1, fine for breach of this Bylaw 711. He said that the facts in Mr. Wouters' case showed a more blatant non-supervision than in this nlatter. Mr. Kotlar was not present at the hearing. He did file a letter with the Conlll1ission ahead of the Hearing. Mr. Kotlar admited that he, "...was looking nlore at the documentation that the conditions had not been met. We had inspection reports indicating that the work had not been completed." He gave no further explanation for the lack of supervision. DECISION In accordance with the Act and Regulations, the Comnlittee made the following orders: a) Pursuant to clause 38(1)(f) of the Act, that Reginald Kotlar receive an order of reprimand for the violation of Bylaw 711 of the Act ; b) Pursuant to subclause 38(2)(a)(i) of the Act, that Reginald Kotlar, prior to June 30, 2010, pay to the Saskatchewan Real Estate Commission, a $2, fine for the said violation of the Act; and c) Pursuant to clause 38(2)(b) of the Act, that Reginald Kotlar's registration shall be suspended if he fails to pay any portion of the fine within the said period of time. 5

6 RATIONALE The Committee, in considering the disciplinary action, considered Reginald Kotlar's previous sanction history and the length of time he has been in the real estate industry. lack of The Hearing Committee felt that the issue is the lack of review of the matter and failure to see the potential issues that were created by the unclear manner in which the doculnentation was left. As the broker supervising the agents in the Brokerage, Mr. Kotlar should have a process in place to ensure that the conditions in a trade in real estate contract are clear and verifiable. It is this lack of clarity which has lead to the dispute between the Seller and the Buyers. The consequences of the lack of clarity in trades in real estate may include disputes between registrants, the public losing faith in registrants' ability to assist them in closing a transaction and legal action being required to resolve matters. This is the responsibility of the broker according to Bylaw 711, "...to adequately supervise the activities of the registrants and other personnel for whom he or she is responsible." It is apparent that this did not occur in this n1atter, leading to problems between the Buyers and the Seller. The Committee wants to ensure that all brokerages realize the importance of Bylaw 711. It is their duty to supervise. This may mean having systems or supervisory personnel in place to n1ake sure it can occur. The public expects this supervision to be taking place and all registrants should be conscious that they are responsible for proper drafting of contracts and the brokerages must know that they are happening within their brokerage. The brokers can only know this if they undertake appropriate and adequate supervision of the people in the brokerage. This is a n10re serious situation than the Wouters case as there was no supervision of the contract and this lack of supervision has significant ramifications to the parties. The Committee feels a strong fine is required to ensure public confidence in the supervision of registrants by the Commission and to send a strong message to all registrants that supervision by brokerages is their responsibility and it will be enforced by the Commission. 6