IN THE MATTER OF THE REAL ESTATE ACT, C. R-1.3 IN THE MATTER OF ELAINE ELDER

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1 IN THE MATTER OF THE REAL ESTATE ACT, C. R-1.3 AND IN THE MATTER OF ELAINE ELDER DECISION OF THE SASKATCHEWAN REAL ESTATE COMMISSION Commission File: # Before: A Saskatchewan Real Estate Commission Hearing Committee comprised of the following: Randal C. Touet - Chairperson Phillip Mack Wayne White Appearances: Aaron Tern, on behalf of the Investigation Committee Elaine Elder, Registrant Al White, Broker for the Registrant Hearing Date: August 27,2012 Written Decision: October 19,

2 The Mitigation Hearing was held August 27, 2012 at the Saskatoon Club, Saskatoon, Saskatchewan before a Hearing Committee ("the Committee") of the Commission. The Statement of Facts and Admissions dated May 29, 2012, provided particulars of Elaine Elder's vio lation and admissions. CHARGE and ADMISSION OF MISCONDUCT The registrant was charged with and has admitted, in the Statement of Facts and Admissions, to professional misconduct as follows: Count 1: That contrary to Section 39(1)(c) of The Real Estate Act Ms. Elder breached Commission Bylaw 701, by making or permitting to be made a statement, record, report, notice or other document required by this Act, the regulations or the bylaws that contained an untrue statement of the material fact and/or omitted to state material fact. Count 2: That contrary to Section 39(l)(c) of The Real Estate Act Ms. Elder breached Commission Bylaw 702, by failing to protect and promote the interest of her client and failing to deal fairly with the other parties to this transaction. Count 3: That contrary to Section 39(1)(c) of The Real Estate Act Ms. Elder breached Commission Bylaw 714, in that Ms. Elder failed to take reasonable steps to discover facts pertaining to every property for which she accepted an agency agreement that a prudent registrant would take in order to fulfil the obligation to avoid error, misrepresentation or concealment of pertinent facts. Count 4: That contrary to Section 39(1)(c) of The Real Estate Act Ms. Elder breached Commission Bylaw 726, by making or permitting an advertisement to the public as an inducement to trade in real estate which was inaccurate, reasonably capable of misleading the recipient or intended recipient, and was harmful to the best interests of the public. 2

3 LEGISLATION Section 39(1)(c) of The Real Estate Act states: "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 a breach of this Act, the regulations or the bylaws or any terms or restrictions to which the registration is subject." Bylaw 701 which states: "No registrant shall make or permit to be made, whether orally or otherwise, a statement, record, report, notice or other document required by this Act, the regulations or the bylaws that: (a) contains an untrue statement of a material fact; or (b) omits to state a material fact. " Bylaw 702 which states: "A registrant shall protect and promote the interests of his or her client. This primary obligation does not relieve the registrant from the obligation of dealing fairly with all other parties to the transaction. " Bylaw 714 which states: "A registrant shall take reasonable steps to discover facts pertaining to every property for which the registrant accepts an agency agreement that a prudent registrant would take in order to fulfil the obligation to avoid error, misrepresentation or concealment of pertinent facts. " Bylaw 726(b) and (c) which states: "Any advertisement or incentive or the offering of any incentive or the participation in an incentive program to the public as an inducement to trade in real estate undertaken or authorized by a registrant shall not be: (b) inaccurate; or (c) reasonably capable of misleading the recipient or intended recipient." FACTS In accordance with subsection 9(4) of The Real Estate Regulations ("the Regulations"), the Committee accepted Elaine Elder's Statement of Facts and Admissions, which include the following relevant points: 1. Ms. Elder has been continuously registered as a salesperson 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 since April 11, Ms. Elder has completed the continuing professional development seminars each registration year since Ms. Elder is presently registered under the provisions of The Real Estate Act as a salesperson with Maunula Holdings Ltd. o/a Re/Max of the Battlefords. 3

4 4. On or about August 8, 2007, Ms. Elder entered into an MLS Exclusive Sellers Brokerage contract with a Seller for a listing of property in Wilbert, Saskatchewan ("The Property"). The list price for the property was $149, As part of the listing Ms. Elder stated that the water supply to the Property was "from own well approximately 50 feet deep" and this information became part of the MLS listing. Ms. Elder represented that the Property lot was approximately two acres by two acres, rectangular in shape and had a gravel driveway. 6. Ms. Elder did not take any steps to verify the information set out in the said listing contract as she indicates that she had listed and previously sold the Property in In November 2002, Ms. Elder had listed the property for $24, on behalf of another party. The Seller had purchased the Property from this other party for $22, with a closing date of February 15, As part of the 2003 transaction it was stated in the Residential Contract of Purchase and Sale that, "Surveyor's Certificate would be included." This writing was crossed out and initialled "EE" followed by the statement "Sellers will assist Purchaser in finding property boundaries (NO MONETARY VALUE)." In the Notice to Remove Conditions form dated January 31, 2003, it is stated that "propert y boundaries will be determined in spring " 8. Ms. Elder attended the Property on or about May 2003 with her husband to attempt to locate the corner pins on the Property with a metal detector. They were unable to do so and then used some wooden stakes to mark one square acre on the property. Ms. Elder indicates that it was not her intention that these markings were the boundaries of the Property. 9. In listing the Property in August 2007, Ms. Elder relied on the information she had from May 2003, that the Property was a rectangular shape, including the house, the garage, the water well that serviced the Property and the access road to the Property. In doing so Ms. Elder relied on her own information and did not take any steps to verify the Property boundaries. 10. On October 26, 2007, Ms. Elder agreed with the Seller to withdraw the listing agreement for the Property which was made August 8, Ms. Elder states and understands the following to be true: a) That after August 8, 2007, the Seller negotiated a sale of the Property to a third party for $80, The parties obtained legal services to formalize their payment and decided that a Surveyor's Certifica te was required; b) In or about March of 2009, the Seller obtained the services of a qualified surveyor to survey the Property. The result of that survey disclosed: 4

5 ii) The water well that serviced the Property is wholly situated on another parcel of land owned by a separate party; ii) The access road that connects the Property to the municipal roadway is partially situated on another parcel of land owned by a separate party, thereby eliminating any access to the Property; iii) A portion of the yard site previously thought to be part of the Property is actually situated on another parcel of land owned by a separate party. c. The third party then agreed to pay $60, for the Property if an easement could be arranged for the purpose of accessing the well and use of the driveway. No such easement agreement was reached and the third party ended negotiations for purchase of the Property. d. The Seller moved from the Property as the owner of the neighbouring and adjacent property had taken the position that it would be trespassing for the Seller to access the Property. e. Between purchasing the Property in 2003 for $22,000.00, listing in August 2007 for $149,900.00, and then agreeing to sell for $80, in November 2007, the Seller had made the following improvements to the Property: i) New soffits and facia in 2006; ii) Installed a reverse osmosis system and water softener in 2006; iii) New paint in 2006; iv) New shingles in 2007; v) Installed patio blocks in 2007; and vi) New septic pump in f. The Property has been essentially been abandoned by the Seller since 2008 while a lawsuit between the parties continues. PRELIMINARY ISSUES It was raised as a concern by the Committee that the time frame for these decisions is an issue. The initial transaction was back in 2003 and the new transaction in The Committee was advised that the Real Property Report was dated March 13, 2009 and the Seller filed a complaint on February 19, 2010, prompting an investigation by the Commission. Mr. Tetu argued that the limitation sections of The Real Estate Act and Regulations applied from the date 5

6 that the contravention became known in March of Bylaw 810 indicates that if the complaint is not received within six years of the contravention, an investigation may not take place. It is the finding of the Committee that the knowledge of the issue did not come to the attention of the complainant until after the Surveyor's Certificate was prepared in or about March of 2009 and that an investigation was commenced pursuant to Section 810. It was the position of the Committee that The Real Estate Act limitation period of two years applies to prosecutions under Section 88 of the Act... not in investigations referred to in Bylaw 810 of the Act and therefore the proceeding has continued. It was the recommendation of the Committee that the Real Estate Commission should review the two sections to ensure they are clarified in the future for the use of Registrants. REPRESENTATIONS The Investigation Committee representative, Aaron Tetu, indicated that the complaint under Count 1 was regarding the listing and reference to the well and incorrect dimensions of the Property. The facts related to a breach of Bylaw 702 and Count 2 related to the failure of Ms. Elder to verify the facts in listing and in the purchase. Mr. Tetu indicated that the errors were serious even though they did not suggest any intentional issues as determined in the complaint or in the investigation. Mr. Tetu referred the Committee to the Schmidt and Morrison cases, Schmidt being Case B and Morrison, In the Schmidt case, this was Mr. Schmidt and his partner dealing with the buyer of real estate property and providing a factually incorrect response to the Real Estate Commission's Review Officer with regard to the certain facts. Mr. Schmidt received a fine of $5, with regard to Bylaw 701 and $3, with regard to breach of Bylaw 726 together with hearing costs in the amount of $ Mr. Morrison received a $5, fine regarding a failure to determine the encroachment of his parents' cabin property onto an adjacent property. He has also received an Order of educational upgrading in the course, Real Estate as a Professional Career. Mr. Tetu indicated that the consequences in this case are much more serious than in the previous cases. Mr. Tetu referred the Hearing Committee to the Spezowka, Blonski and Doderai cases with regard to Bylaw 714. In the Spezowka case a Mr. Spezowka was fined the sum of $2, for failing to properly determine the taxes involved and special payment levy on the sale property. Mr. Blonski, in case , was fined $2, with regard to failing to determine the truth of the statement that a new boiler was on the condominium property. Mr. Doderai was fined the sum of $2, for advertising a property with having 716 square feet when it was later verified that it actually was 516 square feet. Mr. Tetu also referred the Committee to the Darrel Dick case, , where Mr. Dick was fined $3, for breach of bylaw 702 with regard to dealing with property for his father when he did not confirm the Power of Attorney and problems arose therefrom. 6

7 Mr. Tetu referred the Committee to the principles of sanctions which include punishment, a deterrent to the Registrant and other registrants, protection of the public and rehabilitation of the Registrant. He stressed that a Registrant should not rely on information received from others but has a responsibility to independently determine information if possible. Mr. Tetu also advised the Committee that the previous cases were somewhat dated and acknowledged that while there is a maximum of $5, per charge for a cumulative total of $15,000.00; the fines granted in this case should reflect the changing marketplace in the province. In particular, as property values have increased significantly, he suggested that fines should rise; otherwise the deterrent value of a fine will be less significant. The impact on the Registrants and the real estate industry in the province would then have less impact according to Mr. Tetu. With regard to the circumstances of this case, he indicated that they are extremely serious and the seriousness of the situation should be reflective in the sanctions. Mr. Tetu advised that litigation between the parties is on-going and, as such, the Court is better suited to deal with the issue of restitution. He requested costs of the hearing to be assessed against Ms. Elder which according to the document filed with the panel is a total of $2, In conclusion, Mr. Tetu requested the Committee to consider the severity of the consequences in that the property had been abandoned for approximately the last four years. Ms. Elder spoke to the Committee and indicated that she did listen to her Sellers and spoke to everyone regarding the circumstances of the Property. She indicated that the Property visually looks a lot like a rectangular lot and stressed that she and her husband had tried to find the corner pins for the Property. Ms. Elder stressed again to the Committee that in her estimation all was good amongst the parties until the Surveyor's Certificate determined otherwise in There never was a red flag in her mind with regard to the Property. Ms. Elder felt that a fine in the sum of $15, cumulatively would be too significant in this matter. She advised the Committee that she had tried to fix the situation but the neighbour of the Seller refused to sell or otherwise deal with the Property to allow the Seller to obtain the easement required to otherwise deal with the problems related to the Property. Ms. Elder confirmed that she has been in the real estate industry for 28 years and she stated that she always tried to help her clients. She does many, many transactions and goes to all the courses. Mr. Al White, the Broker for Ms. Elder, also spoke to the Committee. He indicated that Ms. Elder has five children, is a great family person, and in the circumstances of this case there was never any intentional action on behalf of Ms. Elder to cause problems. There was a mistake, a costly one. He indicated that Ms. Elder does 60 to 100 real estate transactions per year and has a very good reputation in the community. Mr. White suggested that if parcel pictures had been readily available at that time, it may have made a difference to the events leading to this sanction. 7

8 In questioning by the Committee, it became apparent that the previous titles which may have indicated some of the issues and problems with this Property were never reviewed. Mr. Tetu indicated that he would be seeking a $5, fine for breach of Bylaw 701; a $3, fine for breach of Bylaw 702; a $2, fine for breach of Bylaw 714; and a $5, fine for breach of Bylaw 726, together with costs of $2, DECISION In accordance with The Real Estate Act, Bylaws and Regulations, the Committee made the following orders: Count 1 a) Elaine Elder receive an order of reprimand for the violation of Bylaw 701; b) Elaine Elder, prior to December 31, 2012, pay to the Saskatchewan Real Estate Commission, a $5, fine for the said violation ofthe Act; and c) Elaine Elder's registration shall be suspended if she fails to pay any portion of the fine within the said period oftime. Count 2 d) Elaine Elder receive an order of reprimand for the violation of Bylaw 702; e) Elaine Elder, prior to December 31, 2012, pay to the Saskatchewan Real Estate Commission, a $3, fine for the said violation ofthe Act; and f) Elaine Elder's registration shall be suspended if she fails to pay any portion of the fine within the said period of time. Count 3 g) Elaine Elder receive an order of reprimand for the violation of Bylaw 714; h) Elaine Elder, prior to December 31, 2012, pay to the Saskatchewan Real Estate Commission, a $2, fine for the said violation of the Act; and i) Elaine Elder's registration shall be suspended if she fails to pay any portion of the fine within the said period of time. Count 4 j) Elaine Elder receive an order of reprimand for the violation of Bylaw 726; k) Elaine Elder, prior to December 31, 2012, pay to the Saskatchewan Real Estate Commission, a $5, fine for the said violation of the Act; and 1) Elaine Elder's registration shall be suspended if she fails to pay any portion of the fine within the said period of time. COSTS m) Elaine Elder, prior to December 31, 2012, pay to the Saskatchewan Real Estate Commission costs in the amount of $1, Elaine Elder's registration shall be suspended if she fails to pay any portion of the costs within that said period of time. 8

9 RATIONALE The Committee, in considering the disciplinary action, considered Elaine Elder's lack of previous sanction history and the length of time she had been in the real estate industry. The Committee was struck by the severity of the consequences in this action and the significant breach of all the Bylaws. While dealing with acreage properties may raise more issues than normal residential real estate, it was incumbent upon the Registrants to properly do their job. It is not sufficient to make representations with regard to factual matters without ensuring that the facts are correct. If the Registrant is not aware of particular facts such as the exact number of acres, it must be made clear that there was no representative as to the size of the acreage, the shape of the property or any other unconfirmed matters. The Committee is not accepting that it is simply okay to make statements based on previous representations without independent verification of the facts. Each time registrants enter into a new listing, they are acting, and must act, in the interests of all parties to the transaction. The failure to determine the facts and to make unwarranted representations is very apparent in this matter. Ms. Elder should never have stated that the property was rectangular when indeed it was actually somewhat triangular and many difficulties arose because of lack of proper investigation. The fact that the adjoining neighbour is not cooperative in helping to resolve these matters does not mitigate or remove the issue of Ms. Elder being required to properly determine the facts before they are presented. There are a few cases which have come before the Real Estate Commission for mitigation or otherwise, which have more serious ultimate consequences then those in this particular situation. It appears that the value of the Property has been severely impacted by these circumstances. Transactions over the last number of years have led to serious issues between the parties and for the Property to have been abandoned for approximately four years. The sanctions recommended by the Investigation Committee Representative are not incongruent with the seriousness of the breaches by Ms. Elder. The Committee is prepared to accept that Ms. Elder did not act intentionally in regard to the situation; however, the failure of Ms. Elder to properly comply with her legislative and personal obligations to act in the best interests of the parties has created a situation of extreme difficulty for the parties, especially the Seller. Again, it should be stressed that the purpose of the sanction is both to ensure that Ms. Elder understands the consequences of her failure to act appropriately and to make sure all registrants know that they must verify these facts before they are set out in a listing agreement, advertisement, or in any other fashion presented to the public. The public is entitled to rely on the professionalism and actions of registrants to disclose what they know; not for registrants to act on assumptions and unverified information. With regard to the issue of costs, the Committee is of the 0pilllOn that while in some circumstances full costs are appropriate, when there has been some cooperation, and it appears there has been in this matter by Ms. Elder, it has saved the Committee some costs compared to holding a formal hearing or further extending the investigation. Therefore, in the circumstances one-half costs is appropriate and have been awarded. 9

10 The Hearing Committee again stresses the importance to all Registrants to ensure that they properly investigate and determine the facts surrounding the property with which they are dealing. If there are facts of which they are not sure, they cannot make representations until they have confirmed them or advise all the parties that they are unclear, so the parties themselves can determine the risk on their own. When property is said to be of a certain dimension and have certain characteristics when these have not been determined, the consequences for their failure must therefore fall back on the Registrant. Dated at Saskatoon, Saskatchewan this 19 th day of October, =~. 10