DECISION OF THE SASKATCHEWAN REAL ESTATE COMMISSION AND CONSENT ORDER Lautermilch (Re), 2019 SKREC 7 Date: January 28, 2019 Commission File: 2018-26 IN THE MATTER OF THE REAL ESTATE ACT, C. R-1.3 AND IN THE MATTER OF ELDON LAUTERMILCH Before: A Saskatchewan Real Estate Commission Hearing Committee comprised of the following: David M. Chow - Chairperson Doreen Heinbigner Dean Staff CHARGE and ADMISSION OF MISCONDUCT: [1] The registrant is charged with and is admitting to professional misconduct as follows: Count 1: That, contrary to section 39(1)(c) of The Real Estate Act, Mr. Eldon Lautermilch breached Commission Bylaw 726(c) by authorizing the publication of an advertisement that included information that was reasonably capable of misleading the recipient or intended recipient. LEGISLATION: [2] 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. 1
[3] Commission Bylaw 726(c) 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 reasonably capable of misleading the recipient or intended recipient; FACTS: [4] In accordance with subsection 9(4) of The Real Estate Regulations ( the Regulations ), the Hearing Committee accepts Eldon Lautermilch s Statement of Facts and Admissions, which includes the following relevant points: [5] Mr. Lautermilch has been continuously registered as a salesperson under the provisions of The Real Estate Act in the Province of Saskatchewan with the Saskatchewan Real Estate Commission since July 2, 2009. [6] Mr. Lautermilch has taken the following real estate courses: Phase 1 Real Estate as a Professional Career; Residential Real Estate as a Professional Career. [7] Mr. Lautermilch has completed the continuing professional development seminars each registration year since 2009-2010. [8] Mr. Lautermilch is presently registered under the provisions of The Real Estate Act as a salesperson with Century 21 Dome Realty Inc. [9] On July 21, 2017, the Sellers signed a Seller s MLS Brokerage Contract listing the Property for sale. [10] Mr. Lautermilch acted as the listing agent. [11] The brokerage contract lists a civic address of Named Island, La Ronge, Saskatchewan. [12] The Property is not, in fact, located on Named Island. [13] The cabin Mr. Lautermilch listed for sale is on an unnamed island under lease from the provincial government and has no legal description or civic address attached to it. [14] The Sellers also signed a Residential Saskatchewan MLS Data Input Form that stated the Property was located on Named Island. [15] The Sellers contacted Mr. Lautermilch to assist in the sale of a property on an unnamed island on Lac La Ronge. Mr. Lautermilch had the latitude and longitude of the property, so placing the pin on the MLS map was quite simple. Mr. Lautermilch 2
requested a more detailed map of the area from the Ministry of Parks, Culture and Sport, which he included in the listing as an attachment with an explanation of the unnamed island s proximity to the more easily identifiable markers of Marker A and Named Island. [16] Mr. Lautermilch submitted the listing documents to his brokerage, which sent the documents on to the Association of Regina REALTORS (the Association ). The listing was deemed incomplete as Mr. Lautermilch had not been able to fill in a property address, which had recently become mandatory. [17] Mr. Lautermilch spoke to his broker and the Association about how to identify and advertise the Property. All three parties struggled with how to present a property that had no civic or legal address. [18] On August 13, 2017, Association staff sent an email to Mr. Lautermilch s broker stating that the Property had been named as Island near La Ronge. [19] According to the Association s audit logs, Association staff changed the name of the Property to Named Island near La Ronge shortly thereafter. [20] The MLS Listing created with respect to the Property names the Property as Named Island near La Ronge. The Public Remarks state that the Property is a waterfront log cabin, on its own unnamed island. [21] The Owner owns the only cabin located on Named Island on Lac La Ronge. [22] The Owner called Mr. Lautermilch about the listing. The Owner requested that Mr. Lautermilch remove Named Island from the advertisement because the Owner had gone to great pains to keep the cabin obscure and did not want people wandering the island looking for the listing. [23] Mr. Lautermilch did not amend the MLS listing after speaking to the Owner. REASONS: [24] The Investigation Committee and Mr. Lautermilch considered the following as relevant in agreeing to the within consent order: Mitigating Factors [25] Mr. Lautermilch has no previous sanction history. [26] Mr. Lautermilch was co-operative with the investigation. 3
[27] Mr. Lautermilch consulted with his broker and the Association about how to advertise the Property on the MLS System. Aggravating Factors [28] Mr. Lautermilch did not amend the listing after he was contacted by the Owner and specifically asked to do so. Prior Decisions & Other Considerations [29] In May of 2012, the Appeals Committee of the Real Estate Council of Ontario rendered a decision In the Matter of Suzette Thompson ( Thompson ). The Appeals Committee in Thompson set out a series of factors to be considered when determining the appropriate sanction for a registrant found in breach of the legislation. The factors are as follows: 1. The nature and gravity of the breaches of the Code of Ethics. 2. The role of the offending member in the breaches. 3. Whether the offending member suffered or gained as a result of the breaches. 4. The impact of the breaches on complainants or others. 5. The need for specific deterrence to protect the public. 6. The need for general deterrence to protect the public. 7. The need to maintain the public s confidence in the integrity of the profession. 8. The degree to which the breaches are regarded as being outside the range of acceptable conduct. 9. The range of sanction in similar cases. [30] These factors are reasonable considerations and can offer guidance to members of a Hearing Committee tasked with crafting an appropriate sanction for a registrant found to have committed professional misconduct. These factors have been consistently applied in Saskatchewan Real Estate Commission consent orders since September 2016. 1. The nature and gravity of the breaches of the Code of Ethics. [31] Mr. Lautermilch was engaged to assist in the sale of a property located on an unnamed island on Lac La Ronge. The Property did not have a civic address, so completing the MLS Listing became complicated. Mr. Lautermilch ultimately allowed the publication of an advertisement that identified the Property as being located on Named Island when, in fact, the Property was not located on Named Island. Although Mr. Lautermilch included a map marking the location of the Property and comments intended to clarify that the Property was not located on Named Island, these measures were not sufficient clarification in light of the explicit statement that the Property was located on Named Island. 2. The role of the offending member in the breaches. [32] Although Mr. Lautermilch consulted with his broker and staff at the Association, he was still ultimately responsible for the content of the advertisement. 4
3. Whether the offending member suffered or gained as a result of the breaches. [33] There is no evidence to suggest that Mr. Lautermilch enjoyed any benefits or suffered any losses as a result of his breach of the legislation. 4. The impact of the breaches on complainants or others. [34] The Owner owns the only cabin on Named Island. She was upset by the advertisement because she did not want people wandering around the island trying to find the Property. 5. The need for specific deterrence to protect the public. [35] Mr. Lautermilch must be reminded that all of the information registrants present to the public in their advertisements must be clear and accurate. It must be made clear to Mr. Lautermilch that, regardless of any consultation with other parties, as the listing agent, he remains ultimately responsible for the content of any advertisements relating to the properties he lists for sale. 6. The need for general deterrence to protect the public. [36] General deterrence is needed to remind all registrants that the information they present to the public in their advertisements must be clear and accurate. It must be emphasized to all registrants that, regardless of any consultation with other parties in the creation of an advertisement, registrants remain ultimately responsible for the content of any advertisements relating to the properties they list for sale. 7. The need to maintain the public s confidence in the integrity of the profession. [37] Members of the public must be reassured that all of the information they receive from registrants in advertisements is clear and accurate. 8. The degree to which the breaches are regarded as being outside the range of acceptable conduct. [38] Mr. Lautermilch s conduct falls below the standard expected of registrants, but it was not egregious. 9. The range of sanction in similar cases. A. What is an appropriate sanction for Mr. Lautermilch s breach of Commission Bylaw 726(c)? [39] In Mahon (Re), 2018 SKREC 20 (file #2016-70) ( Mahon ), Marianne Mahon was issued an order of reprimand and a $2,000 fine for creating an advertisement that inaccurately stated what was included in the property. Ms. Mahon listed a property for sale that was comprised of two lots. She assumed the property included two lots that were separated by a fence. One lot included a house and garage, the other was clear. Ms. Mahon was unable to obtain information from the Town office and did not 5
take any other steps to determine how the lots that made up the property were split. She created an MLS Listing that stated: Great location on 2 lots. Corner lot has 1 bedroom house with single garage, other lot is clear. Ms. Mahon also represented the buyer of the property. After taking possession, the buyer learned that the property only extended to the fence and that the vacant lot on the other side of the fence was not part of the property. [40] Ms. Mahon had no previous sanction history and was co-operative with the investigation. She acknowledged her error and apologized when questioned by her buyer client. Ms. Mahon signed a Consent Order acknowledging her error. [41] Ms. Mahon was acting as a limited dual agent in the transaction. Registrants must be even more diligent when there are no other registrants involved to ensure the information presented to the parties is accurate and the transaction is managed properly. [42] Mr. Lautermilch s breach of Bylaw 726(c) is less serious than that of Ms. Mahon. Mr. Lautermilch was aware that the Property was not located on Named Island and attempted, albeit unsuccessfully, to create an advertisement that clearly indicated as much. Mr. Lautermilch had also reached out to his broker and his local Association for assistance in creating the advertisement. [43] In Ursan (Re), 2009 SKREC 9 (file #2008-26A) ( Ursan ), Hazel Ursan was issued an order of reprimand and a $3,000 fine for issuing an advertisement that did not clearly explain or qualify what was included in the MLS Listing. Despite the statement in the listing that the sale included the adjacent, vacant lot, the contract of purchase and sale only referred to one of the two lots that comprised the property. [44] Ms. Ursan had no prior sanction history, was co-operative and had no malicious intent. [45] The Hearing Committee considered the significant harm to the buyer and the buyer s representative and the fact that the accurate legal description of the property is one of the core elements of a trade. [46] Mr. Lautermilch s breach of Bylaw 726(c) is less serious than that of the registrant in Ursan. Ms. Ursan s advertisement resulted in a contract of purchase and sale that failed to accurately identify the lots that comprised the property. [47] In Kolababa (Re) (file #2001-03B) ( Kolababa ), Timothy Kolababa was issued an order of reprimand and a $500 fine for distributing information to the Saskatoon Real Estate Board that identified the property as having a concrete basement when, in fact, it did not. The appraisal and building inspection reports indicated that the property had block basement walls. There was no evidence indicating whether or not the buyer was aware of the basement wall construction. Mr. Kolababa had 6
information about the basement wall construction from when he had listed the property in the past. [48] There was no evidence that Mr. Kolababa was aware of the discrepancy or that he had made any effort to cover up his mistake. He was co-operative and had no prior sanction history. The Hearing Committee did not find any deliberate attempt to mislead or evidence of consumer harm. The Committee noted that the hearing had been very stressful for Mr. Kolababa and that his reputation suffering harm could be a sufficient deterrent to prevent him from re-offending. [49] The inaccurate information was not a clerical error, because Mr. Kolababa was in possession of information indicating the basement was block wall construction from his previous listing of the property. The Hearing Committee noted that the onus is on the registrant to verify information in an advertisement and this was not done. [50] Mr. Lautermilch s breach of Bylaw 726(c) is slightly more serious than that of the registrant in Kolababa. The owner of the Property was very upset by Mr. Lautermilch s advertisement and worried that members of the public might visit Named Island in an attempt to locate the Property. [51] The decision in Kolababa was rendered in 2001. In 2008, the real estate market in Saskatchewan experienced a significant expansion that resulted in an increase in property values. As property values rise, so do the commissions registrants can expect to earn on a trade in real estate. Fines ordered by the Commission must keep pace with these increases, and with the impact of general inflation, or run the risk of fines coming to be seen as a cost of doing business. [52] An order of reprimand and a $1,750 fine are appropriate sanctions for Mr. Lautermilch s breach of Bylaw 726(c). [53] As Mr. Lautermilch has agreed to sign this consent order, there will be no order as to costs. CONSENT ORDER: [54] In accordance with The Real Estate Act, its Regulations, and the Commission Bylaws, and with the consent of Eldon Lautermilch and the Investigation Committee of the Saskatchewan Real Estate Commission, the Hearing Committee hereby orders: [55] With respect to Count 1, the charge of professional misconduct contrary to section 39(1)(c) of The Real Estate Act for breach of Commission Bylaw 726(c): a. Eldon Lautermilch shall receive an order of reprimand for the violation of Bylaw 726(c); 7
b. Eldon Lautermilch shall, within 30 days of the date of this order, pay to the Saskatchewan Real Estate Commission a $1,750.00 fine for the said violation of the bylaw; and c. Eldon Lautermilch s registration shall be suspended if he fails to make payment as set out above. [56] There shall be no order as to costs. Dated at Moose Jaw, Saskatchewan this 28 th day of January, 2019. David M. Chow, David M. Chow, Chairperson 8