Real Estate Council of Ontario DISCIPLINE DECISION IN THE MATTER OF A DISCIPLINE HEARING HELD PURSUANT TO THE REAL ESTATE AND BUSINESS BROKERS ACT, 2002, S.O. 2002, c. 30, Sch. C BETWEEN: REGISTRAR UNDER THE REAL ESTATE AND BUSINESS BROKERS ACT, 2002 - AND- ANTON JEEVA ARULAPPU Subject to Rule 4.02 of the Discipline and Appeals Committee Rules of Practice (REBBA 2002), I, the Chair of the Discipline Committee (REBBA 2002) have reviewed and considered the Agreed Statement of Facts and Recommended Penalty together with the Waiver of Hearing submitted by the Parties to this proceeding and provide the following Order: FINDINGS: In violation of Sections 2.(1), with reference to 10.(2), 11.(1), 13 and 14; 4, 5, and 27.(1)(a) of the REBBA 2002 Code of Ethics. ORDER: Fine of $7,000.00 payable to RECO on or before October 22, 2014. Successful completion of the Real Estate Institute of Canada (REIC) REIC 2280: Legal Issues in Real Estate course and provide confirmation of successful completion on or before October 22, 2014. Successful completion of the Real Estate Institute of Canada (REIC) REIC 2600: Ethics and Business Practice course and provide confirmation of successful completion on or before October 22, 2014. WRITTEN REASONS: REASONS FOR DECISION INTRODUCTION This matter proceeded on the basis of an Agreed Statement of Facts and Penalty and Waiver of Hearing, pursuant to Rule 4.02 of the Rules of Practice (REBBA 2002). Page 1 of 7
The Agreed Statement of Facts and Penalty read: AGREED STATEMENT OF FACTS AND PENALTY 1. The Brokerage is and was, at all relevant times, registered as a Brokerage under the Act. Anton Arulappu is and was, at all relevant times, registered as a Broker under the Act employed, within the meaning of the Act, by the Brokerage. 2. On November 29, 2009, Mr. Arulappu, on behalf of the Brokerage, entered into a written seller representation agreement with the Seller to list a residential property for sale located at the Property with an asking price of $654,900.00 (the Seller Representation Agreement ). 3. Mr. Arulappu, on behalf of the Brokerage did not at any time obtain the Seller s acknowledgement in writing of the information set out in Section 10 of the Code of Ethics. 4. Mr. Arulappu, on behalf of the Brokerage, did not do the following with respect to the Seller Representation Agreement: a) Indicate whether MLS or Exclusive services would be provided by initialing the appropriate provision, although the Seller did sign the Agreement; b) Identify the seller who was party to that Agreement; and c) Obtain the written and dated consent of the Individual, the Seller s spouse, to that Agreement; notwithstanding that Mr. Arulappu was aware that the Individual resided at the Property and/or that the Property was the matrimonial home of the Individual and the Seller. However, the Individual was aware of the Seller Representation Agreement and the subsequent Agreement of Purchase and Sale. 5. On or about January 13, 2010, Mr. Arulappu, on behalf of the Brokerage, presented the Seller with an offer for the Property, dated January 13, 2010, from [the Buyer] In Trust ( the Buyer ) for $590,000.00 ( the January 13 Offer ). 6. The Brokerage, through Mr. Arulappu, represented the Buyer and/or the Buyer with respect to the Offer and resulting Agreement of Purchase and Sale and transaction. 7. The Brokerage purported to represent the Buyer through a partly completed written Buyer Representation Agreement ( the Buyer Representation Agreement ). The socalled Buyer Representation Agreement was signed by the Buyer on January 15, 2010. With respect to the so-called Buyer Representation Agreement, Mr. Arulappu, on behalf of the Brokerage, did not do the following: a) Indicate a commencement or expiry date for the term of representation; b) Disclose to the Buyer the amount of commission to which the Brokerage was entitled under that Agreement, but did not charge the Buyer any commission; and c) Execute or date that Agreement on behalf of the Brokerage. 8. At some point in the offer/negotiation process a handwritten term was added, which Mr. Arulappu represents was at the request of the parties, indicating that the Buyer was permitted access to the Property on January 15, 2010 on a lease basis until time of closing and that the Buyer was allowed to reside on the Property until closing. In negotiations, this term was removed and replaced by the following term ( the Lease Term ): Page 2 of 7
The vendor agrees to provide access to property Jan 14, 2010 on a lease basis until time of closing. The buyers are allowed to reside on property until closing at which time the lease agreement becomes null & void. 9. On or about January 15, 2010, the Seller made an Agreement of Purchase and Sale ( the Agreement of Purchase and Sale ), to sell the Property to the Buyer including the following terms and/or conditions: a) Price of $627,000.00; b) Deposit payable upon acceptance of $10,000.00 payable to the Brokerage ( the Deposit ). The Agreement of Purchase and Sale indicated that the deposit was payable by negotiable cheque; c) Completion date of February 26, 2010; d) Acceptance confirmed January 15, 2010; and e) The aforementioned Lease Term. 10. Intentionally deleted 11. The Lease Term, drafted by Mr. Arulappu on behalf of the Brokerage, included the following deficiencies: a) It was written to commence January 14, 2010, one day before acceptance of the Agreement of Purchase and Sale; b) Did not address what payment would be provided as rent in consideration for permission to lease the Property. The Parties came to their own verbal agreement with respect to rent; c) Did not address the payment of other costs, besides the rent, such as utilities; d) Did not address what would happen if the Agreement of Purchase and Sale was not completed or the completion date was delayed; and e) Did not address the rights of the landlord and tenant generally with respect to the Property, including with respect to chattels and fixtures, pending completion of the Agreement of Purchase and Sale and/or other termination of the Lease Term. 12. On the Confirmation of Co-operation and Representation form, the Seller did not initial the written consent to multiple representation in the referenced transaction. However, she did sign the document. 13. Contrary to the Agreement of Purchase and Sale, the Buyer did not pay a deposit upon acceptance of that Agreement on January 15, 2010, as defined by the Agreement. Mr. Arulappu indicates he took steps to follow up with the Buyer and confirm same with the Seller. 14. On or about January 21, 2010, the Brokerage received a negotiable cheque dated January 20, 2010, provided by the Buyer. On or about February 5, 2010, the January 20, 2010 deposit cheque was returned not sufficient funds. 15. On or about January 27, 2010, the Buyer moved into the Property. 16. Intentionally deleted 17. On February 12, 2010, a certified cheque was delivered to the Brokerage in the amount of $5,000.00, dated February 11, 2010 ( the partial deposit ). Page 3 of 7
18. Mr. Arulappu, on behalf of the Brokerage, did not draft and present an amendment to the Agreement of Purchase and Sale to reflect that the deposit was $5000.00. By that point the Seller indicated that she wanted negotiations to be through her lawyer. 19. The Agreement of Purchase and Sale was not completed on the completion date of February 26, 2010. The Buyer did not leave the Property although title had not been transferred to her. 20. On March 29, 2010 title to the Property was transferred from the Buyer to a numbered company. The Buyer was and is the principal of the numbered company. SUMMARY Anton Arulappu acted unprofessionally including as follows: 1. Mr. Arulappu, on behalf of the Brokerage, did not obtain the Seller s acknowledgement, in writing, of the information required by Section 10 of the Code of Ethics, contrary to Section 2(1) in respect of Section 10(2) of the Code of Ethics. 2. Mr. Arulappu, on behalf of the Brokerage, did not obtain, in writing, the following with respect to the Seller Representation Agreement, contrary to Section 2(1) in respect of Sections 11 and 13 of the Code of Ethics: a) Indicate whether MLS or Exclusive services would be provided by initialling the appropriate provision, although the Seller did sign the Agreement and allowed other registrants to view the Property; b) Identify the seller who was party to that Agreement; c) Obtain the written and dated consent of the Seller s spouse to that Agreement. However, the Seller s spouse was aware of the Agreement. 3. Mr. Arulappu, on behalf of the Brokerage did not ensure that the Seller initialled the multiple representation provision on the Confirmation of Cooperation and Representation form, contrary to Sections 4 and 5 of the Code of Ethic, although she did sign the document and allowed other registrants to view the Property. 4. Mr. Arulappu, on behalf of the Brokerage, did not obtain, in writing, the following information on the Buyer Represention Agreement, contrary to Section 2(1) in respect of Sections 11 and 14 of the Code of Ethics: a) Indicate a commencement or expiry date for the term of representation; b) Disclose to the Buyer the amount of commission to which the Brokerage was entitled under that Agreement; and c) Execute or date that Agreement on behalf of the Brokerage. 5. Although he indicated he was requesting to draft a lease, Mr. Arulappu, on behalf of the Brokerage, drafted the Lease Term with deficiencies that included the following, contrary to Sections 4, 5 and 27(1)(a) of the Code of Ethics: a) It was written to commence January 14, 2010, one day before acceptance of the Agreement of Purchase and Sale; b) Did not address what payment would be provided as rent in consideration for permission to lease the Property and did not reduce the oral agreement between the parties to writing. The Parties arrived at their own oral agreement on this point; Page 4 of 7
c) Did not address the payment of other costs, besides the mortgage, such as utilities; d) Did not address what would happen if the Agreement of Purchase and Sale was not completed or the completion date was delayed. Mr. Arulappu indicates he advised against an unconditional agreement in the circumstances; and e) Did not address the rights of the landlord and tenant generally with respect to the Property, including with respect to chattels and fixtures, pending completion of the Agreement of Purchase and Sale and/or other termination of the Lease Term. 6. Mr. Arulappu, on behalf of the Brokerage, did not draft and present an amendment to the Agreement of Purchase and Sale to reflect that the deposit was $5000.00 contrary to Sections 4 and 5 of the Code of Ethics. By that point the Seller indicated that she wanted negotiations to be through her lawyer. Anton Arulappu breached the following sections of the Code of Ethics: Brokers and salespersons 2. (1) A broker or salesperson shall not do or omit to do anything that causes the brokerage that employs the broker or salesperson to contravene this Regulation. In respect of: Information before agreements 10. (2) The brokerage shall, at the earliest practical opportunity and before an offer is made, use the brokerage s best efforts to obtain from the buyer or seller a written acknowledgement that the buyer or seller received all the information referred to in subsection (1). Contents of written agreements 11. (1) A brokerage shall not enter into a written agreement with a buyer or seller for the purpose of trading in real estate unless the agreement clearly, comprehensibly and prominently, (a) specifies the date on which the agreement takes effect and the date on which it expires; (b) specifies or describes the method for determining, (i) the amount of any commission or other remuneration payable to the brokerage, and (ii) in the case of an agreement with a seller, the amount of any commission or other remuneration payable to any other brokerage; (c) describes how any commission or other remuneration payable to the brokerage will be paid; and (d) sets out the services that the brokerage will provide under the agreement. Seller representation agreements 13. If a brokerage enters into a seller representation agreement with a seller and the agreement is not in writing, the brokerage shall, at the earliest practicable opportunity and before any buyer makes an offer, reduce the agreement to writing, have it signed on behalf of the brokerage and submit it to the seller for signature. Buyer representation agreements 14. If a brokerage enters into a buyer representation agreement with a buyer and the agreement is not in writing, the brokerage shall, before the buyer makes an offer, Page 5 of 7
reduce the agreement to writing, have it signed on behalf of the brokerage and submit it to the buyer for signature. Best interests 4. A registrant shall promote and protect the best interests of the registrant s clients. Conscientious and competent service, etc. 5. A registrant shall provide conscientious service to the registrant s clients and customers and shall demonstrate reasonable knowledge, skill judgment and competence in providing those services. Written and legible agreements 27. (1) A registrant who represents a client in respect of a trade in real estate shall use the registrant s best efforts to ensure that, (a) any agreement that deals with the conveyance of an interest in real estate is in writing. AGREED PENALTY Anton Arulappu be ordered to pay a fine of $7,000.00 by October 22, 2014. Anton Arulappu be ordered to take the Real Estate Institute of Canada Legal Issues in Real Estate 2280 course and provide to RECO with confirmation of successful completion of same by October 22, 2014. Anton Arulappu be ordered to take the Real Estate Institute of Canada Ethics and Business Practice 2600 course and provide to RECO with confirmation of successful completion of same by October 22, 2014. By initials below, I, Anton Arulappu, acknowledge that I have read and understand the penalty outlined herein and agree to the said terms and/or conditions. [Respondent s Initials] By initials below, I, Anton Arulappu, agree, understand, acknowledge and consent to waive the requirement for a hearing and to request an order from the Chair of the Discipline Committee that includes this Agreed Statement of Facts and Penalty as a final settlement of this matter. [Respondent s Initials] By initials below, I, Anton Arulappu, acknowledge that I was aware of my right to be represented by Legal Counsel or agent in this matter. [Respondent s Initials] By signature below the Parties agree, acknowledge, understand and consent to the final settlement of this matter by way of this Agreed Statement of Facts and Penalty. [The Agreed Statement was duly signed by the Parties.] Page 6 of 7
DECISION OF THE CHAIR Having reviewed and considered the Agreed Statement of Facts, the Chair of the Discipline Committee (REBBA 2002) concluded that the Respondent breached Sections 2.(1), with reference to 10.(2), 11.(1), 13 and 14; 4, 5, and 27.(1)(a) of the REBBA 2002 Code of Ethics. The Chair of the Discipline Committee (REBBA 2002) is also in agreement with the joint submission of the Parties as to penalty and accordingly makes the following order: 1. Anton Jeeva Arulappu is Ordered a Fine of $7,000.00 payable to RECO on or before October 22, 2014. 2. Anton Jeeva Arulappu is Ordered to successfully complete the Real Estate Institute of Canada (REIC) REIC 2280: Legal Issues in Real Estate course and provide confirmation of successful completion on or before October 22, 2014. 3. Anton Jeeva Arulappu is Ordered to successfully complete the Real Estate Institute of Canada (REIC) REIC 2600: Ethics and Business Practice course and provide confirmation of successful completion on or before October 22, 2014. [Released: November 11, 2013] Page 7 of 7