Real Estate Council Of Ontario. Regulatory Digest

Real Estate Council Of Ontario Regulatory Digest Issue 3: October December 2013

The Real Estate Council of Ontario (RECO) administers and enforces the Real Estate and Business Brokers Act, 2002 (REBBA 2002) and its regulations on behalf of the Ontario government. REBBA 2002 requires registered real estate professionals to conduct themselves and their businesses in a manner that protects consumers in real estate transactions. Failure to do so could lead to regulatory action. Further, with few exceptions, anyone who trades in real estate must be registered under REBBA 2002. Trading in real estate without the benefit of registration or an exemption could lead to prosecution under REBBA 2002. RECO s legal library RECO s mission is excellence in the delivery of regulatory services that protect the public interest and enhance consumer confidence in the real estate profession. RECO s vision is public trust and confidence in Ontario s real estate profession. Contact us at: 3300 Bloor Street West West Tower, Suite 1200 M8X 2X2 Tel: 416-207-4800 Toll Free: 1-800-245-6910 Fax: 416-207-4820 www.reco.on.ca regulatorydigest@reco.on.ca Twitter: @RECOhelps YouTube: RECOhelps RECO s enforcement of REBBA 2002 helps to ensure public trust and confidence in Ontario s real estate profession. The Regulatory Digest is an online resource that summarizes RECO s regulatory actions involving: the Registrar issuing a Notice of Proposal to revoke, suspend, refuse to renew, or apply conditions to a registration; offences related to REBBA 2002 and its regulations resulting in prosecution in the Provincial Offences Courts; breaches of the Code of Ethics that are referred to a hearing in front of the Discipline Committee or Appeals Committee; and mediation of complaints to a resolution agreeable to all parties. Decisions are not published until the appeal period has expired or the appeal has been heard or abandoned. For the latest decisions, visit RECO s website (www.reco.on.ca). Page 1 of 15

Provincial Offences Act Offences under REBBA 2002, other than violations of the Code of Ethics, may be prosecuted in the Ontario Provincial Offences Court. Individuals convicted of offences are subject to fines of up to $50,000 and/or prison terms of up to two years less a day. Corporations are subject to fines of up to $250,000. In addition to specified fines, convicted parties are also subject to a victim surcharge. The surcharge is collected by the Court for the Victims Justice Fund. Graydon Hill Realty Ltd., Revoked Date of conviction: November 14, 2013 Date of sentencing: November 14, 2013 Failed to immediately deposit sufficient funds into the trust account. Graydon Hill Realty Ltd. pleaded guilty to one count of failing to immediately deposit funds into the trust account to eliminate a shortfall. The brokerage was fined $250,000. David Allen, Revoked Date of conviction: November 14, 2013 Date of sentencing: November 14, 2013 Failed to ensure that Graydon Hill Realty Ltd. immediately deposited sufficient funds into the trust account. Mr. Allen, Broker of Record of Graydon Hill Realty Ltd., pleaded guilty to one count of failing to ensure that the brokerage immediately deposited sufficient funds into the trust account to eliminate a shortfall. He was fined $20,000 and ordered to pay $100,000 in restitution. Danny Dhaliwal, Salesperson Date of conviction: November 18, 2013 Date of sentencing: November 18, 2013 Failed to notify the Registrar in writing within five days of a change to information previously provided on an application for registration about charges laid against him. Mr. Dhaliwal pleaded guilty. He was fined $2,000. Page 2 of 15

Claudio Mastronardi, Salesperson Date of conviction: November 18, 2013 Date of sentencing: November 18, 2013 Furnished false information about a conviction in an application. Failed to notify the Registrar in writing within five days of a change to information previously provided on an application for registration about the issuance of a judgment. Mr. Mastronardi pleaded guilty to both counts. He was fined $4,500. Charles Aziegbemhin, Broker Date of conviction: December 5, 2013 Date of sentencing: December 5, 2013 Failed to ensure that Reccmox Realty Inc. complied with REBBA 2002. Failed to review, sign and date the trust account reconciliation statements for the trust account maintained by Reccmox Realty Inc. Mr. Aziegbemhin, Broker of Record of Reccmox Realty Inc., pleaded guilty to three counts of failing to ensure that the brokerage complied with the Act and one count of failing to review, sign and date the trust account reconciliation statements within the prescribed time. He was fined $16,000. Reccmox Realty Inc. Date of conviction: December 5, 2013 Date of sentencing: December 5, 2013 Failed to deposit into the trust account, all money that came into the brokerage s hands in trust for other persons in connection with the brokerage s business. Failed to prepare trust account reconciliation statement(s). Failed to keep an accurate written record identifying every deposit and disbursement from the trust account. Failed to make complete and accurate trade record sheets. Reccmox Realty Inc. pleaded guilty to all counts. The brokerage was fined $16,000. Page 3 of 15

Allan Shepheard (also known as Al Shepheard), Salesperson Date of conviction: December 18, 2013 Date of sentencing: December 18, 2013 Accepted a commission or other remuneration for trading in real estate from a person other than the brokerage that employed him. Falsified information related to a trade in real estate. Furnished false information in relation to a trade in real estate. Mr. Shepheard pleaded guilty to all counts. He was fined $24,000 and placed on probation for two years. The probation order requires that he make a restitution payment of $2,780. Page 4 of 15

Discipline Committee & Appeals Committee Matters that involve alleged breaches of the Code of Ethics may be referred to the Discipline Committee for a hearing. Individuals found in violation may be ordered to take educational courses, pay a fine of up to $25,000, and may be required to pay fixed or imposed costs. Keywords are provided for each summary to help readers locate similar Discipline and Appeals decisions using the search feature available on RECO s website under Complaints & Enforcement. Sukhjinder Gandhi (also known as Sunny Gandhi), Salesperson Brampton, ON Date decision released: October 3, 2013 Did not prepare a written Buyer Representation Agreement (BRA) naming the consumer and the brokerage as parties, explain the BRA and the nature of the brokerage s services to the consumer, or obtain their acknowledgement of the above in writing. Did not independently confirm with the consumer what she wanted to pay for any property prior to submitting an offer. the Chair of the Discipline Committee, Mr. Gandhi was ordered to pay a fine of $8,000 by December 31, 2013. Conscientious and Competent Service, Duty to Client, Representation Agreements Daljinder Singh Gill, Broker Date decision released: October 3, 2013 Failed to forward trust funds upon receipt of a letter from the seller s counsel and signed by the buyer directing him to do so. the Chair of the Discipline Committee, Mr. Gill was ordered to pay a fine of $4,000 and to successfully complete the Real Estate Institute of Canada s REIC 2280: Legal Issues in Real Estate course by March 31, 2014. Conscientious and Competent Service, Duty to Ensure Compliance Broker of Record Page 5 of 15

Philip Michael Cannon (also known as Phil Cannon), Salesperson Oshawa, ON Date decision released: October 3, 2013 Put his client at risk of legal action by allowing him/her to effectively sell the property twice. Failed to inform the complainant that the seller had already accepted another conditional offer to purchase the property. Failed to include a clause in the second Agreement of Purchase and Sale (APS) that made it conditional on the original APS becoming null and void, or not being completed. Failed to ensure that the second APS was properly terminated via a mutual release signed by the seller and the complainant. the Chair of the Discipline Committee, Mr. Cannon was ordered to pay a fine of $11,000 by September 18, 2014. Conscientious and Competent Service, Duty to Client, Negotiations Sharon J. Crann, Salesperson Oshawa, ON Date decision released: October 4, 2013 Failed to advise another registrant that her brokerage and the seller/builder had a collateral agreement granting her a maximum commission of $3,000. the Chair of the Discipline Committee, Ms. Crann was ordered to pay a fine of $6,000 by July 31, 2014. Conscientious and Competent Service, Dealing with Registrants / Third Parties, Negotiations, Representation (commission), Unprofessional Conduct Page 6 of 15

Mario Di Clemente, Salesperson Date decision released: October 23, 2013 Failed to disclose in a timely manner all relevant facts and/or deficiencies relating to the condition of the property, which he owned and listed. Failed to obtain written confirmation that the property had passed its final inspection and that the municipality concluded that all deficiencies had been addressed. The Discipline Panel ordered Mr. Di Clemente to pay a fine of $8,000, successfully complete the Ontario Real Estate Association (OREA) Land, Structures and Real Estate Trading course and the OREA Real Property Law course by March 31, 2014. Disclosure General, Discovery of Facts, Misrepresentation (negligence), Unprofessional Conduct Janice Dama, Salesperson Hamilton, ON Date decision released: November 11, 2013 Failed to verify in a timely manner on behalf of the complainant, a client of the brokerage, the legally permitted use of the property, ensure that he/she was aware of issues with respect to obtaining a variance of the property s permitted use and the transaction history of the property. Failed to obtain written acknowledgement from the complainant that he/she received copies of the Schedules attached to the APS and both parties having received copies of the APS. Failed to provide the complainant a complete copy of the APS, including a signed Confirmation of Acceptance. the Chair of the Discipline Committee, Ms. Dama was ordered to pay a fine of $8,000 by June 30, 2014. Conscientious and Competent Service, Discovery of Facts, Duty to Client, Insufficient Copies of Documents, Misrepresentation (negligence) Page 7 of 15

Anton Jeeva Arulappu, Broker Markham, ON Date decision released: November 11, 2013 Failed to obtain the seller s written acknowledgement that he/she had received the information required under section 10 of the Code of Ethics (regarding service alternatives, the nature of services the brokerage will provide and how multiple representation would change those services, etc.) prior to an offer being made. Failed to confirm details of the Listing Agreement in writing, including: o whether MLS or Exclusive services would be provided; o identify the seller who was party to the Agreement; and o consent from the seller s spouse. Failed to ensure that the seller initialed the multiple representation provision on the Confirmation of Cooperation and Representation form. Failed to document the following information on the BRA: o commencement or expiry date of representation; o amount of commission to which the brokerage was entitled; and o sign or date the agreement on behalf of the brokerage. Drafted a lease clause with several deficiencies: o the commence date was one day before the APS was accepted; o it did not reduce the oral agreement between the parties to writing, including not specifying a rental amount or payment of other costs, besides the mortgage, such as utilities; o it did not address what would happen if the APS was not completed or the completion date was delayed; and o it did not address the rights of the landlord and tenant with respect to the property, including chattels and fixtures, pending completion of the APS and/or other termination of the lease clause. Failed to draft and present an amendment to the APS to reflect the correct deposit amount. the Chair of the Discipline Committee, Mr. Arulappu was ordered to pay a fine of $7,000 and to successfully complete REIC 2280: Legal Issues in Real Estate course and REIC: 2600: Ethics and Business Practice courses by October 22, 2014. Conscientious and Competent Service, Duty to Client, Multiple Representation, Representation Agreements, Written and Legible Agreements Page 8 of 15

Amarjot Lamba (also known as AJ Lamba), Broker Mississauga, ON Date decision released: November 21, 2013 Failed to treat the buyers and a fellow registrant fairly and/or prevent error with respect to a trade in real estate when he failed and/or omitted to deliver an offer to the seller. By way of an Agreed Statement of Facts and Penalty ratified by a Discipline Panel, Mr. Lamba was ordered to pay a fine of $10,000 by October 31, 2014. Dealing with Registrants / Third Parties, Delivery of Deposits and Documents, Misrepresentation (negligence), Presentation of Offers Cheryl Anne Corris, Salesperson St. Catharines, ON Date decision released: November 28, 2013 Instructed a staff member to sign as a witness to the creation of a Notice of Fulfillment of Condition and send it to the buyers for signature. the Chair of the Discipline Committee, Ms. Corris was ordered to successfully complete the REIC 2280: Legal Issues in Real Estate and REIC: 2600: Ethics and Business Practice courses by June 30, 2014. Conscientious and Competent Service, Making / Furnishing False Information / Documentation, Misrepresentation (negligence) Page 9 of 15

Kathy Rosalie Webster, Salesperson Date decision released: November 28, 2013 Failed to ensure the accuracy and to confirm the current property taxes prior to listing the information on the MLS. When she realized that the stated figure was incorrect, she failed to amend the MLS listing and/or alert the buyer s representative in a timely manner, or at all. the Chair of the Discipline Committee, Ms. Webster was ordered to pay a fine of $5,000 by March 31, 2014. Conscientious and Competent Service, Duty to Client, Incorrect Information in Listing, Misrepresentation (negligence) Kevin Thomas La Rose (also known as Kevin La Rose), Salesperson Mississauga, ON Date decision released: December 10, 2013 Failed to advise his clients of the HST implications resulting from the sale of the property. Failed to document a referral or recommendation for his clients to meet with a solicitor or accounting professional to discuss the potential HST liabilities before entering into the APS. the Chair of the Discipline Committee, Mr. La Rose was ordered to provide confirmation by December 31, 2013 that he had already completed the REIC 2600: Ethics and Business Practice course during 2013; pay a fine of $8,000; and successfully complete the REIC 2280: Legal Issues in Real Estate course by November 3, 2014. Conscientious and Competent Service, Discovery of Facts, Services from Others / Outside Professional Advice, Written and Legible Agreements Page 10 of 15

Mediation of Complaints Under certain circumstances, the Registrar may attempt to mediate or resolve a complaint. RECO does not have the authority to impose a resolution to monetary or contractual disputes, or to assess or award damages. Any exchange of money mentioned in the following summaries was agreed upon voluntarily by the complainant and respondent. Complainant: Buyer s Representative Respondent: Broker of Record Date of release: October 3, 2013 The buyer s representative claimed that his Broker of Record (BOR) was interfering with his trade by demanding the contact information of the buyer. The buyer s representative and the seller s representative were in dispute over the acceptability of a personal cheque being used for the deposit. The seller s lawyer wanted the cheque to be certified and the buyer s representative refused to comply. In an attempt to resolve the dispute, the BOR demanded that the buyer s information be provided to him so that the Agreement of Purchase and Sale (APS) could be completed. The buyer s representative agreed that it was in the buyer s best interest to comply with the seller s request for a certified cheque and provide his BOR with the requested information. The BOR completed the trade. Complainant: Seller Respondent: Seller s Representative Date of release: October 7, 2013 In 2008, the seller s representative gave a seller a voucher for a cruise as an incentive for using the representative s services. The seller chose not to redeem the voucher upon receipt in 2008 because it required additional fees to the third-party provider. The details of the promotion, including that the voucher expired after two years, were explained on the representative s website. In 2013, the seller asked the representative for another voucher because they were still owed the cruise. Although the promotion had been discontinued and the voucher had expired, the representative agreed to provide another voucher. Page 11 of 15

Complainant: Consumer Respondent: Registrant Date of release: November 26, 2013 The registrant requested permission to use a video from the consumer s website. The consumer agreed, provided a licence agreement for signature. When the consumer did not receive either the signed agreement or payment, he contacted the registrant. The registrant confirmed that he did post the video on his website, but immediately removed the video when contacted by the consumer. He chose not to enter into the agreement. The mediation clarified that there was no agreement in place. Complainant: Buyer Respondent: Buyer s Representative Date of release: December 2, 2013 The buyer entered into an APS for a property that went into court appointed receivership before the sale could be finalized. A copy of a court Order was provided to the brokerage for the release of the deposit. The brokerage refused to release the deposit because it believed that the buyer owed them commission for the trade. The BOR consented to the release of the deposit to the buyer in accordance with the release Direction. Other Action: A written warning was issued to the BOR. Complainant: Buyer Respondent: Buyer s Representative Date of release: December 3, 2013 The buyer signed a Buyer Representation Agreement (BRA). He was told he did not qualify for financing and therefore was not being sent listings information from his representative. The buyer requested that the BRA be cancelled, but the representative refused. The brokerage and its representative agreed to terminate the BRA. Page 12 of 15

Complainant: Buyer Respondent: Buyer s Representative Date of release: December 4, 2013 The buyer entered into a two-year BRA without fully understanding the implications. A deposit was made for an APS that failed to complete. The representative refused to release the deposit, or represent the buyer in any trade where there was no cooperating commission payable. The buyer s representative/brokerage agreed to terminate the agreement and release the deposit to the buyer. He also agreed to familiarize himself with industry standards for representation agreements and acting in the best interest of a client. Other Action: A written warning was issued to the buyer s representative. Complainant: Buyer Respondent: Broker of Record Date of release: December 13, 2013 The BOR approved the use of a BRA created by an employee of the brokerage. The buyer signed the BRA not understanding the contract was valid for one year. The BOR threatened to sue after the buyer purchased a property with another brokerage. The BOR agreed to withdraw the civil action against the buyer because the BRA did not comply with the requirements of REBBA 2002. Other Action: A written warning was issued to the BOR. Complainant: Consumer Respondent: Registrant Date of release: December 17, 2013 The registrant borrowed $15,000 from the consumer while representing them in a trade during 2009. The registrant had not repaid the consumer claiming she did not owe them any money. In fact, the registrant won a judgment against the consumer and a Writ of Seizure and Sale of Land was obtained to collect the money owed. The mediation clarified that this matter was not related to a trade in real estate, was a personal matter and did not fall within the jurisdiction of the REBBA 2002. Page 13 of 15

Complainant: Buyer Respondent: Seller s Broker of Record Date of release: December 19, 2013 The buyer purchased a property and agreed to pay the deposit by certified cheque to the seller s brokerage in accordance with the terms of the APS. The buyer did not submit a certified cheque, but rather an altered personal cheque from another province. The seller s BOR agreed to accept the deposit cheque and provided the buyer s representative with a receipt indicating that if the transaction failed and a release was signed, the refund would not be issued for 20 days. The buyer filed a complaint when the refund cheque was not received after 10 days. The buyer acknowledged not providing the seller s BOR with a certified cheque and that their representative received the receipt stating the terms of a refund. The Buyer received a refund in accordance with those terms. Complainant: Buyer Respondent: Seller s Broker of Record Date of release: December 19, 2013 The APS indicated that the buyer was purchasing a property in Trust for company to be formed. The buyer delivered a deposit cheque, which the seller s BOR deposited to the brokerage s trust account. A Mutual Release was signed by both the buyer and seller instructing the deposit holder (brokerage) to make the refund cheque payable to the buyer. The buyer s bank refused the cheque because the seller s BOR made it payable to the Buyer in Trust for company to be formed rather than the buyer. The BOR agreed to re-issue the refund cheque payable to the buyer in accordance with the Direction. Page 14 of 15

Complainant: Buyer Respondent: Buyer s Representative and Broker of Record Date of release: December 30, 2013 The buyer signed a Mutual Release and requested a return of the deposit from the seller s brokerage. The brokerage refused to honour the release because it was not signed by the buyer s BOR who disagreed with the terms. The buyer s and seller s BOR acknowledged that they are required to follow the wishes of the buyer and seller in respect to cancelling a failed agreement and return any outstanding deposit according to the terms of agreement or any written Direction/consent of the buyer(s) and seller(s). The buyer s deposit was refunded as instructed in the Direction. Complainant: Buyer Respondent: Buyer s Representative Date of release: December 30, 2013 The buyer received the wrong key for the property he purchased. The buyer s representative refused to replace the key. The buyer admitted to receiving the key from their lawyer. The buyer s representative agreed to obtain the correct key from that lawyer. Complainant: Buyer Respondent: Buyer s Representative Date of release: December 31, 2013 The buyer was given a written promise for a $2,300 rebate upon the successful completion of a new condominium purchase. The property closed in May 2013, but the buyer did not receive the promised rebate. The representative could not provide the rebate to the buyer because he/she didn t receive their commission from the seller/developer. The written promise, due and payable upon successful completion of the property, contained no provision to delay payment. The brokerage agreed to pay the rebate and confirmed that future written promises will contain clearer instructions. Page 15 of 15