Misuse of Blank and Undated Documents
The real estate agent in this case misused the documentation that has been drafted and made available by the Ontario Real Estate Association (OREA).
The agent rather than providing advice and assistance or representation as authorized under the Real Estate and Business Brokers Act, 2002 (the Act) decided to embark upon a new venture and a novel way of providing real estate services.
The agent used a website as a vehicle for providing services. In addition, in order to comply with the Act, he had his own Brokerage. This particular Brokerage facilitated the placement of the listing on the MLS system.
The entire package of services was intended to be offered at extremely attractive prices. The arrangement was similar to those who follow the “mere posting” procedure for listings.
In any event, the consumer was provided with a series of sample documents, instructions on how to complete the documents and a set of blank documents for execution.
These were made available to the consumer by downloading them from the website after payment of the required fees/ payments/ charges etc.
The following is the list of documents in this case:
• Working with a Realtor, a Form developed by OREA to explain agency
• Listing Agreement, Form 200
• Data Input Form
• Schedule B to Listing Agreement, Form 203
• Amendment to Listing Agreement, Form 240
• Cancellation of Listing Agreement, Form 242
• Assignment of Listing Agreement, Form 243
The completion instructions very much left the consumer on his own to make his own decisions without the attention of a registrant under the Act.
The Consumer indicated discomfort with the instruction to sign and submit undated and incomplete documents, in particular the draft amendment, cancellation and assignment agreements.
The Consumer was provided with a refund of the amount paid for commission.
The agent acted unprofessionally including as follows:
a) Counselled and/or permitted consumer signatures and initials on incomplete and/or undated draft representation agreements and related schedules and draft agreements, without the consumer knowing all substantive terms at the time of execution of the documents.
b) In particular and without limiting the generality of the forgoing, made and/or counseled and/or permitted and/or endorsed the making of a written
representation agreement in which the date upon which it takes effect and the upon which it expires was not set out.
The agent 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:
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;
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.
Error, misrepresentation, fraud, etc.
38. A registrant shall use the registrant’s best efforts to prevent error, misrepresentation, fraud or any unethical practice in respect of a trade in real estate.
The agent was ordered to pay a penalty of $9,000.00 by June 29, 2012.
This is one of the first in a series of “mere posting” discipline cases. The real estate profession is not unregulated in Ontario. This is not the “wild west”.
Real estate has been made a regulated industry in Ontario. The Real Estate and Business Brokers Act, 2002 outlines the requirements that must be followed. The Act is one of consumer protection. The enforcement of the Act has been delegated to the Real Estate Council of Ontario (RECO).
This discipline case, ensures that the Act must be followed. A single real estate agent cannot make up their own rules and guidelines and act in a capricious manner when it comes to the public. Taking shortcuts will not be tolerated. An agent must fulfill their duties, obligations and responsibilities imposed by the Act.
Negotiating with the consumer for a lower price is one thing, but negotiating for services which place the consumer at risk, is quite another.
As a rule, I use fictitious names. The actual case is published on RECO’s website and is available to the public. For educational purposes, the names of the parties really don’t have any bearing. If you need to quote the case, you will have to obtain the proper legal citation. In this instance, names were not required in order to understand the case.
I should also point out that I have used the expression “real estate agent” in its common everyday sense of the term. “Agent” under the Act would actually be the “Brokerage”, and the correct term for the person would be “sales respresentative” or “broker” as the case may be. You might also be made aware that the concept of “agency” is not used in the Act. The term “representation” is used in replacement.
Brian Madigan LL.B., Broker is a Manager at RE/MAX West Realty Inc., Brokerage 416-745-2300.