Agent Fails to Check Status of Parking Pad Application
In this case, Bernie Robb was the Listing Agent for Malcolm Towers. The property was somewhat small, but located in an upscale area where parking was at a premium. So, if you have it, then you flaunt it. At least, that way, you get more money for your house, until someone raises objection.
That’s what happened in this case. Malcolm told Bernie that he had a parking pad. He didn’t. So, he said he was applying for it since it would be a “legal non-conforming use”.
Basically, Bernie knew that this wasn’t true. He was absolutely desperate for the commission, so he went along with the lie. OK, that was short term cash, and this case is really about the “long term pain” associated with that decision.
Pre-listing Discussions (Seller and Agent)
Robb stated that in speaking with the Seller, Malcolm Towers, he was advised that the Seller was aware that front parking pads were not permitted in this particular neighbourhood, and that:
“a special application had to be made to make it legal.”
Seller Property Information Statement
Robb, appreciating that there were some problems with this false assertion, took steps to protect himself. He arranged for the Seller to sign a Seller Property Information Statement or SPIS. If Malcolm is going to lie, then let’s get it down in writing.
Under the section for “driveway” the word “private” has been pre-printed with a check mark next to it.
Next to that is a line marked “other”, which has been filled in with “front pad (legal non-conform)” in handwritten text.
On the last page of the SPIS, which is dated “January 11, 2011” (sic) with the Seller’s signature, there is a space marked “additional comments” which, among other handwritten comments, includes the text “front pad legal non-confirming.”
In the “Remarks” section of the MLS listing, Bernie included the statement that:
“Front Pad On [1-A Street] is Legal Non- Conforming.”
Agreement of Purchase and Sale
The Smiths purchased the property from Towers without a problem.
Here is what the Agreement said:
“With Front Parking Pad on [123 Main Street] Being Legal Non-Conforming”.
The City Letter
Shortly after closing the Smiths received a letter from the City as follows:
· the front parking pad is illegal
· it must be removed within 30 days
· failure to comply could result in a fine of up to $5,000.00
Wilma, who acted for the Smiths as Buyers, stated that based on the information in the MLS advertisement, neither she, nor the Smiths, had any reason to question the statement that the front pad parking was legal non-conforming.
The Title Insurance Matter
Following the filing of the complaint, the Smiths indicated to RECO that their title insurer had accepted liability.
Below is a copy of the RECO decision:
It is agreed that Robb acted unprofessionally including as follows:
1. He included information on the MLS advertisement and in the APS, regarding the legal status of the front parking pad, which he knew to be inaccurate.
2. He further failed to indicate the MLS or in the APS that the Seller would be submitting an application to the Committee of Adjustments to get the front parking pad classified as legal before closing.
3. He allowed his brokerage’s client, the Seller, to sign the SPIS which stated that the parking was “legal non-conforming” without verifying that the statement was correct, or in the alternative, knowing that the statement was incorrect.
It is agreed that Robb breached the following sections of the Code of Ethics:
Fairness, Honesty, Etc.
3 A registrant shall treat every person the registrant deals with in the course of a trade in real estate fairly, honestly and with integrity.
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.
37 (1) A registrant shall not knowingly make an inaccurate representation in respect of a trade in real estate.
Robb was ordered to pay a penalty of $7,000.00 on or before October 31, 2014.
This seems to be a straightforward case. Don’t lie. And, don’t get bullied into lying. Your name and reputation is at stake here.
The big, big problem in this case was that Bernie knew (or had a very strong hunch) that Malcolm was lying about the pad. But, as soon as Malcolm said he “would be applying… BEFORE closing”, Bernie took the lie one step further. He concealed the “intent to apply” since that might have thrown off the deal or lowered the price.
Now, this particular fine is small. I would have expected simply an error or mistake with this level of a fine. Bernie got off easy. This was self-interest and it was deceitful. I would have expected a fine of at least double what it was.
The other very interesting point, is that Bernie took every step to make sure that the Seller was responsible, ie. SPIS and the APS, while at the same time hoping that this would discharge him from liability.
You will also appreciate that there were some simple steps that could easily have been taken by Wilma and the Smiths’ lawyer to confirm the parking pad status. However, this particular case is about Bernie and not Wilma, or the lawyer.
Note: 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.
Brian Madigan LL.B., Broker