Agent Fails to Investigate Ongoing Renovations and Zoning Status
In this particular case, the Listing Agent failed to properly follow up with the municipality. Betty Rubble was selling a single family property. There was an extra unit. Apparently, there was an interior door connecting the two units. The door would make that one unit. The owner was in the process of having a wall constructed to replace the door. That would make it two units. But, not necessarily legal!
The present owner, a Company had purchased the property by way of power of sale proceedings conducted by CMHC.
The property was and is a single detached 1 ½ story frame house. Betty advertised it on MLS as follows:
“2 family dwelling offers 3 bed, 2 bath, 2 kitchens, 2 sep hydro meters w/2 sep entrance, completely updated from top to bottom, newer furnace and water heather, newer plumbing, ceramic, laminate flooring, some windows –tenants willing to stay –RSA Seller will not warrant current use buyer to verify Call LA for more info”
When the Buyer viewed the Property he saw that the building contained two dwelling units, with an interior door directly connecting the two dwelling units.
A Building Permit permitting renovations at the Property was issued to Company.
A copy of the Building Permit was retained in the trade/transaction files of Betty Rubble:
“Single Family Dwelling, Description of work:
Interior alterations to the existing single family dwelling including drywall, insulations and interior finishes. Subject to field inspection.”
The property is located in a zone that permits a “two family dwelling” as defined by the municipal Zoning By-law, but that is not, and was not at any relevant time, the status of the Property.
The Property is not a large enough lot to meet the minimum requirements for a “two family dwelling” under the By-law.
The Buyer subsequently attended at the Property and found that the interior door had been replaced with a wall, which had yet to be finished.
Based on what she had been told, Betty told the Buyer that the replacement of the interior door was permitted. However, Betty at some point became aware that there were difficulties obtaining approval of any variance to the permitted use of the Property and did not ensure the Buyer was aware of these issues at the earliest practical opportunity.
Further, did not fully disclose to the Buyer the transaction history of the Property.
This is a summary of the RECO decision:
1. Failed, in a timely manner to verify on behalf of the Buyer, the client of the Brokerage, the legally permitted use of the Property, when it was practicable to do so, and failed in a timely manner to ensure that the Buyer was aware of issues with respect to obtaining a variance of the Property’s permitted uses, contrary to Sections 4, 5, 21(1), and 38 of the Code of Ethics.
2. Did not ensure the Buyer was aware of the transaction history of the Property, contrary to Sections 4, 5 and 21(1) of the Code of Ethics.
3. Did not obtain the Buyer’s written acknowledgement to having received copies of the Schedules to the Agreement of Purchase and Sale and did not obtain written acknowledgement by the Parties, to having received copies of the Agreement of Purchase and Sale, contrary to Sections 5 and 28(1) of the Code of Ethics.
4. Did not provide to the Buyer a complete copy of the Agreement of Purchase and Sale, including signed Confirmation of Acceptance, contrary to Sections 4, 5, and 28(1) of the Code of Ethics. Betty Rubble breached the following sections of the Code of Ethics:
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.
21.(1) A broker or salesperson who has a client in respect of the acquisition or disposition of a particular interest in real estate shall take reasonable steps to determine the material facts relating to the acquisition or disposition and, at the earliest practicable opportunity, shall disclose the material facts to the client.
Copies of agreements
28.(1) If a registrant represents a client who enters into a written agreement that deals with the conveyance of an interest in real estate, the registrant shall use the registrant’s best efforts to ensure that all parties to the agreement receive a copy of the agreement at the earliest practicable opportunity.
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.
Rubble was ordered to pay a fine of $8,000.00 by June 30, 2014.
The best source of information is the municipality.
The worst source of information is the Seller. Why? They might have a vested interest in colouring the truth somewhat.
The interior door was there to placate the City, no other reason. Then, it came out. And now, it has to go back in.
Far too much “monkeying around”. The Listing Agent should spot that, and ask some questions. But, far more importantly, the Listing Agent needs to independently VERIFY the facts.
It is also interesting that the Discipline Panel believed that the fact that there previously was a power of sale by CMHC was relevant.
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