Brian Madigan LL.B., Broker
BRMadigan@iSourceRealEstate.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300
Toll Free: 1-888-507-0817

 

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Agent Fails to Reduce REBATE Promise into Writing (RECO Discipline)

February 26, 2016 - Updated: February 26, 2016

 

Agent Fails to Reduce “Rebate” Promises into Writing (RECO Discipline)

 

This situation seems occur with reasonable frequency. This time Lynn Flintstone got caught.

 

It boils down to nothing more than a failure to put in writing her promise.

 

Lynn was a new agent, but that shouldn’t be an excuse. She took a listing and held an open house. There she met the prospective Buyers, and she said: “if you buy through me, I will give you…….”.

 

Naturally, we don’t exactly know what she said because she didn’t reduce it to writing.

 

The Sellers were Clients, that means there was an agency appointment. She proposed to the Buyers that they be Customers, meaning “non-agency”.

 

The Buyers signed a CCR to this effect, that is, a Confirmation of Cooperation and Representation. There is no indication as to whether they had previously signed a WWR (Working with a Realtor) or a BCSA, Buyer Customer Service Agreement. This BCSA document would have room for a schedule which could have included this “promise”.

 

Around the same time, Flintstone gave the Buyers an oral promise to pay them a rebate (the “Rebate”) on certain terms and conditions, none of which were reduced to writing.

 

The Buyers purchased the property and at issue following the closing was the enforcement of the promise.

 

RECO DECISION

 

Set out below is a copy of the RECO Decision.

 

It is agreed that Flintstone acted unprofessionally when she:

 

1. Failed to reduce her oral promise and the terms and conditions surrounding that promise to pay the Buyers the Rebate to writing, thereby failing to treat them fairly, to provide them with conscientious and competent service, and committing an error and unethical practice, in contravention of section 3, 5, 38 and 39 of the Code of Ethics.

 

It is agreed that Flintstone 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.

 

Conscientious and competent services, 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.

 

Unprofessional conduct, etc.

 

39. A registrant shall not, in the course of trading in real estate, engage in any act or omission that, having regard to all of the circumstances, would reasonably be regarded as disgraceful, dishonourable, unprofessional or unbecoming a registrant.

 

PENALTY

 

Flintstone be ordered to pay a penalty of $2,000.00 on or before May 31, 2017.

 

In addition to the above penalty, Flintstone must enrol in the Ethics and Business Practice Course provided by the Real Estate Institute of Canada (REIC), and provide proof of successful completion of the course on or before May 31, 2017.

 

In addition to the above penalties, Flintstone must enrol in the Legal Issues in Real Estate Course provided by the Real Estate Institute of Canada and provide proof of successful completion of the course on or before May 31, 2017.

 

In addition to the above penalties, Flintstone  must provide to the Registrar a short essay in an electronic word processing format, not less than 500 words in length, outlining how what she has learned about her responsibilities to clients and customers from the educational courses set out above.

 

COMMENT

 

To avoid any issues with the proposed rebate, it should be reduced to writing and outlined in sufficient detail that it is clear to the Buyers. How much is it? Are there any conditions? When is it payable?

 

Presumably, the agent in this case, did not see “eye to eye” with the Buyers after the deal was closed. Otherwise, we would not have a complaint.

 

This case, is not so much about the disagreement between the parties over the arrangement as it is about the fact that “nothing was put in writing at all”.

 

The decision as written does not make reference to s.11 of the Code of Ethics which is applicable. The commission needs to be reduced to writing. An ancillary or implied term is the calculation of any rebates which would be taken into consideration in calculating the commission to be paid.

 

Have a look at the penalty here. In addition to the fine, the agent is required to take two (2) courses from the Real Estate Institute of Canada (REIC) in Ethics and Law. Together, they would represent 5 days in class.

 

Also, and this is a brand new requirement, a 500 word essay on what was learned from those two courses. 

 

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

www.iSourceRealEstate.com


Tagged with: rebate bonus promise reduction commission not in writing reco discipline ontario law
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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

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