Agent Mistakenly Includes Central Air Conditioning (RECO Discipline)
This is an unfortunate situation which could easily occur by mistake. The agent, Paul Hewson took a listing. Likely, it was in the wintertime. Mistakenly, he thought there was “central air”, but he was wrong. Probably, it was cold and he didn’t go outside to check.
Oftentimes, central air conditioning is so common that agents will include it as “second nature”. Sellers while they read over the details of the listing just “miss it”. So, that’s how the mistake happens. And “yes”, Paul should have gone outside and checked himself. That would have been easy. Also, he may have imagined seeing it, but accidentally recalled another property. Such a mistake should have been caught by the Sellers, but they just missed it.
In this case, there never, ever was central air conditioning on the property.
The MLS Listing
The Listing indicated an asking price of $495,000.00 and stated that there was central air conditioning at the property.
This was incorrect as there was never a central air conditioning unit on the property, either at the time of Listing and/or prior to the closing.
The Agreement of Purchase and Sale
The Buyers submitted an Offer which was accepted on April 13, 2013, with a purchase price of $455,000.00 and a completion date of May 15, 2013.
The Agreement of Purchase and Sale noted that:
Chattels and/or Fixtures included are “As Per MLS Listing”.
The Buyers attempted, through their own agent, to negotiate to have central air conditioning installed by Hewson and/or the sellers.
On June 10, 2013, the Buyer’s agent sent a letter to the Brokerage’s Broker of Record stating that it has been three weeks since they spoke with Hewson regarding this issue and had not received a response regarding the lack of central air conditioning.
Negotiations for the Installation were Unsuccessful
Having received no response whatsoever, the next logical step was to refer the matter to RECO.
The following is a copy of the RECO decision:
It is agreed that Hewson acted unprofessionally when he:
1. Failed to treat every person he dealt with in the course of a trade in real estate fairly, honestly and with integrity, contrary to s. 3 of the Code of Ethics, when he failed to ensure that the central air conditioning information was accurate on the Listing.
2. Failed to promote and protect the best interests of his clients, contrary to s. 4 of the Code of Ethics, when he failed to ensure the central air conditioning information was accurate on the Listing.
3. Failed to provide conscientious and competent service to his clients, contrary to s. 5 of the Code of Ethics, when he failed to verify the existence of central air conditioning at the property before including it in the Listing.
4. Failed to take reasonable steps to determine the material facts about the Property, contrary to s. 21 of the Code of Ethics, when he failed to determine the status of central air conditioning at the Property.
5. Failed to use his best efforts to prevent error, misrepresentation, fraud, or any unethical practice, contrary to s. 38 of the Code of Ethics when he failed to verify the existence of central air conditioning at the Property before including it in the Listing.
It is agreed that Hewson breached the following sections of REBBA 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.
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.
(2) A broker or salesperson who has a customer in respect of the acquisition or disposition of a particular interest in real estate shall, at the earliest practicable opportunity, disclose to the customer the material facts relating to the acquisition or disposition that are known by or ought to be known by the broker or salesperson.
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.
Hewson was ordered to pay a penalty of $5,000.00 on or before September 30, 2014.
In addition to the above penalty, Respondent must enroll 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 September 30, 2014.
There are several lessons here. Accept your punishment. A mistake was made. Step up to the plate and accept responsibility.
The mere fact that the Buyers got the property for $40,000 off the listing price doesn’t mean that they didn’t expect central air.
The Buyers could have noticed or inquired as to the location of the central air. At that point, everyone would know: “there was no central air”. But, that never happened. Still, it was Paul’s mistake.
Finally, I’m sure that the Sellers didn’t mean to sell a central air conditioning system when they didn’t have one. This just doesn’t make sense.
Once the error is discovered, accept it and resolve the issue. Here we have a $5,000.00 fine while the system itself was likely only worth $1,500.00 at most. There is also the complaint, the hearing and the embarrassment. The individual’s real; name is published on the RECO website. In addition, mandatory attendance at a REIC Ethics program (2 to 3 days) is required. All in all, there is over a week’s time associated with this matter in addition to the financial costs.
I wrote about a similar matter several years ago:
The result in that case was pretty much the same.
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