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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Once a Grow House, it’s still was a Grow House (RECO Discipline)

February 19, 2016 - Updated: February 19, 2016

 

Once a Grow House, it’s still was a Grow House (RECO Discipline)

 

Agent Responsible for False Representation

 

This particular situation is not that complicated. RECO assessed an $11,000.00 fine. This was not a case of foolishness, carelessness, or oversight; this was a case of crafty deception and deceit.

 

Sam Ralph was a real estate agent. He acted for Barney Rubble in the purchase of a grow house. It was made clear on the listing, and when the appointment was set up to view the property. There were no “grow house” guarantees in the Offer. So, Ralph knew about this. There was no mistake here.

 

Let’s have a quick look at the evidence. This is always important.

 

 MLS Listing Information

 

“Please attach Schedule B & Include Vca CV& Rnc C1-8. *Note* Please Contact L.B. For Disclosure To Be Fixed (sic) To You Prior To Viewing/Preparing Offer. Thanks.”

 

Ralph signed a written disclosure form

 

Agent: “Sam Ralph”

Appointment Request Date: Wed June 4th Time: 11:30am-12:30pm

Disclosure of Grow-Operation

Subject Property: {the Property], MLS# [MLS Number]

This will serve as full disclosure by [the Original Listing Brokerage], [the Original Listing Salesperson] and [the Original Seller], that the subject property has been used for the growth and/or manufacture of illegal substances.

Should you wish to proceed to show the property to your clients, please indicate your acknowledgement that full disclosure has been made by signing and dating below:

***Please Note: The suite is in move in condition. The Health Department and the Management Company have passed it.

Fax the acknowledgement disclosure to our office at [telephone number], upon receipt of which your Appointment will be processed and confirmed.

 

 

Thank you for your Co-operation. Serge Rybitsky

[Initials of Brokerage]

June 4, 2008

Agent

Office

Date

 

Four Years Later

 

This purchase of the former grow house took place in June of 2008, but by February of 2013 (4 years and 8 months later) Sam Ralph seems to have forgotten all about the “grow house” business.

 

The Sale

 

Bill Elliot acts for his buyer, Wayne Jones. This time, there’s nothing in the MLS about any kind of caution, and there’s no signed Disclosure.

 

This is the clause which Bill Elliot places in the Offer to protect Jones:

 

“The Seller represents and warrants that the use of the property and the buildings and structures thereon has not been for the growth or manufacture of any illegal substances, and that to the best of the Seller’s knowledge and belief, the use of the property and the buildings and structures thereon has never been for the growth or manufacture of illegal substances. This warranty shall service and not merge on the completion of this transaction.”

 

This was the standard form grow house warranty.

 

Sam Ralph got Barney Rubble to sign it easily. Likely, they both knew that they were deceiving the Buyer, and if they went that far, what’s wrong with an outright lie. It just means that the deal is more likely to close.

 

Mr. Ralph did not disclose at any relevant time the Property’s previous use for illegal substances, contrary to Sections 4, 5, 21 and, in respect only to the obligation to use best efforts to prevent misrepresentation and error, Section 38 of the Code of Ethics.

 

RECO Decision

 

Mr. Ralph is responsible under the following sections of the Code of Ethics:

 

Best interests 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.

 

Material facts 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.

 

(In respect only to the obligation to use best efforts to prevent error or misrepresentation)

 

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.

 

COMMENT

 

Fine and Penalty

 

A fine in the amount of $11,000.00 was imposed. That was IT. Nothing else!

 

In many cases, RECO will require the attendance at an educational program, where the agent seems perhaps to have misunderstood his role. That’s not the case here.

 

This is a clear case of fraud and deception. A Course is not going to cure that!

 

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


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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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