May 6th - 2008

RECO Decision: registrant concealed UFFI

The following RECO Complaints, Compliance and Discipline Appeal decision has been condensed and can be viewed in its entirety on the RECO web site at www.reco.on.ca.

The following RECO Complaints, Compliance and Discipline Appeal decision has been condensed and can be viewed in its entirety on the RECO web site at www.reco.on.ca.
 
The Case
This case involves violations of several rules regarding ethical behaviour, primary duty to clients, misrepresentation or falsification, advertising and competence.
 
A residential property was listed for sale on the County Real Estate MLS® disclosing Urea Formaldehyde Foam Insulation (UFFI) in the dwelling on the property by stating “UFFI: Yes”.
 
A buyer, represented by the registrant, purchased the property. Later, the buyer wanted to sell the property, and the registrant listed it for sale and on this listing disclosed “UFFI: Yes”.
 
Months later the registrant introduced new buyers, whom she represented, to the property. Not long afterward, the second listing expired. Up to this point, the registrant expressly disclosed the existence of UFFI on the property on the MLS®.
 
The registrant entered into a new listing agreement with the seller for a term of almost a year, however, the provision setting out the term was not specifically initialled by the seller.
 
A subsequent listing indicated: “UFFI, See Remarks” in the relevant line. In the Remarks section, it stated: “MOVE RIGHT IN! NICE RESIDENTIAL AREA! ROOF ONLY 2 YRS OLD, MANY UPDATES INCL DRYWALL, HRDWD PINE FLOORING, SIDING, SOFFIT & FASCIA; SEE SPIS FOR ADDITIONAL INFO.” The buyers saw this listing prior to making an offer to purchase.
 
The seller filled out a Seller Property Information Statement (SPIS) on the third listing and answered “no” to the questions “Have you made any renovations, additions or improvements to the property?” and “Yes” to the question “To the best of your knowledge have the building(s) ever contained urea formaldehyde insulation?”
 
However, the buyers did not sign the acknowledgement on the SPIS confirming they had seen that document and later made an offer to buy the property. The seller signed back with a counter offer, which the buyers accepted.
 
The Agreement of Purchase and Sale included standard form paragraph 21 which stated there was not and to the best of the seller’s knowledge, never had been UFFI in any building on the property. The agreement also confirmed the listing broker represented both the seller and the buyers in the transaction.
 
At no time after she began representing the buyers did the registrant enter into a written representation agreement with the buyers, nor did she, at the earliest practicable opportunity and before the Offer to Purchase was prepared and submitted, enter into a buyer agency agreement indicating her role and the services she was providing to the buyers, and obtain written acknowledgement from them of the same.
 
The registrant did not provide the seller or the buyers with written disclosure of her dual representation in the transaction and obtain written acknowledgement of the same before the Offer to Purchase was prepared and submitted.
 
Nor did she obtain the informed consent of the buyers to her dual representation of both the seller and the buyers in the transaction.
 
The transaction was completed, and about three months later the buyers discovered what they thought might be UFFI. They contacted the municipality, which inspected the property, and informed the buyers that the inspection revealed the presence of UFFI.
 
The RECO CCD panel decided that the registrant acted unprofessionally in that she:
 
a) Did not ensure that the listing agreement disclosed that the seller specifically gave informed consent in writing to a period longer than six months, by having the seller initialing that provision.
 
b) Did not enter into a written representation agreement with the buyers.
 
c) Did not provide the seller or the buyers with written disclosure of dual representation and obtain written acknowledgement of same, at the earliest practical opportunity and before the Offer to Purchase was prepared and submitted.
 
d) Did not ensure that her clients the buyers signed the SPIS, when express reference to UFFI had been removed from the MLS and the SPIS became the means by which the existence of UFFI would be disclosed.
 
e) Drafted an Agreement of Purchase and Sale that stated there was not and never had been UFFI in the property, as opposed to an appropriate alternative clause.24.
 
The registrant breached the following Rules of the RECO Code of Ethics:
 
Rule 1 – Ethical Behaviour
Rule 2 – Primary Duty to Client
Rule 10 – Misrepresentation or Falsification
Rule 21 – Advertising
Rule 42 – Competence
 
PENALTIES
The registrant was ordered to pay a penalty of $7,500.00 and take and successfully complete the OREA “Real Property Law” Articling course.

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Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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