November 3rd - 2011

RECO Decision: Marijuana grow-op not disclosed

The following decision from RECO Discipline and Appeals Hearings has been condensed. All names have been changed.

The following decision from RECO Discipline and Appeals Hearings has been condensed. All names have been changed.

THE FACTS
Mel owned a house and had been renting it out. He listed it for sale with the help of Perry, a broker at Hornaby Brokerage.

An open house was hosted by Carla, a newly-registered salesperson at Hornaby who was helping with the listing. A police officer came to the open house and told Carla that the property had previously been a marijuana grow house. Carla contacted Perry and the Hornaby broker of record to let them know.

In due course, Gord and Dana bought the house with the help of Jim, a salesperson from Vella Realty. Fifteen months later, the couple filed a lawsuit on the non-disclosure of the former grow-op against: Perry, Mel, Jim, Hornaby Realty and Vella Realty.

When Jim and his broker of record learned of the lawsuit, they wrote a complaint letter to RECO. They accused Perry of having prior knowledge of the marijuana grow-op and not disclosing it. In response, Perry acknowledged that Carla had told him of the police allegation. Perry said he made attempts to contact the police but they would not provide any information because he was not the owner. He said Mel denied having any knowledge of a grow-op but agreed to get more information from the police.

Perry admitted that Mel later told him a small kitchen fire had occurred at the house and a “small grow-op in the basement” was discovered. Perry said Gord and Dana’s offer came in around the same time that he hired a company to investigate the house’s condition. Perry also said he had asked questions to Mel’s upstairs tenant, who was unaware of what the basement tenant was doing.

Perry said he sent a copy of the inspection report to Jim, which they discussed. He said Jim thought the issues were “very minor” and “he didn’t see a problem with them nor did his clients.” Perry told RECO he did not know whether Jim disclosed the report to the buyers. On the contrary, Jim said he had not been aware of the house’s history. Jim’s broker of record stated that the inspection report was not prepared until after the APS was accepted.

In his RECO interview, Perry said that he made no reference to the grow-op in the listing because he could not confirm anything. RECO staff made a Police Freedom of Information request and were informed that a search warrant had been issued and 74 marijuana plants were seized from the house. RECO staff obtained the request form online and submitted it to the police with a $5 fee. The RECO staff were told that anyone, including the public, can request information this way.

THE FINDINGS
The RECO panel determined that Perry acted unprofessionally when he failed to: take steps to confirm the house history as a grow-op although he received information suggesting more inquiry was needed; advise Jim of a material fact about the house so Jim could tell his buyer clients; protect the interests of his own client by failing to make relevant and necessary inquiries and disclosures. The panel ruled that Perry breached three sections of the REBBA 2002 Code of Ethics: (3) Fairness and honesty, etc. (4) Best interests and (39) Unprofessional conduct, etc.

PENALTIES
Perry was ordered to pay a fine of $15,000. The full case is among those dated 2011/04/20 and can be viewed at www.reco.on.ca. Look under “Complaints and Enforcement” and scroll down to “Disciplines and Appeals Hearings and Decisions.” Choose the appropriate year and search by date only. 

Share this item

ON THE MARKETS: House prices rally due to low rates, stable economy Reaching an agreement: Learn the essentials of the APS

For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246