October 3rd - 2011

RECO Decision: Tenant had no right to sell

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
Hans owned a property which he leased to Kevin for a two-year term. The lease agreement stated that, “The tenant will have the option to purchase the property at any time during the lease term at a purchase price of $1.25 million….The tenant agrees to inform landlord of their intention to exercise the option to purchase six months prior to expiry of lease and submit a deposit of $75,000…. If tenant has decided not to exercise option, they will accordingly inform landlord at this time.”

Three months after signing the lease, and without having exercised his option to purchase, Kevin entered into a listing agreement with Delstry Brokerage to sell the property for $1.39 million. The listing agreement stated that Kevin had “the exclusive authority and power to execute this authority to offer the property for sale.”

Millie, the broker of record at Delstry Brokerage, worked on the sale. The MLS® listing identified Kevin as the property’s seller and the Remarks for Brokers section included a statement that Kevin was “representing an interest for owner on title.”

Hans called his lawyer after he discovered that the property was listed without his knowledge or permission. The lawyer sent a letter to Millie and Kevin stating that Hans did not wish to sell and that Kevin was not entitled to list the property. The letter noted that the listing statement which read that Kevin “is representing an interest for owner on title” was clearly incorrect and that Kevin “is not able to convey title to any buyer.” It added that Hans would “not co-operate in any way with a prospective purchaser or offeror pursuant to (the impugned) listing.” Hans’ lawyer directed Millie and Kevin to withdraw the listing immediately.

However, Millie did not remove the listing from the MLS® System. Instead she changed the statement in the Remarks to “vendor has an interest in the property registrable on title.”

Hans’ lawyer then sent a letter to RECO charging that Kevin enlisted Millie’s services to list the property without authorization and against the wishes of the owner. It wasn’t until Millie received a letter from the Registrar that she finally removed the listing from the MLS® System and executed a Cancellation of Listing Agreement.

THE FINDINGS
The RECO panel determined that Millie acted unprofessionally by: creating an MLS® listing which did not identify the true owner of the property but rather identified the owner of an option to purchase the property; creating a listing for the sale of the property when the tenant was attempting to sell only an unexercised option to buy the property; and failing or refusing to remove the listing after becoming aware that the true owner did not want the property listed for sale. Further, the panel determined that Millie breached sections 36 and 37 of the REBBA 2002 Code of Ethics: 36(8) A registrant shall not include anything in an advertisement that could reasonably be used to identify specific real estate unless the owner of the real estate has consented in writing; and 37(1) A registrant shall not knowingly make an inaccurate representation in respect of a trade in real estate.

PENALTIES
Millie was ordered to pay a fine of $6,000 and to successfully complete the REIC Ethics and Business Practice course or the OREA Real Estate College’s Real Property Law course. The full case is among those dated 2011/04/11 and can be seen 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.

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Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

JeanAdrienD@orea.com

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