October 12th - 2012

RECO decision: Absence of seller leads to problems

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

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

Sue was studying abroad and listed her house for sale with Vena Brokerage, where Lily worked as a salesperson. Sue instructed Lily to deal with her cousins, Fred and Mary, whom she said had signing authority and could act on her behalf.

Lily prepared the listing agreement with a list price of $119,900. Since Sue lacked access to a fax machine overseas, she instructed Lily to fax it to her cousins. Lily faxed the agreement to Fred, who signed on Sue’s behalf. At no time did Lily check whether a valid power of attorney existed to grant the cousins signing authority.

An offer for $107,500 came in. It was conditional on financing, a home inspection and the ability to obtain insurance. Lily told Bev, the buyer’s representative, that she would need extra time to contact the owner overseas. Bev said her client was patient and would wait.

Lily tried by phone and email but could not reach Sue to discuss the offer. Instead, she obtained verbal instructions from Fred and Sue’s fiancé, Joe. Lily then signed the offer on behalf of her client.

The agreement, which appeared to be signed by Sue and witnessed by Lily, was faxed to Bev. The buyer proceeded diligently to satisfy the conditions and the transaction was recorded as firm on the real estate board’s MLS® System.

Soon after, Lily contacted Bev to say that Sue no longer wished to sell at the accepted price of $107,500. Lily gave no other explanation for Sue’s sudden change of plans.

When the buyer’s lawyer began investigating, it became obvious that Lily had been unable to reach the seller to get instructions. When Sue was finally contacted, she refused to sell, saying that the price was too low and that she hadn’t actually signed the offer.

The RECO panel determined that Lily acted unprofessionally when she took verbal instructions from Fred and Joe without verifying their authority to act for Sue, as well as when Lily signed the agreement on her client’s behalf without authority. Lily also purported to witness her client’s signature when she knew that the latter had not signed the offer. The panel ruled that Lily breached four sections of the REBBA 2002 Code of Ethics: (4) Best Interests; (37) Inaccurate Representations; (38) Error, misrepresentation, fraud, etc.; and (39) Unprofessional conduct, etc.

Lily was fined $10,000. The full case is among those dated 2011/07/25 and can be viewed at www.reco.on.ca. Look under Complaints and Enforcement and scroll down to Discipline and Appeals Hearings and Decisions. Choose the appropriate year and search by date only.

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