Disciplinary Newsletter November 2020

Disciplinary Newsletter

IMPORTANT NOTICE: Audit and record keeping policies, and Section 6 of the Commission By-law have been updated as of January 2025. This newsletter references outdated content, in accordance with the versions in effect at time. For current information, click HERE.

November 2020

Volume 11 Edition 1

In This Issue

Introduction

Detailing Investigations
Publishing Disciplinary Decisions

Detailing Investigations

The Disciplinary Newsletter does not detail every case the Commission investigates. Rather, these cases were found to be the most useful as a learning resource.

Publishing Disciplinary Decisions

The Commission Disciplinary Newsletter publicizes decisions in accordance with the Commission by-law 839.

Public Initiated Investigations

Brokerage collected remuneration without written authority

A seller listed their home for sale with a brokerage that practices common law agency. The brokerage showed the property to a buyer customer who submitted a rent to own offer with a four-year term, which the seller accepted. The buyer moved in and the brokerage collected remuneration from the seller at this time. Shortly before the end of the four-year term, the buyer terminated the transaction. The seller then listed their property for sale again with a different brokerage and had to pay more remuneration upon the successful completion of an Agreement to Purchase and Sale.

The seller submitted a complaint to the Commission alleging their licensee pressured them into signing the rent to own agreement. The seller further alleged they had to pay remuneration at the commencement of the rent to own agreement instead of at the completion four years later.

In fact, the brokerage did collect remuneration from the seller at the commencement of the rent to own agreement. The Seller Brokerage Agreement indicated that the brokerage would receive remuneration if during the term of the agreement, a legally enforceable Agreement of Purchase and Sale was entered into between the seller and a buyer and the sale was completed.

If the brokerage wanted to collect remuneration, they needed to amend the Seller Brokerage Agreement accordingly.

The broker is responsible to review all documentation and for the supervision of licensee conduct. In this case, the broker advised they were unaware the Seller Brokerage Agreement needed to be amended to reflect a rent to own agreement with remuneration collected before closing.

The broker was charged with and agreed to having violated by-law 714 (d) for charging remuneration to a consumer without written authority.

Penalty

The broker was fined $1,000 for violating by-law 714 (d).

Failure to discover facts pertaining to parking space

Three years after purchasing a condominium, the buyer discovered the parking space was not deeded to them at the time of closing. They advised their lawyer of this information and in return, the lawyer submitted a complaint to the Commission alleging the buyer’s licensee did not include the PID for the parking space on the Agreement of Purchase and Sale (APS). The lawyer further alleged the buyer’s licensee sent them an unprofessional and disrespectful e-mail and attempted to damage the lawyer’s reputation by dissuading clients from using them as a lawyer.

The evidence supported that the buyer’s licensee failed to identify the PID number for the parking space on the APS. The buyer’s licensee stated at the time they prepared the APS, they were aware the parking space was deeded, but could not find the PID number on the listing cut. The form used at the time was Part II Resale Condominium Schedule of the Agreement of Purchase and Sale. Clause 10 identified the parking unit was deeded, however, clause 11) b) ii) also identified the parking space as a common area parking space.

The Registrar expanded the scope of the investigation to include the conduct of the seller’s licensee. The seller’s licensee stated at the time of listing, their client did not advise them whether the parking space was deeded or assigned, but the client did intend to sell the parking space with the unit. Determining whether the parking space was deeded or assigned was pertinent information the seller’s licensee was required to determine at the time of listing.

It was determined by the Commission the PID history for the parking space had been available on Property Online since 2007, which both licensees had access to. Both licensees had a fiduciary obligation to ensure their respective clients’ interests were protected.

The buyer’s licensee was charged with and agreed to having violated Commission by-law 702 Article 10 for failing to determine whether the advertised parking space was deeded or assigned and failing to ensure their client would secure a parking space at the condominium.

The seller’s licensee was charged with and agreed to having violated Commission by-law 702 Article 10 for not determining whether their client’s parking space was deeded or assigned.

Penalty

The buyer’s licensee was fined $500 for violating Commission by-law 702 Article 10.

The seller’s licensee was fined $500 for violating Commission by-law 702 Article 10.

Misleading advertising, failure to properly address agency and poor paperwork

A buyer customer found their dream property in the country with plenty of fresh water and according to the listing information, 4.5 acres for their horses to roam. Upon closing, the buyer learned the property deed confirmed the property contained 2.7 acres. Further, they discovered many things about the property, including it did not contain a septic system, the sewage drained into the river they planned for their horses to drink from, and the well constantly ran dry. The buyer submitted a complaint against the seller’s licensee citing the above allegations and that the licensee advised them they could be a ‘dual agent’ for both parties (buyer and seller).

The evidence supported the seller’s licensee advertised the property as 4.5 acres on the MLS® listing cut whereas Property Online (POL) stated 2.75 acres. The licensee stated the seller advised them POL was incorrect and the property actually contained 4.5 acres. Since a previous listing licensee advertised 4.5 acres, the licensee accepted the seller’s description of the property and suggested the seller have the land surveyed.

Knowing there was uncertainty with the actual property size, the licensee should not have advertised 4.5 acres without proper verification such as a land survey. Alternatively, they could have advertised 4.5 acres and ensured the advertisement clearly stated the property size was uncertain and any potential buyers would need to confirm this for themselves.

The investigation also determined the licensee negotiated terms of an offer prior to addressing their agency relationship in writing as required and provided advice to the complainant, which convoluted their role as the seller’s licensee. Paperwork discrepancies were also identified.

As a result of the investigation, the seller’s licensee was charged with and agreed to having violated by-law 708 (a) (i), (ii), (iii) for inaccurate and misleading advertising; by-law 702 Article 11 for paperwork discrepancies; and by-law 702 Article 35 for unprofessional conduct for providing advice to a buyer customer. The evidence did not substantiate that the licensee stated they could be a "dual agent" for the seller and buyer.

Penalty

The licensee was fined a total of $1,500; $500 for violating by-law 708 (a) (i), (ii), (iii); $500 for violating Commission by-law 702 Article 11 and $500 for violating Commission by-law 702 Article 35.

Licensee failed to understand their role in a transaction

The Commission received a complaint from first time home buyers who were new to the province and had recently purchased their first home. The buyers did not request or receive representation in the purchase of their property. They were customers of the listing brokerage and the seller was represented by a designated agent (a team.)

The buyers submitted a complaint alleging that one of the licensees on the team did not explain to them that in a customer relationship, the designated agent (team), could not work in their best interests. They further alleged that the licensee on the team, referred to themself as the “buyer’s agent”, acted like their representative and also, they had acted unprofessional and made rude comments to one of the buyers.

The licensee stated the complainants signed a Buyer Customer Acknowledgement and claimed they explained the form to the complainants, making it clear to them that they represented the seller in the transaction.

The evidence supported the licensee acted in an agency capacity towards the buyer on several occasions throughout the transaction, despite the complainants having signed a Buyer Customer Acknowledgement. The licensee gave advice to the buyers, referred to themself as the “buyer’s agent” and referred to one of their team members as the “seller’s agent.” The complainants did sign a Buyer Customer Acknowledgement, however; it was clear the licensee did not understand their role in this transaction as their actions crossed over from customer relationship to agency representation.

The investigation included a review of the brokerage transaction file. The buyer’s first offer on the subject property was relayed to the seller verbally. The evidence supported that the licensee negotiated a verbal offer from the buyer prior to addressing their agency relationship in writing. Section 29 of the Real Estate Trading Act requires that all offers be made in writing.

During the pre-closing viewing, an argument escalated between the buyers and the licensee which resulted in the licensee ending the viewing and the buyers leaving the property. The evidence supported the licensee made unprofessional comments towards one of the buyers. Licensees are held to a high standard of professionalism and expected to act accordingly when dealing with all consumers.

The licensee was charged with and agreed to having violated Real Estate Trading Act Section 22 (2) (a) for not understanding their role in the transaction, by-law 702 Article 35 for unprofessional conduct and by-law 702 Article 11 for relaying a verbal offer. The evidence did not support the licensee was simply relaying the buyer’s interest.

Penalty

The licensee was fined a total of $1,500; $500 for violating Real Estate Trading Act Section 22 (2) (a), $500 for violating Commission by-law 702 Article 35 and $500 for violating Commission by-law 702 Article 11.

Commission Initiated Investigations per Real Estate Trading Act Section 17(2)

Mishandling of Trust Funds

As a result of trust account discrepancies identified in a regularly scheduled audit, the Registrar initiated an investigation into a brokerage, as well as the broker. The evidence supported that more than 40 disbursements were made from the brokerage’s trust accounts to the brokerage’s operating account over a 15-month period that were not made as a result of completed real estate transactions.

A review of the brokerage’s operating account indicated the trust funds were used and expensed for operational purposes. The trust funds were returned to the trust accounts within one-to-two months after the initial disbursements; however, none of the disbursements or subsequent-returned deposits were identified on the brokerage’s trust control ledger. In total, more than $3-million dollars in trust fund disbursements were removed and later returned from the brokerage’s trust accounts within a 15-month period.

The chief financial offer (CFO), an unlicensed part owner of the brokerage, was responsible for its financial management, which included the operating account and trust accounts. The CFO was identified as the person who disbursed the funds in question from the trust accounts to the brokerage’s operating account. The Commission’s investigation determined the brokerage had inadequate internal controls for identifying and addressing these ongoing trust shortages. The brokerage’s senior management failed to ensure trust monies were properly protected by either turning a blind eye to the CFO’s actions or employing an inadequate internal control system to prevent such situations from occurring.

The broker signed the trust account bank reconciliations each month despite clear indication in these reports of the trust shortages. The evidence supported the broker did not take adequate measures to identify and/or rectify these ongoing trust shortages at the time they reviewed the monthly trust account bank reconciliations.

As a result of the investigation, the broker was charged with and agreed to having violated Real Estate Trading Act Section 22 (2) (a), (b), by-law 602b), by-law 614, by-law 625a), by-law 703b), c), d), e); by-law 704d).

The brokerage was charged with and agreed to having violated Real Estate Trading Act Section 22 (1) (a), (c); Real Estate Trading Act Section 22 (2) (a), (b); by-law 622.

Penalty

The broker:

Cancellation of broker licence. The NSREC will not accept a licence application for broker, managing associate broker, or associate broker licence for 1 year from the cancellation. In the event they want to obtain a broker level licence, they must complete and pass the broker licensing course and exam. They were allowed to apply for a salesperson licence.
$5,000 fine.

The brokerage:

$15,000 fine.
All of the Commission’s investigation legal costs, totalling approximately $25,000.
At the brokerage’s expense, an independent review by an accounting firm that is approved by the Commission, to verify the trust liability of the brokerage’s trust accounts.
Trust audits to be conducted by the Commission every 6 months, at the brokerage’s expense. Monthly bank statements from trust accounts and operating account as well as all related record keeping must be provided to the Registrar until otherwise determined by the Registrar.

Licensee signs client’s signature

A seller listed their property for sale with a brokerage and a designated agent (licensee) was appointed to represent the seller. Shortly after, the licensee terminated their licence with the brokerage and reinstated their licence at another brokerage.

After viewing an online advertisement, the seller contacted the brokerage with whom they had listed their property for sale to question why the advertisement depicted their property was listed for sale with another brokerage. The seller advised their brokerage they did not sign an Assignment of Seller Designated Brokerage Agreement, authorizing the brokerage to assign the brokerage agreement to another brokerage.

The broker relayed his concerns to the Registrar, who after reviewing the information, initiated an investigation with himself as the complainant.

When questioned by the Commission, the licensee confirmed they signed the seller’s name without their consent on an Assignment of Seller Designated Brokerage Agreement form to assign the agreement to their new brokerage. Had there been a Power of Attorney (POA) in place authorizing the licensee to sign on behalf of the seller, the licensee would have signed their name, followed by POA, and not sign the seller’s name in a similar style to their signature.

The penalty resulted in the licensee being charged with and agreed to having violated Real Estate Trading Act, Section 22 (1) (a) & (b).

Penalty

The salesperson was fined $1,000 and served a 30-day licence suspension for violating Real Estate Trading Act, Section 22 (1) (a) & (b).

Failure to comply with the terms of temporary licence

The Registrar approved a temporary broker licence to be issued to a salesperson to prevent a brokerage licence from terminating as a result of having no broker. Due to the poor audit history of the brokerage for transaction files, the Registrar placed several restrictions on the temporary broker licence, one of which required the licensee to report all new Agreements of Purchase and Sale executed through the brokerage to the Commission’s Licensing Officer. The licensee acknowledged and agreed to these terms in writing.

It was later brought to the Registrar’s attention by another licensee at the brokerage that the brokerage had facilitated Agreements of Purchase and Sale on behalf of consumers. This information was not reported to the Commission’s Licensing Officer at the time the agreements were facilitated, as required. As a result, the Registrar initiated an investigation into the conduct of the temporary broker.

The investigation determined the brokerage facilitated four Agreements of Purchase and Sale on behalf of buyer clients and none of the agreements were reported to the Commission’s Licensing Officer. The licensee advised the Commission they neglected the terms of the temporary broker licence because they did not thoroughly read the terms before signing and agreeing to them.

It is the responsibility of licensees to comply with the terms of any licence restrictions. The licensee was charged with and agreed to having violated Real Estate Trading Act, Section 13(3).

Penalty

The salesperson was fined $1,000 for violating Real Estate Trading Act, Section 13 (3) and the temporary broker licence was revoked.

False advertising and salesperson acting in the capacity of a broker level licence

It was brought to the Commission’s attention that a licensee who was licensed as a salesperson was being advertised as a broker/manager on their brokerage’s Facebook page and website, and that the salesperson was performing broker level duties at the brokerage. The Registrar initiated an investigation to look into the conduct of the salesperson and broker.

The broker and the salesperson stated the salesperson had been promoted to the position of ‘manager’ of one of the brokerage’s branch offices. They state that it was communicated to all licensees in the branch office that because the licensee held a salesperson licence, all broker level questions must be directed to the managing associate broker or to the broker. They stated that until the licensee obtained an actual broker level licence, their role as manager would be limited to administrative duties.

The evidence supported that when the salesperson was approached with a broker level question by another licensee at the brokerage; they addressed the question and provided the licensee with advice. The licensee was charged with and agreed to having violated Real Estate Trading Act, Section 4(1).

Further, the salesperson was advertised as the broker on the brokerage’s Facebook page for the branch office. This post was not removed until shortly after the Registrar initiated the investigation, two months later. The licensee was also advertised on the brokerage’s website as the “broker/manager” for the branch office.

The broker stated both the Facebook post and incorrect title on the website were mistakes made by unlicensed administrators. The broker is responsible for all brokerage advertising. The penalty resulted in the broker being charged with and agreed to having violated Commission by-law 704(b).

Penalty

The salesperson was fined $500 for violating Real Estate Trading Act, Section 4(1).

The broker was fined $500 for violating by-law 704(b).

Failure to verify licence application

The Commission’s compliance staff received a few voicemails from a licensee whom identified themself as a managing associate broker with a brokerage. The compliance staff also observed that the licensee’s Facebook Page and e-mail signature advertised the licensee as a managing associate broker with the brokerage. When compliance staff verified the licensee’s licence status, it was determined that the licensee was licensed as an associate broker with a different brokerage. This information was relayed to the Registrar, who initiated the investigation with himself as the complainant.

The licensee stated they completed the application to be a managing associate broker with the new brokerage and also completed their licence termination with the old brokerage. The full paperwork was sent to the broker of the new brokerage for signature and was supposed to be submitted to the Commission the following day for processing and payment. The next morning the licensee received an e-mail from the old brokerage confirming their associate broker licence with the brokerage was terminated. The licensee assumed that since the old brokerage had been notified of their termination, that the Commission had received all of the paperwork and payment from the broker of the new brokerage. The licensee then began trading on behalf of the new brokerage, including performing duties that require a managing associate broker or broker licence.

The investigation determined that when the Commission received the paperwork, an incorrect licensing form had been submitted and so it was not processed. A Reinstatement of Licence Form was submitted instead of an Application for Broker/Managing Associate Broker form. The licensee had also not completed a required criminal record check. Shortly after receiving the paperwork, the Licensing Officer emailed the licensee and the broker and informed them of this.

In three voicemails the licensee left with the Commission’s compliance team, the licensee stated they were fielding questions on behalf of their “agents” and the brokerage. The licensee was not to advertise or trade under the new brokerage without first receiving confirmation of their licence from the Commission or their broker.

It is the responsibility of all licensees to ensure they only trade, including all advertising and promotion, under the brokerage in which they are licensed. The licensee was charged with and agreed to having violated Commission by-law 705(b).

Penalty

The licensee was fined $400 for violating Commission by-law 705(b).

Transaction file review violation

The Commission received a written complaint from a consumer against a licensee and their broker. The brokerage practices common law agency. Upon review of the complaint and real estate documentation provided, the Registrar decided not to proceed with the allegations; however, due to numerous discrepancies identified in the real estate documentation and the broker having been warned for poor transaction file review in the past, the Registrar initiated a complaint against the broker and directed the Compliance team to investigate the transaction file.

The investigation determined that on two separate occasions, the brokerage prepared Agreements of Purchase and Sale for buyer clients, which were presented to seller clients, before Transaction Brokerage Agreements were entered into between the brokerage and respective clients.

This discrepancy has been brought to the attention of the broker before on multiple occasions. The broker was charged with and agreed to having violated Commission by-law 704(d).

Penalty

The broker was fined $1,000 for violating Commission by-law 704(d).

Brokerage Audits

Transaction file review violation

A Compliance Auditor conducted a brokerage audit for a brokerage in 2018. The audit resulted in the broker receiving a fourth consecutive rating of “needs improvement” for transaction file review. As a result, the Registrar initiated a complaint against the broker to determine if they were fulfilling their broker responsibility per the Act, By-law and Policy.

The transaction file discrepancies identified in the broker’s 2018 brokerage audit report showed no improvement from their previous brokerage audit reports. Repeat transaction file discrepancies were found in previous audits as well as different discrepancies.

The broker was charged with and agreed to having violated by-law 704(d).

Penalty

The broker was fined $1,000 for violating Commission by-law 704(d).

Transaction file review violation

A Compliance Auditor conducted a brokerage audit for a brokerage in 2018. The audit resulted in the broker receiving a third consecutive rating of “needs improvement” for transaction file review. As a result, the Registrar initiated a complaint against the broker to determine if they were fulfilling their broker responsibility per the Act, By-law and Policy.

The broker was charged with and agreed to having violated by-law 704(d).

Penalty

The broker was fined $500 for violating Commission by-law 704(d).

Disciplinary Newsletter July 2019

Disciplinary Newsletter

IMPORTANT NOTICE: Audit and record keeping policies have been updated as of January 2025. This newsletter references outdated content, in accordance with the version in effect at time. For current information on audits, click HERE.

July 2019

Volume 10 Edition 1

In This Issue

Introduction

Audit Program
Detailing Investigations
Publishing Disciplinary Decisions

Brokerage Audits

Transaction File Review Violations

Public Initiated Investigations

Case #1: Failure to verify registered owners of a property
Case #2: Failure to report absence, misleading clients, and failure to protect their client’s interests
Case #3: Failure to obtain a signed letter of intent
Case #4: Failure to verify property information at the time of listing
Case #5: Failure to obtain a signed Working with the Real Estate Industry form, and failure to obtain a signed Brokerage Agreement once a relationship was established

NSREC Initiated Investigations

Case Overview: Failure to verify licensed sales corporations

Introduction

Audit Program: A Guide to Real Estate Audits in Nova Scotia

Published in April 16, 2019 News Bulletin: The Nova Scotia Real Estate Commission’s (the Commission) Board of Directors approved the “Audit Program: A Guide to Real Estate Audits in Nova Scotia” with the intent to have the Audit Task Force gather and evaluate audit rating results within three months of the Audit Program’s implementation. The Audit Task Force completed their evaluation and determined that revisions to the audit rating system are necessary to ensure audit ratings are consistently fair.

At the April 4, 2019 meeting, the Board of Directors approved the Audit Task Force’s recommendation to temporarily suspend all 2019 audit ratings (trust and transaction file review).

Once the audit rating system has been revised, the audit rating system will be presented to the Board of Directors for approval. When the audit rating system is approved, the anticipated commencement will begin in 2020.

For more information and helpful audit tips, visit the “Audit” section on the Commission website.

Detailing Investigations

The Disciplinary Newsletter does not detail every case the Commission investigates. Rather, these cases were found to be the most useful as a learning resource.

Publishing Disciplinary Decisions

The Commission Disciplinary Newsletter publicizes decisions in accordance with the Commission Bylaw 839.

Brokerage Audits

To comply with Commission Bylaw 704(d), brokers are responsible for ensuring the required trust accounts, trust account records and transaction files are maintained in accordance with the Real Estate Trading Act, its Regulations, Commission Bylaw and Commission Policies.

Transaction File Review Violations

The following audit fines were issued prior to January 1, 2019:

In June 2018, a broker was charged with and agreed to having violated Bylaw 704(d). This was the broker’s fourth consecutive “needs improvement” rating for transaction file review during his time as a broker. The broker was fined $1,000.

In August 2018, a broker was charged with and agreed to having violated Bylaw 704(d) for their third consecutive “needs improvement” rating for transaction file review. The broker was fined $500.

Public Initiated Investigations

Case Overview: Failure to Verify Registered Owners of a Property

A mother deeded a property to her daughter and son. The property was listed for sale and after the transaction closed, the sellers contacted the Commission to submit a complaint. The sellers alleged their licensee included a lawn tractor and wood stove in the sale without consent, and contacted their lawyer without their permission.

The licensee’s broker was required to submit a statement for the investigation. The broker advised they had used a checklist when reviewing all accepted agreements. The broker said when reviewing this particular file they provided the licensee with numerous requests to fix paperwork discrepancies. The licensee failed to correct any of the paperwork discrepancies and the transaction subsequently closed.

During the investigation it was found there were two registered property owners. However, only one of the two owners were identified and had signed the Seller Brokerage Agreement and the Working with the Real Estate Industry form.

The licensee was charged with and agreed to having violated Bylaw 702, Article 10 for failing to check Property Online (POL) at the time of listing to verify the names of the registered property owners. The licensee was also charged with and agreed to having violated Bylaw 702, Article 11 for numerous paperwork discrepancies.

The broker was charged with and agreed to having violated Bylaw 704(d) for failing to take sufficient corrective measures to ensure the licensee’s paperwork discrepancies were rectified.

Penalty

The licensee was fined $400 for violating Bylaw 702, Article 10, and fined $500 for violating Bylaw 702, Article 11.

The broker was fined $500 for violating Bylaw 704(d).

Case Overview: Failure to Report Absence, Misleading Clients, and Failure to Protect Their Client’s Interests

A seller contacted a licensee to sell their multi-unit property. After an accepted agreement was in place, the buyer scheduled an appraisal as part of their due diligence. The seller requested their licensee (designated agent) be present during the scheduled property appraisal. The designated agent assured them they would be in attendance. Afterwards, the designated agent informed the seller that the appraisal went well.

The seller soon discovered their designated agent misled them into believing they were present for the property appraisal, but instead the designated agent had left the country. Rather than notifying the seller, the designated agent had another licensee manage the transaction in their absence—this included being present for the property appraisal.

None of this information was communicated to the seller who only learned of the designated agent’s absence after the other licensee contacted them. Due to the designated agent’s absence, the broker appointed themselves and the other licensee as the designated agent. The seller reluctantly signed the Amendment to the Seller Designated Brokerage Agreement.

As a result of the investigation, the designated agent was charged and agreed to having violated Bylaw 705(d) for leaving the country without notifying their broker or client; Bylaw 702, Article 34 for misleading their client during the property appraisal; and Bylaw 702, Article 2 for not being available to fulfill their duties.

The other licensee (who later became the designated agent) was charged with and agreed to having violated Bylaw 702, Article 3 for acting as a designated agent to the seller before the Seller Designated Brokerage Agreement was amended.

Penalty

The designated agent was fined $400 for violating Bylaw 705(d); $400 for violating Bylaw 702, Article 34; and $400 for violating Bylaw 702, Article 2.

The licensee (who later became the designated agent) was fined $400 for violating Bylaw 702, Article 3.

The broker was issued a written warning due to the transaction file discrepancies.

Case Overview: Failure to Obtain a Signed Letter of Intent

Co-owners of a business posted a Kijiji advertisement for the sale and lease takeover of their company. A broker (licensee) responded to the advertisement and said they could help. The business owners agreed and became clients of the brokerage by signing a letter of engagement.

Communication was scattered with the brokerage and the sellers became frustrated with the service they were receiving. The licensee apologized and said it had to do with lack of staffing at the brokerage.

The licensee notified the sellers throughout the duration of the contract saying there were interested potential buyers— one of whom provided an unsigned letter of intent to the sellers.

The sellers became increasingly impatient after emails were not responded to. After months of waiting for the potential buyer to sign the letter of intent, the licensee reassured the sellers that the potential buyer would submit the signed letter of intent soon. It became clear to the sellers that the potential buyer was not serious about buying the business. The sellers requested for the agreement (engagement letter) between themselves and the brokerage to be terminated.

During the investigation, it was found that the licensee’s engagement letter was not clear and potentially misleading. The wording in the agreement stated the sellers would pay an engagement fee and guaranteed that if the sellers were not satisfied with the service from the brokerage, the brokerage would refund the engagement fee. The engagement letter did not outline what limitations would restrict the seller from receiving a full refund. The licensee was given a warning for using unclear and potentially misleading wording in the agreements.

The evidence also supported that the licensee facilitated and obtained an unsigned letter of intent from the potential buyer. Any offer obtained by licensees (letter of intent included) must be in writing and executed by the person(s) making the offer. The investigation resulted in the licensee being charged with and agreed to having violated the Real Estate Trading Act, Section 30(3).

Penalty

The licensee was fined $500 for violating Section 30(3) of the Real Estate Trading Act.

Case Overview: Failure to Verify Property Information at the Time of Listing

A buyer found just what they were looking for—a condominium in their price range advertised as having two deeded parking spaces. After their offer was accepted, the buyer discovered the parking spaces were not deeded, but rather exclusive-use and possession.

At the time of listing the seller-client provided their licensee with information about the condominium, and advised that the two parking spaces were deeded. The seller’s licensee failed to verify the accuracy of the information and advertised the two parking spaces as deeded.

As a result of the investigation, the licensee was charged with and agreed to having violated Bylaw 708(a)(i)(ii)(iii)(iv) and (v).

Penalty

The licensee was fined $500 for violating Bylaw 708(a)(i) (ii)(iii)(iv) and (v).

Case Overview: Failure to Obtain a Signed Working with the Real Estate Industry Form, and Failure to Obtain a Signed Brokerage Agreement Once a Relationship was Established

It was closing day for a first-time buyer. The buyer arrived at the property for the pre-closing viewing and found the seller still there. It was agreed the seller would return the next day to pick up the remaining items, along with their cat hiding underneath the stairs.

After this arrangement had been made, the licensee directed the buyer to call their lawyer and say the pre-closing was fine. In the buyer’s complaint, they alleged the house was not clean and their licensee did not speak up to represent them.

Shortly after moving into the home, the buyer noticed bug bites on their legs. The buyer soon discovered the home was infested with fleas and hired an exterminator. The licensee stopped by the property soon after and provided the buyer with money to cover the exterminator costs, along with a housewarming gift.

The investigation found there was insufficient evidence to support these allegations against the buyer’s licensee.

However, during review of the transaction file, it was revealed the licensee began showing properties to the buyer in June and did not have them sign a Working with the Real Estate Industry form until August. The evidence also supported that the licensee was giving advice prior to the commencement date on the Buyer Designated Brokerage Agreement.

As a result of the investigation, the licensee was charged with and agreed to having violated Bylaw 703, Article 3 for not having the buyer sign the Working with the Real Estate Industry form at the earliest possible opportunity, and failing to have the buyer sign a Buyer Designated Brokerage Agreement when the agency relationship was established.

Penalty

The licensee was fined $500 for violating Bylaw 702, Article 3.

NSREC Initiated Investigations

Case Overview: Broker Fails to Verify Licensed Sales Corporation

A brokerage contacted the Commission to report that three licence renewal forms for approved sales corporations were missing in their brokerage licence renewal package. The broker believed three of their licensees had licensed sales corporations and advised the Commission that the brokerage had been paying remuneration to the unlicensed sales corporations.

The Registrar initiated an investigation and determined the brokerage had paid remuneration to the three unlicensed sales corporations on multiple occasions.

It is the responsibility of the broker to confirm that all sales corporations are licensed with the Commission prior to paying remuneration. The penalty resulted in the broker being charged with and agreed to having violated Bylaw 715(c).

Penalty

A broker was fined $1,000 for violating Bylaw 715(c).

Disciplinary Newsletter July 2018

Disciplinary Newsletter

IMPORTANT NOTICE: Audit and record keeping policies, and Part 6 of the Commission By-law have been updated as of January 2025. This newsletter references outdated content, in accordance with the versions in effect at time. For current information, click HERE.

July 2018

Volume 9 Edition 1

In This Issue

Introduction

New Audit Program
Detailing Investigations
Publishing Disciplinary Decisions

Brokerage Audits

Case #1: Continuously Received a “Needs Improvement” Audit Rating
Transaction File Review Violations
Trust Record Keeping Violations

Public Initiated Investigations

Case #2: Zoning and Misleading Advertising
Case #3: Failure to Provide Signed Documents
Case #4: Failure to Disclose Competing Offers
Case #5: Leaving a Property Unsecured
Case #6: Failing to Ensure Written Agreements are in Place
Case #7: Removal of Client’s Property without their Knowledge or Consent

NSREC Initiated Investigations & Licence Suspension

Case #8: Forging Signatures

Introduction

Audit Program: A Guide To Real Estate Audits in Nova Scotia

The Nova Scotia Real Estate Commission Board of Directors has approved the implementation of a new audit program. The effective date of the new audit program is January 1, 2019.

The new program benefits both the public and the real estate industry by protecting the public interest through effective regulation.

A mandatory CPE course detailing the new program will commence in the fall of 2018 for all licensees.

The new audit program will provide:

Clarity and understanding of the audit process;
A transparent rating system;
Comprehensive audit fee formula based on the number of licensees; and
A process that allows for licensees to be accountable for consistently poor performance instead of their broker.

Detailing Investigations

Be advised that the Disciplinary Newsletter does not detail every case the NSREC investigates. Rather, these cases were found to be the most useful as a learning resource.

Publishing Disciplinary Decisions

The NSREC Disciplinary Newsletter publicizes decisions in accordance with the NSREC Bylaw 839.

Brokerage Audits

In accordance with NSREC Bylaw 704 (d), brokers are responsible for: ensuring the required trust accounts, trust account records and transaction files are maintained in accordance with the Act, the Regulations, the Bylaw and the Commission’s Policies.

The following brokers were charged with violating NSREC Bylaw 704 (d), and accepted settlement agreements with the NSREC:

Transaction File Review Violations

In November 2017, two brokers were charged and agreed with having violated NSREC Bylaw 704 (d) their third consecutive “needs improvement” rating for transaction file review. They were each fined $500.

In April 2018, a broker was charged and agreed with having violated NSREC Bylaw 704 (d) for their fourth consecutive “needs improvement” rating for transaction file review. The broker was fined $1,000.

In April 2018, a broker was charged and agreed with having violated NSREC Bylaw 704 (d) for their third consecutive “needs improvement” rating for transaction file review. The broker was were fined $500.

Transaction File Review Violations Trust Account Record Keeping Violations

Trust Account Record Keeping Violations

In October 2017, a broker was charged and agreed with having violated NSREC Bylaw 704 (d) for their third consecutive “needs improvement” rating for trust account record keeping. The broker was also required to complete the trust record keeping portion of the broker licensing course. The broker was fined $500.

Case Overview: Continuously Received a ‘Needs Improvement’ Audit Rating.

Every year, the NSREC’s compliance auditors conduct trust account audits at each brokerage in Nova Scotia. In addition to the trust audits, each brokerage is subject to a brokerage audit every three years. Audit results fall into one of three categories: very good, good, and needs improvement. If a broker receives a “needs improvement” rating for transaction file review, they will continue to receive a brokerage audit until they have received a “good” rating for transaction file review. Any brokerage that receives three consecutive ratings of “needs improvement” for trust account record keeping or transaction file review are subject to disciplinary action.

A broker received her fourth consecutive “needs improvement” rating for transaction file review. When no settlement agreement was reached, the matter was referred to a discipline hearing.

The Discipline Hearing Panel found the broker demonstrated a lack of knowledge, skill, judgement or desire to be a competent broker. The findings of the panel demonstrated a lack of knowledge by the broker to implement procedures, review documents and most importantly understand agency.

Through their actions and behaviours, they substantially increased the costs of the investigation and the hearing and the panel strongly believed those costs should not be borne by the NSREC.

Penalty

The Panel found the broker in violation of:

Real Estate Trading Act, Section 22 (1) (a)
One count of violating Bylaw 703
One count of violating Bylaw and 704 (d)

and ordered a one-year suspension, a letter of reprimand, and payment of $1,000 fine and $52,800.12 in legal fees.

Reinstatement of the broker’s licence following the one-year suspension is conditional upon retaking the broker’s course and passing the exam. If the broker licence is reinstated, maintenance is conditional upon having four “good” audits with an audit frequency of every six months.

Public Initiated Investigations

Case Overview: Zoning and Misleading Advertising

A family recently sold their home and were looking for a rural property. The buyer had two requirements: an early closing date and a property to accommodate livestock.

After finding a property that was listed as a hobby farm, they submitted an offer that was accepted.

Shortly after the transaction closed, they were informed by a neighbour that livestock did not meet zoning requirements per municipal bylaws.

The buyer alleged that their licensee was aware of their desire to raise livestock throughout the real estate transaction.

The evidence supported that the buyer’s licensee did not take significant steps to confirm, or advise that their client confirm if livestock could be kept on the property.

The buyer’s licensee was charged with and agreed to having violated Bylaw 702, Article 2, for not protecting their client’s interests.

In addition, the seller’s licensee was also found in violation for advertising the property as a hobby farm without verifying this information. This inaccurate advertising was misleading and the seller’s licensee was charged with and agreed to having violated Bylaw 708 (a) ii.

Penalty

The buyer’s licensee was fined $500 for violating Bylaw 702, Article 2.

The seller’s licensee was fined $400 for violating Bylaw 708 (a) ii.

Case Overview: Failure to Provide Signed Documents

A seller decided to list their home and contacted a local licensee. After speaking with the licensee, the seller agreed to list their property. The seller signed a Property Disclosure Statement and a Seller Brokerage Agreement.

The true copy of the Property Disclosure Statement and Seller Brokerage Agreement were not provided to the seller at the time of signing. The seller contacted the brokerage to retrieve a copy of the signed real estate documents. After receiving a copy of the Seller Brokerage Agreement weeks later, the seller discovered that their licensee had shredded the Property Disclosure Statement without the seller’s consent.

The seller’s licensee was charged with and agreed to having violated two counts of Bylaw 702, Article 11. The first violation pertained to the licensee failing to provide true copies of real estate documents to the seller at the time of signing. The second violation was due to several paperwork discrepancies found within the Seller Brokerage Agreement.

The licensee was also found in violation of one count of Bylaw 702, Article 2, for deliberately shredding a completed and signed Property Disclosure Statement without the seller’s knowledge or consent.

The broker was also charged with and agreed with the charge of failing to ensure the documentation was adequately maintained in accordance with the Real Estate Trading Act and NSREC Bylaw. This is a violation of Bylaw 704 (d).

Penalty

The licensee was fined $800 ($400/each violation) for violating two counts of Bylaw 702, Article 11, and fined $400 for violating one count of Bylaw 702, Article 2 ($1,200 in total).

The broker was fined $500 for violating Bylaw 704 (d).

Case Overview: Failure to Disclose Competing Offers

A potential buyer submitted an offer after viewing a property. A few days after the offer was submitted, the potential buyer’s licensee was informed that another offer had been accepted. The potential buyer was confused as there was no mention of competing offers.

The potential buyer’s licensee confronted the seller’s licensee. The seller’s licensee stated an offer was submitted earlier that day from another buyer, and the seller verbally countered late in the afternoon. The potential buyer’s licensee submitted their offer later that evening, but there was no mention of competing offers. The following morning, the seller’s licensee spoke to their seller on how they wished to handle the two outstanding offers. The seller responded they only wanted to deal with the first offer.

In this case, the seller’s brokerage practices designated agency. The decision to disclose the existence of competing offers was up to the seller, as stated in the Seller Designated Brokerage Agreement. The evidence showed that neither box was chosen in the clause that gives the designated agent direction on how to manage offers/competing offers. Due to this clause being left blank, the seller’s licensee should have advised their client that in the absence of instruction to the contrary, they are required to advise both buyers they were in a competing-offer situation.

The seller’s licensee was charged with and agreed to having violated Bylaw 702, Article 11 for not having the specific terms, conditions, obligations and commitments of the real estate transaction in writing. The seller’s licensee was also charged with and agreed to having violated Bylaw 702, Article 12, because they failed to present all written offers and counter-offers, unless instructed by the seller in writing.

Penalty

The licensee was fined $400 for violating Bylaw 702, Article 11, and $400 for violating Bylaw 702, Article 12.

Case Overview: Leaving a Property Unsecured

A seller listed their home in mid-winter. As the home was unoccupied, the seller had their neighbours keep an eye on the property. One neighbour observed suspicious behaviour after noticing the lights were left on two nights in a row. The neighbour contacted the seller’s licensee and informed them the lights in the home were left on.

The seller’s licensee went to the property and discovered that a break and enter had taken place. The backdoor was damaged and a chair was used to keep the door ajar. The perpetrator left a note apologizing and said they had caused the damaged because they were looking for a warm shelter for the night.

A viewing took place at the home earlier that day. During the viewing, the buyer’s licensee noticed the back door was open, but thought it was open to air out the home.

After the viewing was complete, the buyer’s licensee did not further investigate the reason the door was left open. Instead, the buyer’s licensee locked the front door and left the back door as discovered, and made no reports of suspicion to the seller’s licensee or the police.

The buyer’s licensee was charged with and agreed to having violated Bylaw 702, Article 35. The buyer’s licensee had a professional obligation to ensure the property was secure upon leaving, or in the event it could not be secured, it was the buyer’s licensee’s responsibility to immediately notify the listing brokerage.

Penalty

The licensee was fined $500 for violating Bylaw 702, Article 35.

Case Overview: Failing to Ensure Written Agreements are in Place

A seller contacted a licensee to sell their commercial property. The licensee agreed to represent them, and had the seller sign an engagement letter with an expiry date. Upon signing the engagement letter, the seller paid an “engagement fee,” per this agreement.

Time passed and the agreement expired. The licensee requested that the seller alter the expiry date on the engagement letter and enter a new date. The seller agreed and revised the expired agreement. The expiry date passed once again and the seller did not renew. After a year and a half, with no updated representation agreement, the same licensee approached the seller with a letter of intent from a potential buyer who was being treated as a customer. The offer was not accepted.

Despite no agreement being signed, the licensee approached the seller and insisted remuneration for their services, despite the failed offer and no written agreement was in place.

The licensee was charged with and agreed to having violated the Real Estate Trading Act, Section 21 (1), as a result of not fully disclosing remuneration in writing.

In addition, the licensee was also charged with and agreed to having violated Bylaw 702, Article 3, for failing to have the seller sign a written representation agreement that disclosed the licensee’s role and nature of services. Per the Bylaw, this agency disclosure must be stated prior to beginning and establishment of a relationship.

Penalty

The licensee was fined $500 for violating Real Estate Trading Act, Section 27 (1), and $500 for violating Bylaw 702, Article 3.

Case Overview: Removal of Client’s Property without Their Knowledge or Consent

A seller had a vacation property listed. The seller visited their property and noticed a framed photograph was missing. The seller asked their licensee the whereabouts of the photograph. The licensee admitted to taking the photograph, but only to repair it and promised to return it after the repair was complete.

Time passed and while the seller was on Facebook, they noticed a picture of the photograph, in question, was shown under the licensee’s private-art collection album.

The seller confronted the licensee who admitted that they took the photograph, and made a copy of the photo while it was removed from the property. The licensee apologized for their actions. The matter was referred to the Discipline Committee.

Penalty

A hearing panel found the broker in violation of Real Estate Trading Act, Section 22 (1) (a) and (c), and Bylaw 702 Article 1, 2, 34, 35, 39 (a) and (v).

The penalty was a four-month suspension, $4,000 fines and $26,270.07 in legal costs.

NSREC Initiated Investigations & Licence Suspensions

Case Overview: Forging Signatures

A broker was reviewing a pending transaction when they noticed something peculiar with the real estate documents, given to them by one of the brokerage’s licensees.

The first discrepancy was during the signing of the Buyer Brokerage Agreement, where the licensee listed the remuneration amount received incorrectly. Upon review, the broker directed the licensee to obtain an amendment to the Buyer Brokerage Agreement to correct the remuneration error made on the Buyer Brokerage Agreement.

The licensee contacted the buyer and they agreed to sign an amendment, however the licensee incorrectly provided them with a wrong version of an amendment form. After the licensee noticed a signature error, the licensee contacted the buyer on the phone to say they had to sign another version of the correct form. The buyer verbally instructed the licensee to sign the document on their behalf.

There was no power of attorney in place authorizing the licensee to sign on behalf of their client. When the broker reviewed the amendment, the licensee did not sign their name on the buyer’s behalf (ex: John Doe, Power of Attorney, on behalf of “buyer A”). Instead, the licensee signed the buyer’s name in a similar style as the buyer’s signature, and then witnessed it with their own signature.

The broker confronted the licensee advising them that the signatures did not look authentic.

The licensee admitted they signed the buyer’s signature. The buyer also confirmed they had given the licensee the authority to sign on their behalf, but they did not provide written authority to do so (ex. power of attorney).

A power of attorney allows the licensee to sign on their behalf. A power of attorney does not permit a licensee to forge a buyer’s signature, as this licensee had done.

The investigation found the licensee was in violation of the Real Estate Trading Act, Section 22 (1) (a) and (b), for unprofessional conduct for forging a buyer’s signature.

Penalty

The licensee was charged with and agreed to having violated Section 22 (1) (a) and (b) of the Real Estate Trading Act.

The penalty was a $1,000 fine and a one-month licence suspension. At the time this was brought to the NSREC’s attention, the licensee’s then-broker terminated their licence and reported the incident to the NSREC. This absence satisfied his suspension as time served.

Disciplinary Newsletter August 2017

Disciplinary Newsetter

August 2017

Volume 8 Issue 2

In This Issue

The Complaint Process
The Complaints Review Committee
Brokerage Inspections
Fines & Penalties

The Complaint Process

The Nova Scotia Real Estate Commission (the Commission) is responsible for the administration of the Real Estate Trading Act and the Bylaw, which includes receiving complaints about brokerages and licensees, investigating complaints and taking disciplinary action when necessary.

While two licensees may be charged with the same violation, the penalties may be different, as the Commission assesses each case individually as each investigation is distinct and often complicated in its own way.

Each case also goes through several levels of procedure. When a complaint is made that warrants a full investigation, the following steps are taken:

The Registrar initiates an investigation. He may also do so on his own should he determine it necessary for consumer protection purposes.
The respondent licensee and their broker (if applicable) are notified that an investigation has been initiated and sent a copy of the complaint (if applicable) as well as directions on how to reply.
The Commission’s Compliance Investigator requests statements and supporting evidence from all parties directly involved. Other parties involved with the case, including other licensees, may also be contacted for statements or information, if required.
Upon its completion, the investigation report is turned over to the Registrar for their evaluation and decision.
The full investigation file including the Registrar’s decision is reviewed by the Complaints Review Committee (CRC), who may accept, reject or make recommendations to amend the decision to:
1. recommend no charges;
2. recommend charges through a settlement agreement. If the licensee accepts the proposed settlement agreement, they must satisfy the imposed penalty. If the licensee does not agree with the proposed settlement agreement, the matter is referred to the Discipline Committee.
3. refer the matter directly to the Discipline Committee.

When a case is referred to the Discipline Committee, a panel is appointed and a formal hearing will make a final decision on the matter.

What is the Complaints Review Committee

The Complaints Review Committee (CRC) is made up of licensees and public volunteers from across the province.

The role of the CRC is to:

Review all of the Registrar’s complaint decisions
Accept, reject or make recommendations to amend the decisions
Make recommendations to the Commission Board of Directors on conduct, trade practices and standards of business practice
Hear requests for review of the Registrar’s decision to dismiss a complaint

Brokerage Inspections

The Commission may increase the frequency of inspections for a specific brokerage if necessary. Inspection results fall into one of three categories: ‘very good’, ‘good’, and ‘needs improvement’. Any brokerage that receives three consecutive ‘needs improvement’ rating is subject to a $500 fine and the penalty increases if the brokerage receives a fourth or fifth consecutive ‘needs improvement’ ratings.

Fifth Consecutive Needs Improvement Rating for Trust Record Keeping

A broker had their broker licence restricted to associate broker. The broker is required to re-take the broker licensing course, pass the broker exam and receive approval from the Registrar, should they wish to regain a broker licence.

Fourth Consecutive Needs Improvement Rating for Transaction File Review; Third Consecutive Needs Improvement Rating for Trust Record Keeping

A broker was fined $2,000 for receiving a fourth ‘needs improvement’ rating for transaction file review. They were also fined $500 for receiving a third ‘needs improvement’ for trust account record keeping.

Fourth Consecutive Needs Improvement Rating for Transaction File Review

A broker was fined $1,000 for a fourth consecutive ‘needs improvement’ rating for transaction file review.

Disciplinary Newsletter March 2017

Disciplinary News

IMPORTANT NOTICE: Audit and record keeping policies, and Part 6 of the Commission By-law have been updated as of January 2025. This newsletter references outdated content, in accordance with the versions in effect at time. For current information, click HERE.

March 2017

Volume 9 Issue 1

In This Issue

The Complaint Process
Brokerage Inspections
Reminders & Inspection Trends
Investigations
Recent Articles

The Complaint Process

The Nova Scotia Real Estate Commission (the Commission) is responsible for the administration of the Real Estate Trading Act and Bylaw, which includes receiving complaints about brokerages and licensees, investigating complaints and taking disciplinary action when necessary.

Each case also goes through several levels of procedure. When a complaint is made that warrants a full investigation, the following steps are taken:

The Registrar initiates an investigation. He may also do so on his own should he determine it necessary for consumer protection purposes.
The respondent licensee and their broker (if applicable) are notified that an investigation has been initiated and sent a copy of the complaint (if applicable) as well as directions on how to reply.
The Commission’s Compliance Investigator requests statements and supporting evidence from all parties directly involved. Other parties involved with the case, including other licensees, may also be contacted for statements or information, if required.
Upon its completion, the investigation report is turned over to the Registrar for their evaluation and decision.
The full investigation file including the Registrar’s decision is reviewed by the Complaints Review Committee (CRC), who may accept, reject or make recommendations to amend the decision to:
1. recommend no charges;
2. recommend charges through a settlement agreement. If the licensee accepts the proposed settlement agreement, they must satisfy the imposed penalty. If the licensee does not agree with the proposed settlement agreement, the matter is referred to the Discipline Committee.
3. refer the matter directly to the Discipline Committee.

When a case is referred to the Discipline Committee, a panel is appointed and a formal hearing will make a final decision on the matter.

What is the Complaints Review Committee?

The Complaints Review Committee (CRC) is made up of licensees and public volunteers from across the province.

The role of the CRC is to:

review all of the Registrar’s complaint decisions;
accept, reject or make recommendations to amend the decisions;
make recommendations to the Commission Board of Directors on conduct, trade practices and standards of business practice; and
hear requests for review of the Registrar’s decision to dismiss a complaint.

Brokerage Inspections

Every year, the Commission’s Compliance Inspectors conduct trust account inspections for each brokerage in Nova Scotia. In addition to trust inspections, each brokerage is subject to a full brokerage inspection every three years which includes a review of the brokerage transaction files and trust record keeping. The Commission may increase the frequency of inspections for a specific brokerage if necessary. Inspection results fall into one of three categories: ‘very good’, ‘good’, and ‘needs improvement’. Any brokerage that receives three consecutive ‘needs improvement’ rating is subject to a $500 fine and the penalty increases if the brokerage receives a fourth or fifth consecutive ‘needs improvement’ ratings.

Three Consecutive ‘Needs Improvement’ Inspections

One broker was fined $500 for three consecutive ‘needs improvement’ ratings for transaction file review.

Four Consecutive ‘Needs Improvement’ Inspections

One broker was fined $1,000 for four consecutive ‘needs improvement’ ratings for transaction file review.

Reminders & Inspection Trends

Put the Self in Self Regulation!

The Commission invites interested licensees to nominate themselves to fill one three-year term with the Commission’s Board of Directors.

Licensees must be in good standing to be eligible to be nominated. Good standing requires the nominee to have not been found guilty of violating the Commission’s Act or Bylaw, resulting in fines totaling more than $500, in the past two years.

The Commission Board of Directors meet five times per year and the newly elected Commissioner has the opportunity to serve on other Commission committees.

If you have questions about the application requirements, election process or time commitment involved, please contact Peggy Kell at This email address is being protected from spambots. You need JavaScript enabled to view it..

Important Changes to Voting

We know that it is not always easy for licensees to travel to the Halifax area to join us at our Annual General Meeting and vote in our election. This year we want to make it easier for those who are out of town, and also encourage greater participation in the voting process by moving our election online!

That’s right, for this year’s election for the Commission’s Board of Directors, you will be able to cast your ballot from the comfort of your home, office or where ever you have an internet connection.

More information will be sent out in the early April detailing specifically how, and when, to cast your ballot.

Buyer Brokerage Agreements: Don’t Just Ask Your Clients to Sign!

Our Compliance Team has been made aware of several instances where licensees are presenting a brokerage agreement to their buyers, with no further information on the agreement and simply asking the client to sign.

The Buyer Brokerage Agreement was mandated by the Board of Directors because it clearly indicates to the roles and responsibilities of the brokerage and the buyer while they are looking for their next home. Handing your clients a Buyer Brokerage Agreement with no explanation of what it is they are signing is not in their (or your) best interest and can have serious repercussions. Licensees are encouraged to use what they learned in the Buyer Brokerage Agreement info session to help guide those discussions.

For more information, visit www.nsrec.ns.ca/bba

Investigations

The following cases are provided as learning opportunities for the industry. These cases do not reflect every matter investigated by the Commission, but are representative of the more serious or consistent issues. Disciplinary actions are disclosed in accordance with Commission Bylaw 839.

Case Overview: Misleading Advertising

A first-time home buyer purchased a home with the assistance of a licensee from a common law brokerage. The seller was also a client of the brokerage and both the buyer and seller had entered into a Transaction Brokerage Agreement. The property was advertised as having a gravel driveway, however, shortly after the transaction closed the buyers found out that the driveway and part of their deck was technically part of a neighboring property that was also sold by the same seller.

The investigation revealed that the licensee representing the seller was advised by the seller at the time of the listing that the property boundaries were unclear and that no surveyors location certificate existed. While this information was listed in the listing cut for the neighboring property, it was not included in the listing cut of the property the buyers had purchased. Not including this information in both listing cuts was not in the seller’s best interest and a violation of Bylaw 702, Article 2.

The evidence in this case also supports that although the seller’s licensee was aware that the location of the driveway boundaries was unclear, they still advertised that the property the buyer’s ultimately purchased included the gravel driveway. This was misleading, inaccurate, and a violation of Bylaw 708(a)(i)(ii)(iii).

Results

In January 2017, the seller’s licensee was charged with one violation of Bylaw 702, Article 2 ($500) and one violation of Bylaw 708(a)(i) (ii)(iii) ($400), for a total of $900 in fines.

The broker was cautioned for poor licensee supervision.

Lessons Learned

Brokers are responsible to ensure all brokerage advertising is accurate and not misleading. In this case, where the seller had indicated outright to the licensee representing them for both properties that they were unsure where the property line was between the properties, that information ought to have been either clarified or at the very minimum made clear in both listings.

The seller’s licensee should have asked their client if they wanted to have those crucial details verified so that potential buyers would not be misled to believe that the wrong property included the driveway.

Remember that an advertisement may be considered misleading even if it is not demonstrated that a consumer was actually misled. It is only necessary to show that the advertisement is capable of misleading a reasonable consumer.

Case Overview: Co-mingling Funds in Trust

At a routine audit, a broker had reported that there were zero trust transactions during an audit period. Whenever this is reported, the brokerage must submit to the Compliance Inspector both a signed declaration stating that there were zero trust transactions, and either bank statements or a letter from their financial institution for validation.

After the Inspector made several requests for both the declaration and its validating letter or statement, the matter was referred to the Compliance Manager. At this point, the brokerage had provided the signed declaration, but not its validation.

Further time passed after the initial request and neither a bank statement nor a letter from the financial institution was provided to the Commission and as a result, the Registrar suspended the licence of the broker for violating Bylaw 702, Article 35.

Upon having their licence suspended, the former broker informed the Commission that while they did not have any brokerage trust funds in the account, they did move their own funds through the account for another business venture outside of trading in real estate. This is a violation of Bylaw 626, which states that only funds related to trading in real estate can be deposited into the brokerage’s trust account.

Results

In January 2017, the broker was charged with one violation of Bylaw 702, Article 35 ($500), and one violation of Bylaw 626 ($500), for a total of $1,000 in fines.

Lessons Learned

The Commission Bylaw does not permit brokerages to hold any funds in their trust account which are not real estate trust funds (i.e. funds that are not tied to a real estate transaction). As Bylaw 626 states, “A broker shall not co-mingle their own money with trust funds. The only funds that may be deposited into a brokerage trust account are funds to be held in trust”.

While the broker’s licence in this instance was reinstated upon providing the requested documentation and a detailed description on why funds were co-mingled, it will no longer be this easy. As of February 1, 2017, the Commission’s Board of Directors agreed to add Bylaw 409(d) which requires any licensee whose licence is suspended for failure to cooperate with the Commission’s audit process to pay a full licensing fee of $360 to have their licence reinstated.

Case Overview: Failure to Cooperate

A seller contacted the Commission shortly after terminating their seller brokerage agreement with a brokerage. The seller became concerned when they received a call from the broker, after terminating their listing, requesting payment of an early termination fee.

Upon being made aware of the seller’s concern, the Registrar requested the seller’s transaction file from the broker. The file was sent electronically in a format that was encrypted and could not be opened. After numerous unsuccessful requests for the transaction file in an alternative format, the Registrar opened an investigation. Once notified that an investigation was opened, the broker submitted the transaction file via fax.

Upon reviewing the transaction file, it was determined that the broker did not have a written agreement allowing the brokerage to charge a fee for the early termination of the seller brokerage agreement. The broker claimed that they had had a conversation with the seller on fees at the time the seller brokerage agreement was signed, though this obligation was not reflected in writing, which is a violation of Bylaw 702, Article 11.

Results

In January 2017, the broker was found in violation of Bylaw 702, Article 11 ($500).

The broker was also cautioned for not providing documents to the Commission staff when requested.

Lessons Learned

Brokers are required to fully cooperate with Commission compliance staff on all audit/investigation-related requests. Failing to do this, especially when in respect to failing to provide documentation that public funds are secure, can result in the broker’s licence being suspended.

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