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Disciplinary Newsletter November 2022

Disciplinary Newsletter

November 2022

Volume 12 Edition 2

IN THIS ISSUE

Introduction

Detailing Investigations
Publishing Disciplinary Decisions

Public Initiated Investigations

Case #1: Not Reviewing Showing Instructions
Case #2: Not Confirming Facts Led to Misleading Advertising
Case #3: Unprofessionally Discrediting a Fellow Licensee
Case #4: Overstating Square Footage
Case #5: Disclosing Information Not in Client’s Best Interest
Case #6: Not Protecting Client’s Interests
Case #7: Not Following COVID-19 Protocols

NSREC Initiated Investigations

Case #1: Broker Not Maintaining Records

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

Not Reviewing Showing Instructions

Prospective buyer customers viewed a property with a licensee who was not the seller’s representative. The buyer brought their dog to the viewing. During the viewing, the dog ingested rat poison, which resulted in the dog requiring medical attention from a veterinarian. The buyers submitted a complaint to the Commission alleging that the seller’s licensee was aware of the rat poison at the property and failed to communicate this information to the licensee who facilitated the viewing.

The evidence supported that the seller’s licensee took adequate steps to make sure that the licensee who facilitated the viewing was aware of the rat poison. The ShowingTime app confirmation included a clear statement about the presence of rat poison at the property, which was provided to the licensee who facilitated the viewing with the buyers. The seller’s licensee stated they also verbally reminded the licensee of the presence of rat poison during a phone call prior to the viewing. The licensee who facilitated the viewing did not recall this conversation and did not review the showing instructions on the ShowingTime app confirmation.

The Registrar expanded the scope of the investigation to include the conduct of the licensee who facilitated the viewing with the buyer customers. The evidence supported that the licensee did not verify the information on the ShowingTime app confirmation and as a result, violated Commission By-law 702 Article 35.

The licensee who facilitated the viewing was unaware the buyers were bringing their dog to the viewing. The evidence supported that once the licensee became aware of the presence of the dog, prior to entering the property, they failed to have any conversations with the buyers concerning the dog and allowed the dog to enter the property without expressed permission from the seller. As soon as the licensee became aware of the presence of the dog, they were required to advise the buyer that the dog cannot enter the property without permission from the seller. Failure to so do, constituted a violation of Commission By-law 702 Article 35.

Licensees should never allow pets to enter a property, either their own or a buyer’s, without expressed permission from the seller.

The licensee who facilitated the viewing was charged with and agreed to having violated two counts of Commission By-law 702 Article 35.

PENALTY

The licensee was fined a total of $1,000; $500 for each violation of Commission By-law 702 Article 35.       

Not confirming Facts Led to Misleading Advertising

Out of town buyers returning to Nova Scotia found an ideal property to build their retirement home, a vacant lot which bordered a golf course. According to the MLS® listing cut and their discussions with the listing licensee, golf privileges would be included with the purchase. The buyers purchased the property and were customers of the seller’s brokerage. After closing, the buyers were advised by the General Manager of the golf course that the golf privileges associated with the subject property had been revoked due to the previous owner’s failure to pay the yearly sustaining fee to the golf club. The buyers submitted a complaint to the Commission alleging that the seller’s licensee misrepresented the property by advertising the golf privileges when in fact they were revoked.

The evidence supported that when listing the property, the seller’s licensee accessed the deed and noted the golf privileges were detailed in the deed. The licensee did not confirm this information with the sellers and referenced the golf privileges on the MLS® advertisement. The sellers were aware the golf privileges had been revoked. The licensee advised they read the MLS® listing addendum to the sellers and the sellers did not correct them concerning the existence of the golf privileges and signed off on the addendum.

The golf privileges were a major selling feature for this property. The deed clearly stated that the golf privileges can be revoked in certain circumstances, and in this case they were.

Licensees have an obligation to independently verify information which a reasonably prudent licensee would discover, prior to advertising. Knowing there was a possibility that the golf privileges could be revoked, assuming the sellers would correct any errors on the MLS® addendum was not property verification. Failing to verify this information prior to advertising was a violation of Commission By-law 708 (a) (i), (ii), and (iii).

The seller’s licensee was charged with and agreed to having violated Commission By-law 708 (a) (i), (ii), and (iii) for failing to verify the status of the golf privileges prior to advertising.  

PENALTY

The seller’s licensee was fined $500 for violating Commission By-law 708 (a) (i), (ii), and (iii).

Unprofessionally Discrediting a Fellow Licensee

The Commission received a complaint from a consumer who listed their property for sale with a real estate licensee. The consumer alleged that another real estate licensee (with whom they had used the services of in the past and had a personal connection with), was upset the consumer did not use their services when listing the property. As a result, the licensee in question sent unprofessional text messages to the consumer as well as an unprofessional e-mail to the listing licensee. 

The evidence supported that the licensee sent text messages to the consumer attempting to dissuade them from listing their property with the listing licensee. They referred to the listing licensee as being a ‘discount broker’ and stating that in this market the consumer would ‘need the experience level of a realtor who is full time’. The licensee further stated they had ‘far more experience’ than the other licensee.

The text messages were inappropriate and an attempt to discredit the listing licensee. Licensees must be held to a high standard of professionalism. By sending these text messages, negatively commenting on another licensee, the licensee demonstrated unprofessional conduct, a violation of Real Estate Trading Act Section 22 (1) (a).

The evidence further supported the licensee also sent an e-mail to the listing licensee expressing their displeasure with the remuneration agreed to by the listing brokerage and consumer. Remuneration is completely negotiable between brokerages and consumers. This e-mail was distasteful and unprofessional. 

Unrelated to the allegations, the licensee continually and incorrectly referred to the complainant as their client. The evidence supports that the licensee represented the complainant when they originally purchased the subject property so in that case the complainant was a customer of the brokerage. The licensee stated they pulled favours and did their job to get the complainant a deal and great investment when they purchased the property. This demonstrated the licensee’s lack of understanding of the basics of agency relationships.

The licensee was charged with and agreed to having violated Real Estate Trading Act Section 22 (1) (a) for sending unprofessional test messages to a consumer.

PENALTY                     

Logan Berkvens, salesperson with Parachute Realty was fined $750 for violating Real Estate Trading Act Section 22 (1) (a). He was also issued a written warning for the e-mail sent to the listing licensee and for not understanding the basics of agency relationships.

Overstating Square Footage

A buyer had an accepted agreement on a new construction home. A key factor in their decision to purchase the home was the Total Living Area (TLA), which was considerably higher than comparable properties. Shortly prior to closing the buyer observed an excavator making changes to the backyard which created a large slope and removed any level yard. At this point, the buyer submitted a complaint against the seller’s licensee alleging that the TLA was overstated by approximately 600 square feet on the MLS® listing cut. The buyer further alleged that the seller’s licensee was aware the grade of the backyard would be changed and purposely withheld that information because it devalued the property.

The seller’s licensee was asked to demonstrate to the Commission’s Investigator how they determined the TLA when listing the property. The licensee provided a copy of the building plans and broke down their measurements in some detail.

The Commission determined that the listing licensee’s TLA was overstated by 451 square feet. Licensees have an obligation to ensure all information they advertise is correct and accurate. Although the Commission does not set out a standard method for measuring, the TLA the listing licensee advertised, based on the measuring method they employed, was significantly overstated. This was a violation of Commission By-law 708 (a) (i), (ii), and (iii).

Respecting the allegation pertaining to changes to the grade of the backyard, the evidence did not support that the licensee was aware of this information until it was brought to their attention by the buyer’s licensee.

The licensee was charged with and agreed to having violated Commission By-law 708 a) (i), (ii), and (iii) for inaccurately advertising the total living area of the subject property whereby the square footage was significantly overstated.

PENALTY

The seller’s licensee was fined $500 for violating Commission By-law 708 (a) (i), (ii), and (iii).

Disclosing Information Not in Client’s Best Interest

The Commission received a complaint from a seller who had recently sold their property. Their complaint was against their representative. The complainant alleged that prior to the preparation of the buyer’s offer, the buyer’s licensee had a conversation with the seller’s licensee wherein the seller’s licensee relayed that the sellers would probably accept an offer in the $420,000 range. According to the complainant, this information was relayed to them by their licensee during a phone call.

The seller’s licensee confirmed they had a phone call with the buyer’s licensee prior to the facilitation of the offer, although they disputed the details of the call. The licensee explained that when asked by the buyer’s licensee what their seller client would accept for a purchase price, they replied that an offer in the $420,000 range would be a good starting point but they did not disclose a final purchase price that the seller would expect.

Although there was insufficient evidence to determine whose version of the conversation was most accurate, the evidence supported that the seller’s licensee disclosed to the buyer’s licensee a potential starting purchase price. By relaying this information to the buyer’s licensee, the seller’s licensee disclosed their client’s motivation without the seller’s consent.  The seller’s licensee should not have answered the buyer’s licensee’s question without first relaying the conversation to their clients and following their instruction on how to respond, if at all. This was not done and as a result, the seller’s licensee did not protect their client’s best interests and violated Commission By-law 702 Article 2.

The seller’s licensee was charged with and agreed to having violated Commission By-law 702 Article 2.

Penalty

The seller’s licensee was fined $500 for violating Commission By-law 702 Article 2.

Not Protecting Client's Interests

A seller listed their property for sale with a real estate licensee. Shortly after, the seller contacted the licensee on numerous occasions to address a few concerns; the pictures they provided the licensee to update the MLS® system had not been uploaded and the for sale sign was not placed on the property. As a result of not receiving satisfactory action from the licensee with respect to their concerns, the consumer filed a complaint with the Commission. The complainant further alleged they were not provided with a true copy of the listing documentation, including the Seller Designated Brokerage Agreement (SDBA).

Respecting the pictures, the evidence supported the licensee did not update the pictures on the MLS® system despite being asked to so by their seller client on three occasions. The license had advised the seller that the pictures were sent to a brokerage administrator to update; however, the evidence did not support this request was made.

Regarding the for sale sign, the licensee was required to place one on the property per the SDBA. Despite this being brought to their attention by the seller, a for sale sign had still not been placed on the property when the complaint was submitted to the Commission, which was over two months after the property was listed.

By failing to update the pictures and place a for sale sign on the property, the licensee did not follow the lawful instruction of their client. Their actions did not protect the best interests of their client, which was a violation of Commission By-law 702 Article 2.

Finally, regarding the real estate documentation, the evidence supported all documentation was signed by both parties using an electronic signature platform. When using electronic signature platforms, licensees are required to explain to consumers how to retrieve executed copies of documentation signed electronically and if there is a time frame to do so. In this case, the complainant alleged they were not able to access the documentation electronically and so it would appear that this was not properly explained to them. The licensee was issued a written warning reminding them of their obligation to thoroughly explain the process of using electronic signature platforms with consumers and to ensure they know how to obtain a true copy of all executed documentation.

The seller’s licensee was charged with and agreed to having violated Commission By-law 702 Article 2.

Penalty

The seller’s licensee was fined $500 for violating Commission By-law 702 Article 2 and issued a written warning for not thoroughly explaining to their client the process of using an electronic signature platform.

Not Following COVID-19 Protocols

A seller listed for property for sale with a real estate licensee and instructed that all potential buyers and their representatives must wear masks and sanitize during viewings. This instruction was clearly identified by the seller’s licensee on MLS® listing cut and the ShowingTime app. Despite this instruction, the seller’s exterior video surveillance captured a potential buyer and their licensee entering the property without wearing a mask. The seller then submitted a complaint to the Commission.

The evidence supported that the buyer’s licensee and their client entered the property through the front door, viewed the backyard and then exited the property through the front door without masks on their faces, as required by the seller.  

Wearing masks while conducting trading activities was not a requirement of the provincial health department, however, sellers are able to set these requirements for their property, as the complainant did in this case. The buyer’s licensee had an obligation to ensure that all parties entering the property were following the seller’s instruction by wearing masks. Failing to do so constituted unprofessional conduct, a violation of Commission By-law 702 Article 35.

The licensee was charged with and agreed to having violated Commission By-law 702 Article 35 for not ensuring all parties were wearing masks, as required.

Penalty

The licensee was fined $500 for violating Commission By-law 702 Article 35.

COMMISSION INITIATED INVESTIGATIONS PER REAL ESTATE TRADING ACT SECTION 17(2)

Broker Not Maintaining Records

The Commission’s Compliance Auditor conducted a modified trust audit for a brokerage. As a result of the audit, it was determined that the broker was holding unresolved trust funds in their trust account. Per Real Estate Trading Act 32 (6A), after holding unresolved trust funds for a period of two years from the date of the deposit, brokers must submit the funds along with a copy of the transaction file to the Commission. The broker submitted a trust cheque to the Commission for the amount but was unable to locate a complete copy of the transaction file, which they were required to maintain. As a result, the Registrar initiated an investigation.

Brokers are responsible to ensure that they maintain all transaction and trust records for a period of seven years, this includes all records from terminated transactions. The evidence supported that the broker did not maintain a copy of the transaction file and as a result violated Commission By-law 707.

The broker was charged with and agreed to having violated Commission By-law 707.

Penalty

Christopher Morash, broker of Coldwell Banker Performance Realty was fined $1,000 for violating Commission By-Law 707.

The Nova Scotia Real Estate
Commission
is the regulator of the
Nova Scotia real estate industry.

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