Disciplinary Newsletter

December 2023

Volume 13 Edition 1

IN THIS ISSUE

Introduction

Detailing Investigations
Publishing Disciplinary Decisions

Public Initiated Investigations

Case #1: Misleading Advertising
Case #2: Failure to Properly Address Relationship
Case #3: Unprofessional Conduct During A Viewing
Case #4: Not Protecting Interests of Client and Lack of Knowledge/Skill/Judgement
Case #5: Not Protecting Interests of Clients/Relaying Verbal Offers
Case #6: Not Protecting Interests of Clients and Lack of Knowledge/Skill/Judgement
Case #7: Not Protecting Clients Interests Resulting In Unclear Closing Day
Case #8: Misleading Advertising/Lack of Knowledge/Skill/Judgement

NSREC Initiated Investigations

Case #1: Paying an Unlicensed Sales Corporation
Case #2: Unlicened Branch Office

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

MISLEADING ADVERTISING

Buyers had an accepted agreement on an oceanfront property. During their due diligence period, they discovered that the property was older than advertised by the seller’s licensee. They submitted a complaint to the Commission alleging that the seller’s licensee incorrectly advertised the age of the property as 15 years old when the home was actually built approximately 10 years earlier, making it 25 years old.

At the time of listing, the seller’s licensee was advised by the sellers that when they purchased the property 15 years ago, it was not completed on the inside and had been abandoned for several years. The sellers did extensive work to the outside and completed the inside, including: rebuilding an exterior wall, new windows, roof, insulation, siding, wiring, plumbing and completed the interior.

It was known to the licensee that the first construction on the property took place approximately 10 years earlier than the above noted work carried out by the seller. Advertising the property age as 15 years old was misleading.

The licensee was charged with and agreed to having violated Commission By-law 708 (a) (i), (ii) and (iii) for misleading advertising.   

PENALTY

The licensee was fined $500 for the violation.   

FAILURE TO PROPERLY ADDRESS RELATIONSHIP

A licensee had a buyer client who was interested in a particular property that was not listed for sale. On their client's instruction, the licensee contacted the owner, a senior who lived alone, and asked if they were interested in selling their property. The owner said no. A few months later, the owner received an unsolicited letter in the mail from the licensee along with an offer on the property and a Seller Customer Acknowledgement and Fee Agreement. In the letter, the licensee offered to go over the offer with the owner, but did not advise them of their option to seek their own representation. The owner submitted a complaint to the Commission citing this allegation. At the time the investigation was initiated, the Registrar expanded the scope of the investigation to include the allegation that the licensee did not address their agency relationship with the parties prior to preparing the Agreement of Purchase and Sale (APS).

The evidence supported that licensee prepared an APS for their buyer client and mailed it to the seller. The licensee did not first provide and/or review with the seller a Working With the Real Estate Industry form and Seller Customer Acknowledgement and Fee Agreement. This is required before relaying an offer from a client to an unrepresented consumer. There is an order of operations that must be followed by licensees with respect to relationship disclosures, agency/customer agreements and agreements of purchase and sale. 

The standards to which transaction files will be reviewed, including the required timing and order of having disclosure documents and contracts signed, is outlined in the NSREC’s Audit Policy.

The licensee was charged with and agreed to having violated Commission By-law 705 (a) for failing to comply with the Commission’s Audit Policy.   

PENALTY

The licensee was fined $500 for the violation.  

UNPROFESSIONAL CONDUCT DURING A VIEWING

The Commission received a complaint from a member of the public whose property was listed for sale. The seller had security cameras on the property. They submitted a complaint alleging that during a viewing, a real estate licensee handled private documentation, opened a closed armoire, which contained private information, and took interior pictures.

The licensee was alone during the viewing. They state they took pictures because the listing cut identified interior pictures were allowed. They state they looked at furniture because they were verbally advised by the listing licensee that furniture could be included in the sale of the property. The listing licensee adamantly denied making this statement.

The evidence supported that during the viewing, the licensee entered a bedroom, picked up and examined a document on the bedside table and took a close-up picture of the inside of a shelf of the bedside table. The evidence also supported that the licensee approached and opened the closed door of an armoire and looked inside. It further appears they took a picture of the inside of the armoire.

The public expects that a real estate licensee, who accesses a property for sale, respects the seller’s privacy, and does not invade personal space or touch/photograph/video record personal property.  The public must have confidence that when they provide access to their property to real estate licensees, that their privacy will be respected and information shall be gathered, used, and shared, only for a reason related to the trading in real estate.

The licensee was charged with and agreed to having violated Commission By-law 702 Article 35 for unprofessional conduct during a property viewing.  

PENALTY

The licensee was fined $1,000 for the violation.

NOT PROTECTING INTERESTS OF CLIENT AND LACK OF KNOWLEDGE/SKILL/JUDGEMENT

A licensee was contacted by a consumer about potentially listing a property. The licensee viewed the property with the owner, gave a recommended listing price and advised they had buyer clients who may be interested in the property. The following day, the licensee viewed the unlisted property with buyer clients.

The same day, the licensee had their buyer clients sign a Working With the Real Estate Industry disclosure form (WWREI), Buyer Designated Brokerage Agreement (BDBA), Transaction Brokerage Agreement (TBA) and a completed Agreement of Purchase and Sale (APS). The licensee had been working with the buyers for weeks and they had already signed a WWREI and BDBA which was still in effect.

The following day, the licensee met with the seller and presented them with the following paperwork for their signature: WWREI, Seller Designated Brokerage Agreement (SDBA), TBA and APS.  

The evidence supported that the licensee, on behalf of their brokerage, entered into a TBA with the seller and the buyers. The licensee had no previous relationship with the seller but had facilitated four transactions for the buyers in recent years. The licensee led the seller into a high-risk situation whereby they could not provide them with advice or other agency services. The seller and the buyers were not on equal playing field with respect to their knowledge and experience with real estate transactions.

The seller’s best interests were to expose their property to the market to solicit interest and offers. The evidence supported the licensee did not make this recommendation to the seller, nor did they advise the seller of their option to receive representation from another designated agent or brokerage. As a result, the licensee violated Commission By-law 702 Article 2.

Not only was it inappropriate for the licensee to recommend the seller enter into a TBA, they did not follow the required procedures for licensees when providing and obtaining disclosure acknowledgements and representation agreements.

Licensees are required to have consumers (clients and customers) sign the Commission’s WWREI disclosure form at the earliest opportunity. The licensee did not obtain any required written disclosures with the seller prior to preparing the APS on behalf of their buyer clients. Further, the TBA was not signed by all parties prior to the preparation of the APS, as required. Presenting the seller with all real estate documentation to be signed at the same time is not an acceptable practice.

In addition, the evidence supported that the licensee did not discover that the subject property was a matrimonial home. Prior to entering into brokerage agreements with sellers, licensees are required to verify who has the authority to market and sell the property and ensure all sellers are identified on and sign all real estate documentation.

Finally, the investigation included a review of the brokerage transaction file and numerous paperwork discrepancies were identified.  

The evidence supported the licensee demonstrated a lack of understanding of the basics of agency relationships. Their overall conduct and the paperwork discrepancies identified constituted a violation of Real Estate Trading Act Section 22 (2) (a).

The licensee was charged with and agreed to having violated Commission By-law 702 Article 2 for not protecting the interests of their client; and Real Estate Trading Act Section 22 (2) (a) for demonstrating a lack of knowledge/skill/judgement. 

PENALTY

The licensee was fined $500 for the violation of Commission By-law 702 Article 2 and $750 for the violation of Real Estate Trading Act Section 22 (2) (a).

NOT PROTECTING INTERESTS OF CLIENTS/RELAYING VERBAL OFFERS

The Commission received a complaint from a seller who listed a vacant lot for sale with a licensee. After there was an accepted agreement in place, pending closing, the seller’s licensee asked the seller if the buyers could store their camping trailer on the lot until closing. The seller agreed. A few days later the seller drove by the lot and discovered the buyers had moved numerous personal items onto the lot, had a campfire and appeared to be sleeping at the lot. The seller submitted a complaint to the Commission alleging that their licensee failed to represent their interests respecting the storage of the trailer. The consumer further alleged the licensee was acting as an agent for both the seller and buyers when the seller did not sign paperwork consenting to this.

The buyers were customers of the licensee’s brokerage. The evidence supported when the buyers requested to store their trailer on the property before closing, the licensee immediately called the seller, put them on speakerphone in front of the buyers, and relayed the request. This was inappropriate.

The licensee ought to have relayed the request to their client privately, discussed with them the potential risks of allowing a buyer to store anything at the property, which had not closed, and recommend they speak to their legal counsel prior to agreeing.  None of this was done. Although there was no way for the licensee to anticipate that the buyers would move into their trailer on the lot, this is the very reason the seller should have been referred to their lawyer for counsel.  In this regard the licensee did not protect their client’s interests, a violation of Commission By-law 702 Article 2.

The evidence did not support the complainant’s second allegation. The licensee was not representing the buyers, they were customers of the brokerage.  

Unrelated to the allegations, the investigation included a review of the brokerage transaction file. The evidence supported that licensee received two written offers. The licensee reviewed the offers and e-mailed the seller with the highlights. The seller instructed the licensee to determine whether one of the buyers in particular would increase the purchase price to a specific amount. The licensee then relayed this request via a phone call to the buyers who agreed on the price. The licensee then asked the buyers to write a new offer with the verbally agreed upon purchase price. Relaying a purchase price over the phone constitutes a verbal offer. The Real Estate Trading Act is clear that all offers obtained by licensees are to be written and executed. Facilitating verbal offers constitutes a violation of Real Estate Trading Act Section 30 (3).

The licensee was charged with and agreed to having violated Commission By-law 702 Article 2 for not protecting the interests of their client and Real Estate Trading Act Section 30 (3) for facilitating a verbal offer.  

PENALTY

The licensee was fined $500 for each violation.  

NOT PROTECTING INTERESTS OF CLIENTS AND LACK OF KNOWLEDGE/SKILL/JUDGEMENT

An out-of-province buyer had an accepted agreement on a property in Nova Scotia. The buyer was represented by a licensee. As part of their due diligence, the buyer hired a home inspector and a septic inspector to conduct inspections at the property. Upon review of the inspection reports, the buyer noticed the reports were incomplete. They contacted the respective inspectors and were advised the inspectors were unable to complete their inspections because the water and power were turned off at the property. The buyer terminated the transaction and submitted a complaint to the Commission alleging that their licensee did not advise them that the water and power would be turned off during the inspections.

The seller’s licensee states they advised the buyer’s licensee on multiple occasions the property was winterized and the water was not turned on. The buyer’s licensee denied being advised. The evidence did not support that the buyer’s licensee was aware the power at the property had been turned off.

The buyer’s licensee failed to attach a Water and Septic Schedule to the Agreement of Purchase and Sale. This was required in order to carry out specific inspections of the water/septic system. Failing to include this schedule did not protect the interests of their client, a violation of Commission By-law 702 Article 2.

The inspection report identified that the septic tank cover was exposed during the inspection. Based on the evidence, it appeared the buyer’s licensee allowed the septic inspector to dig to expose the septic tank cover without consent from the seller (because the schedule was not attached). The buyer’s licensee was responsible to ensure the property was secure during the inspection.

Finally, the investigation included a review of the transaction file, which identified numerous paperwork discrepancies.

The buyer’s licensee was charged with and agreed to having violated Commission By-law 702 Article 2 for failing to include the Water and Septic Schedule, and Real Estate Trading Act Section 22 (2) (a) for the paperwork discrepancies.

PENALTY

The licensee was fined $500 for each violation. 

NOT PROTECTING CLIENTS INTERESTS RESULTING IN UNCLEAR CLOSING DATE

A seller recently sold a property. The seller and the buyer each had their own representation. Shortly prior to closing, there was confusion as to when the closing date was. The seller believed the closing date was October 29^th and the buyer believed the closing date was October 28^th. The seller submitted a complaint to the Commission alleging that the buyer’s licensee falsified the closing date on the Agreement of Purchase and Sale (APS). Based upon the information received during the course of the investigation, the Registrar expanded the scope to include the conduct of the seller’s licensee.

The evidence supported the buyer’s licensee prepared an offer in which clause 2.1, closing and conveyance, was struck and underneath the standard text of the clause, the following words were added “Seller to choose closing date between October 11 and October 29^th, 2021.” The buyer initialed beside this clause.

The offer was then relayed to the seller’s licensee who relayed the offer to the seller. The seller subsequently struck the “October 11^th and”, and left “October 29^th, initialed this change and accepted the agreement. 

The seller’s licensee relayed this agreement to the buyer’s licensee. Shortly thereafter, the buyer’s licensee asked the seller’s licensee in a text message if the closing date could be October 28^th. The seller’s licensee responded by text that it shouldn’t be an issue.

The next day, the buyer’s licensee sent the seller’s licensee the APS with clause 2.1 altered to reflect October 28^th. The buyer had initialed this change.

The seller states their licensee relayed the new proposed closing date, but they refused. The seller’s licensee states they then relayed their client’s refusal to the buyer’s licensee by phone. The buyer’s licensee denied being advised of this information.

Based on the above, the buyer believed the closing date was October 28^th whereas the seller believed the closing date was October 29^th.

The evidence did not support that the buyer’s licensee fraudulently altered the closing date, however, they did fail to verify for their client the status of the proposed amendment, via the submission of an attempted amended APS, to change the closing date to October 28th.   This was contrary to their client’s best interests.

The seller’s licensee also failed to ensure their client’s interests were protected by failing to confirm the written APS reflected a clear closing date with all necessary signatures and initials.   

The buyer’s licensee was charged with and agreed to having violated Commission By-law 702 Article 2 for not protecting the interests of their client.   

The seller’s licensee was charged with and agreed to having violated Commission By-law 702 Article 2 for not protecting the interests of their client.   

PENALTY

Both licensees were fined $500 for the violation.   

MISLEADING ADVERTISING/LACK OF KNOWLEDGE/SKILL/JUDGEMENT

A buyer had an accepted agreement on a piece of land listed with a real estate licensee. The buyer entered into a Transaction Brokerage Agreement (TBA) with the seller and the brokerage. As part of the buyer’s due diligence, they had a survey conducted and it was determined that the property was 7.45 acres and not 10 acres, as advertised by the licensee. The buyer submitted a complaint to the Commission alleging that the licensee incorrectly advertised the lot size of the property.

The evidence supported that at the time the property was listed, Property Online identified the property was 10 acres. During the course of the transaction, a survey determined the property was 7.45 acres. Property Online was updated to reflect this information. Despite this information being brought to the licensee’s attention, they continued to advertise the property as 10 acres.

Unrelated to the allegations, the investigation included a review of the brokerage transaction file and numerous paperwork discrepancies were identified. The evidence supported the licensee lacked understanding of agency relationships and was unclear whether the parties were clients or customers. The licensee further convoluted the relationship by entering into and a TBA simultaneously with the Agreement of Purchase and Sale. They entered into a TBA with the buyer and seller with whom they had no previous agency relationship with.

Not only was it inappropriate for them to recommend to both the seller and buyer to enter into a transaction brokerage agreement, they also did not follow the required procedures for licensees when providing and obtaining disclosure acknowledgments and representation agreements.

The evidence supported the licensee presented both the seller and the buyer with all real estate documentation to be signed at the same time; the Working With the Real Estate Industry form, Seller Designated Brokerage Agreement, Buyer Designated Brokerage Agreement, TBA and Agreement of Purchase and Sale.  This is not an acceptable practice for a licensee. In addition, numerous paperwork discrepancies were identified.

The licensee’s conduct included failing to correct the lot size in the advertisement once it was brought to their attention, lack of understanding of the basics of agency relationships, and the paperwork discrepancies.

The licensee was charged with and agreed to having violated Real Estate Trading Act Section 22 (2) (a) for demonstrating a lack of knowledge/skill/judgement. 

PENALTY

The licensee was fined $750 for the violation.

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

PAYING AN UNLICENSED SALES CORPORATION

A licensee contacted the Commission’s Licensing Officer inquiring how to license their sales corporation. The licensee advised that the brokerage was currently paying remuneration to their sales corporation, which was not licensed with the Commission. This information was relayed to the compliance department and, as a result, the Registrar initiated an investigation.

The evidence supported the broker had been paying the licensee’s unlicensed sales corporation for two months. 

Brokers are provided with copies of licences when they are activated. Further, brokers can access all licences at their brokerage by viewing the Commission’s licensing database. The By-law is clear that a brokerage shall not pay a commission/referral fee (remuneration) to an unlicensed person. 

The broker was charged with and agreed to having violated Commission By-law 715 (c).

PENALTY

The broker was fined $1,000 for the violation.  

UNLICENSED BRANCH OFFICE

It was brought to the Commission’s attention that a brokerage had signage at a location that was not licensed as a branch office. Further, a licensee was promoting the unlicensed branch office on social media and using the office space. The Registrar brought the unlicensed branch office to the attention of the broker. After nearly two weeks, the brokerage made no attempt to either remove or cover up the signage or license the location as a branch office. As a result, the Registrar initiated an investigation.

The broker states that a licensee of the brokerage erected a sign at the location on their own accord prior to the brokerage applying for a branch office at the location. The brokerage was awaiting approval from the franchisor in order to move forward with applying for a branch office with the Commission. 

The By-law is clear that all branch offices must be licensed with the Commission. It is the broker’s responsibility to ensure this is done. Until a branch office licence was issued by the Commission, that office space was not allowed to have signage, be advertised and/or operate as a branch office.

Brokers are ultimately responsible to ensure all necessary licences are obtained.

The broker was charged with and agreed to having violated Commission By-law 314 (a) and (b) for promoting an unlicensed branch office.

PENALTY

The broker was fined $1,000 for the violation.