Barney Noble had a listing of a condominium. His friend and real estate agent, Bill sent him a referral from Quebec. Barney arranged for Omar to handle the transaction on behalf of Buyer Bob. To make things just a little more complicated Bob’s Quebec agent Bill acted as his Attorney in this transaction by Power of Attorney.
It is important to note that Barney was with XYZ Brokerage and Omar was with ABC Brokerage.
At no time, did Barney ever meet Bob, the Buyer.
There were a few things that were issues in the deal. The financing condition came and went without notice. Barney proposed that documents be “backdated”. Barney also personally “witnessed” both the Agreement of Purchase and Sale and a Referral Agreement, although he had never, ever met Bob.
Finally, there was a deal to rebate the listing portion of the leasing commission after the purchase had been completed. This arrangement was never reduced to writing.
The Decision of the RECO Discipline Committee
a) In a situation in which he participated in the preparation of an offer to purchase, and communicated directly with a buyer who was the client of a brokerage not his own including by directly sending him a signed Agreement of Purchase and Sale, inquiring about a deposit, did not at the earliest practicable opportunity inform the Complainant (Buyer) about the nature of that Brokerage’s services as set out in Section 10 of the Code of Ethics to the Act (“Code”), and did not at any time endeavor to obtain the Complainant’s acknowledgement in writing of this information at any time, contrary to Section 2 (1) in respect of Sections 10 (1) and 10 (2) of the Code, and contrary to Sections 3 and 5 of the Code.
b) Advised the backdating of a transaction document; namely, the August 7 Draft Waiver, contrary to Sections 3 and 5 of the Code and Section 38 in respect of the duty to prevent error, misrepresentation and unethical practice.
c) Did not reduce his promise about commission in respect of the Lease to writing, contrary to Sections 3 and 5 of the Code;
d) Signed as witness to two signatures in a document, one of which signatures he did not see signed, contrary to Sections 3, 5 and 37 (1) of the Code and Section 38 in respect of the duties to prevent error and misrepresentation.
RECO imposed a $6,000.00 fine and the obligation to take two courses from REIC, namely Law and Ethics.
A real estate agent cannot communicate directly with the client of another Brokerage (even if your received the original referral).
Agency must be explained including the two service models that are available to a consumer. The consumer must first be INFORMED, and then, and only then, the consumer must exercise their CHOICE.
You cannot “backdate” documents. That’s not legal. It’s not permitted. It’s simply wrong and deceptive. It is unethical and a misrepresentation of what occurred. It’s a forgery!
Needless to say (or at least, I would have thought) you cannot “witness” a document if you aren’t there. The purpose of the witness is to have someone who can testify in Court later on, that the person signing:
- was identified,
- appeared to be over the age of majority,
- was not subject to compulsion or threats,
- was not under the influence of alcohol or drugs,
- appeared to be of sound mind, and
- executed the document willingly.
Otherwise, just a signature would do!
If deals are made, then they need to be documented, which means being reduced to writing. It’s not appropriate to have verbal agreements in the real estate business.
Note: As a rule, I use fictitious names. The actual case is published on RECO’s website and is available to the public. For educational purposes, the names of the parties really don’t have any bearing. If you need to quote the case, you will have to obtain the proper legal citation.
This case is from 2016.
Brian Madigan LL.B., Broker