Agent Makes Investment Property Errors (RECO Discipline)

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This is another RECO Discipline Case. In this situation, Wilma Flintstone made some errors. She acted for Betty Rubble in the purchase of an investment property, that is, one for rental.

Betty signed a Buyer Representation Agreement (BRA) and entered into an agreement to purchase a property for $630,000.00, the agreement required:

a) a deposit of $20,000.00 to Brokerage A (“Initial Deposit”);

b) an additional $10,000.00 deposit by October 14, 2011 (“Supplemental Deposit”); and

c) a completion date of November 30, 2011.

There were two conditions: 1) financing and 2) solicitor’s approval.

Within the time frames, Waivers of both conditions were forwarded. The second deposit was never paid.

On September 7, 2014, a Lease Listing Agreement was signed at a rate of $3,500.00 a month.

However, not only was this Listing entered into several months before Betty had taken possession, but it included a provision in which Betty represented and warranted that she had:

“the exclusive authority and power to execute the Property Lease Listing to offer the Property for lease.”

An MLS Data Sheet was completed to this effect indicating that the unit was owner occupied.


It is agreed Wilma acted unprofessionally, including as follows:

Purchase of the Property

1. Failed to follow-up with Betty about the Supplemental Deposit, and/or failed to advise the Listing Agent that the Supplemental Deposit had not been made by Betty by the date on which they had agreed to provide it, thereby breaching section 4 of the Code of Ethics under the Act (the “Code of Ethics”).

Failure to Document Client’s Instructions

2. Wilma failed to obtain written confirmation of her permission to sign the Solicitor Waiver on behalf of Betty, and acted unprofessionally by signing the Solicitor Waiver on behalf of Betty and in the Betty’s name, thereby breaching sections 4, 5 and 38 of the Code of Ethics.

3. Signing as a witness to the Betty’s signature on the Solicitor Waiver when she did not in fact witness the Consumer sign the Solicitor Waiver, thereby breaching sections 4, 5, 37 (1), and 38 of the Code of Ethics.

Lease Listing

4. Completing, assisting in the completion of and/or advising in the execution of the Property Lease Listing in which Betty represented and warranted that she had “the exclusive authority and power to execute the Property Lease Listing] to offer the Property for lease”, when Wilma knew this to not be the case, thereby breaching sections 37 (1) and 38 of the Code of Ethics.

5. Completing, assisting and/or advising in the completion of the Property MLS Data Form which contained information Wilma knew to be false. More specifically, that the Property was being occupied by Betty, thereby breaching sections 5, 37 (1) and 38 of the Code of Ethics.

6. Causing the Property to become listed onto the MLS, falsely advertising that the Property was being occupied by its owner, Betty, and that the Betty was in fact the Property’s owner, thereby breaching sections 5, 37 (1) and 38 of the Code of Ethics.

7. Failing to promptly ensure the MLS Lease Listing was removed from the MLS once, at the very least, the Property Agreement fell through, thereby breaching sections 37 (1) and 38 of the Code of Ethics.

Decision By RECO Discipline Committee

Discipline Committee (REBBA 2002) concluded that the Respondent breached Sections 4, 5, 37 (1) and 38 of the REBBA 2002 Code of Ethics.


A fine in the amount of $6,000.00 was imposed together with the requirement to take two courses offered by REIC namely Ethics and Law.


There are a few issues here, with Wilma taking some “shortcuts”:

  • Make sure you tell the Listing Agent if you fail to pay that second deposit in time. There are potential repercussions.
  • Don’t sign the client’s name without authority to do so.
  • Don’t “witness” the client’s signature unless you are physically present.
  • Don’t say that the prospective Buyer, is the owner, unless the deal has closed.
  • Don’t say that the Prospective Buyer, occupies the property, when you know that not to be the case.
  • If the purchase deal falls through, remove the lease listing immediately.

You will notice from the actual case summary that there is a reference to additional mortgages and the non-completion of the purchase. In all likelihood (and this is speculation) the initial purchase was completed as “owner occupied”. That was the intended financing. The purchaser would qualify for high ratio financing. When the Lender found out that the property was to be rented as an investment, different lending criteria would apply. That was the reason that the second deposit was not available and that the property initially didn’t close on time.

Real estate agents must be upfront with Lending Institutions in order to secure the right financing.

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.

Brian Madigan LL.B., Broker

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