This situation was simple enough. Bob acted for Bill in the sale of his property. There was a mutual driveway. It was not quite wide enough to park Bill’s car but the neighbour gave permission (tolerated or acquiesced) to Bill. So, Bill parked his car there.
Bob on the listing said that it had a “mutual drive” as well as a “separate detached, once (sic) car garage in backyard”.
Bill had a verbal agreement with his neighbour that he could use the front parking pad (the mutual drive indicated in the listing), even though it was not wide enough on the Bill’s side of the Property line to park an average sized car. The neighbour allowed the Bill to park there, even though doing so encroached on his Property slightly. This agreement was never put into writing.
On January 7, 2013, Martha a Buyer put in an offer on to purchase. In Schedule “A” was the following:
“The Seller warrants that with respect to the mutual drive, the Seller has an agreement with the adjoining neighbour/owner that provides for the allowance of one parking spot on the shared driveway for the Seller and is transferable to the Buyer in perpetuity.”
This was a good clause, well-thought out. Apparently, the Buyer’s agent drafted it following a telephone conversation with Bob. It was signed and accepted by Bill.
Two days before closing, the lawyer representing Martha noticed the clause regarding parking and asked for a copy of the written agreement.
The Title search date had passed.
There was a compromise deal, reducing the sale price to Martha by $7,500.00:
$4,000.00 paid by Bill
$2,500.00 paid by Martha’s real estate agent
$1,000.00 paid by Bob
Afterwards, Bill thought that he paid too much and he was following Bob’s advice.
So, he complained to the Real Estate Council of Ontario about Bob’s conduct.
It is agreed that Bob acted unprofessionally when he:
1. Failed to protect and promote the best interests of his client when he allowed his client to sign the Agreement of Purchase and Sale, with the parking clause included, when he knew or ought to have known that there was no written agreement concerning the use of the front parking pad. This conduct is in violation of Section 4 of the Code of Ethics under the Act (the “Code of Ethics”).
2. Failed to protect and promote the best interests of his client when he failed to request a formal written agreement from the neighbour’s outlining the parking arrangements. This was a failure to ensure that all aspects of the impending trade in real estate were reduced into writing, which is a violation of Section 27(1) (a) of the Code of Ethics.
It is agreed that Bob breached the following sections of the Code of Ethics:
4 A registrant shall promote and protect the best interests of the registrant’s clients.
Written and Legible Agreements
27(1) A registrant who represents a client in respect of a trade in real estate shall use the registrant’s best efforts to ensure that,
(a) Any agreement that deals with the conveyance of an interest in real estate is in writing.
Bob was ordered to pay a penalty of $2,500.00 on or before January 31, 2017.
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 was released by RECO on 10 November 2016 and published by RECO on 30 March 2017.
This is a matter that should have been picked up by Bob. The other agent spotted it and dealt with it very expertly.
Now, the next step was the very “poor explanation” Bob must have given to his own client, Bill, because Bill signed it and he should not have.
The “parking spot” issue is still “in play” after the title search date had expired since it was a “matter of contract”. Otherwise, we would have been “out of time” here and the risk would have passed to the Buyer, Martha.
Fortunately, for Martha’s lawyer, this parking spot issue was reduced to writing by Martha’s agent, meaning that it was still a matter to be dealt with by the parties.
Everyone through in money: the Buyer’s Agent and the Seller, but when it actually came to Bob’s contribution he decided to shrink away rather than “man up”.
The Buyer’s Agent shouldn’t have had to contribute anything, nor should the Seller, based upon Bob’s bad advice. There’s Bob with $1,000.00 in and he thinks he’s off “Scott free”.
Bill reported this to RECO, and RECO imposed a $2,500.00 fine upon Bob. But, Bill doesn’t get that money. It’s a fine and it goes to RECO.
Bill should have sued in Small Claims Court for $4,000.00, the amount he had to be on account of Bob’s negligence. Bill had two years to sue after the deal which was 2 days before closing, or likely June 2013, plus 2 years being June 2015. The RECO case was not heard until late 2016, so it was then too late to sue.
Sue first, complain to RECO later!
Brian Madigan LL.B., Broker