Don't Forget About Council #511
In the many years that I have taught the Legal Update course, most REALTORS® have shown understandable interest in court decisions and how those decisions might affect their practice and personal liability. Surprisingly, I have not noticed the same level of interest or concern regarding disciplinary decisions by the Real Estate Council of BC (Council).
The underlying assumption for the diminished level of interest in Council's disciplinary actions might be the belief that if one is not going to be found liable by a court for their actions, it's unlikely that they would be found liable by Council for those same actions. Such a belief is not only mistaken but dangerous. Courts deal with compensating clients for damages suffered as a result of their agent's negligence. Council deals with the professional misconduct of licensees, which may or may not have resulted in their client suffering financial harm.
While it's possible that a finding of negligence by a court could also result in a finding of professional misconduct, it's important to note that the former is not a prerequisite of the latter. Following are two recent disciplinary decisions of Council that illustrate how REALTORS® can suffer significant consequences from their misconduct even if their client would be unlikely to have been successful in court.
Negligent misrepresentation in sales material In the first case,1 the listing agent represented in his sales material that the newly renovated house was built in 2013 and that the property was fully fenced and contained both security and sprinkler systems.
Before making an offer to purchase, the buyer viewed the property and discovered the property was not fenced. They also noted the absence of a security system; this was confirmed by the listing agent when asked directly. Armed with this knowledge, the buyer made an offer to purchase subject to inspection and the production of permits regarding the renovations. The permits revealed that, while the renovations were done in 2013, the house was built in 1993. Although the buyers had indicated that a sprinkler system was of prime importance to them, the sprinkler system was not addressed by their inspector. Despite this, the buyer still removed the subjects and completed the purchase.
After acquiring the property, the buyer became dissatisfied with the transaction. One might imagine their first thought was to sue the seller and listing agent for the obvious misrepresentations made about the property by the listing agent. However, it's unlikely that such a lawsuit would have been successful in court. To be successful, the buyer would have to establish that a misrepresentation was negligently made, that the misrepresentation was relied upon by the buyer and that the buyer suffered damages as a result of the misrepresentation. While the misrepresentations in the sales material were obviously negligently made, the buyer could not be said to have relied upon them as the buyer knew (or in the case of the sprinkler system, ought to have known) that the representations were false at the time they removed their subjects.
Even though it's unlikely the listing agent would have been found liable if the complaint had been pursued through the courts, he was not so fortunate before Council. Council found the listing agent to have committed professional misconduct and he was given a seven-day suspension together with a $5000 discipline penalty and $1500 in costs.
Revealing confidential information to a third party without consent
In the second case,2 the listing agent had a longstanding relationship with the seller. As part of that longstanding relationship, the listing agent understood that the seller was estranged from her daughter and did not want personal contact with her daughter. After the sale of the property, the seller moved into a care home. The daughter approached the listing agent and asked that she be provided with the seller's address so that the daughter could personally deliver a letter to the seller. The listing agent provided the daughter with the seller's new address. The daughter contacted the seller directly, causing the seller great distress.
Even though the actions of the listing agent did not cause the seller financial damage, the listing agent was found by Council to have committed professional misconduct by divulging confidential information of the seller to a third party without the consent of the seller. The listing agent was reprimanded and ordered to pay a disciplinary penalty of $2000 and $1500 in costs.
Both of these decisions reinforce the fact that professional misconduct can exist irrespective of whether the actions of the licensee would create liability in the courts. REALTORS® must at all times understand the regulatory environment under which they operate so as to avoid actions that amount to professional misconduct.
Norton Rose Fulbright LLP
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