Naughty Agent – Stories of Realtors Doing Bad Things Part IV

Des and Jennifer discuss recent disciplinary decisions by the Real Estate Council of Ontario (RECO) against real estate agents. 

Three cases: 

• one where an agent contacted sellers whose houses were on the market and tried to convince them to terminate their current contracts and list with her
• another where an agent representing a buyer listed a property for lease before the buyer owned the property
• and a third where an agent and her husband bought a property privately, assigned the agreement to a numbered company without notifying the sellers, and failed to disclose that she was a registered real estate agent

 
Listen For
1:47 Unethical Practices by a Top Agent
8:23 Violation of Tenant Rights
17:29 A Real Estate Agent’s Deceptive Assignment of Purchase Agreement
23:19 A Discussion on Ethical Standards and Penalties

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See the RECO decisions page https://www.reco.on.ca/complaints-enforcement/regulatory-activities-decisions/ 

Guest: Jennifer Scaife, Des Brown Real Estate
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Desmond can be reached at:
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Recorded in Sep 2023

Transcript

Desmond Brown (00:01):

It's been a while, but today on Sold in the 6ix and back by Popular Demand, we launch our latest episode of Naughty Agent. Yeah, that's where we look at recent disciplinary decisions by the Real Estate Council of Ontario. We also call them RECO, against our fellow real estate agents. Now, some of the ashes of my colleagues is appalling. Some have been quite funny, like the agent who pulled out his pants and mooned another agent. But overall, when RECO takes action, it's serious. And it's usually because someone in the general public has suffered because of the foolish actions of a realtor. I'm Desmond Brown, standby for our latest episode of Naughty Agent. Jennifer Scaife is a member of my team and I love her because with Jen, there are no gray areas. It's either right or wrong. Jen, welcome back to Sold in the 6ix and to naughty agent.

Jennifer Scaife (01:12):

So good to be here Des, I love this program.

Desmond Brown (01:18):

Yeah, people just see your face when we go over some of these cases. Just how, wow, how appalled you are. I mentioned being appalled in any introduction there, but boy, yeah, there is no gray area with you, and that's what I love about you. But

Jennifer Scaife (01:35):

You can't possibly imagine. You can't make up a story where an agent moons somebody in the driveway or anywhere.

(01:45):

Come on,

Desmond Brown (01:47):

God. A lot of this stuff we can't make up and some of the things that our fellow agents do are quite mind boggling. But anyway, let's get right into it. Here's our first case. This one's a bit of inside baseball for our industry, but it also involves the public. And with the changes we've seen in the market over the past year with a lot of listings sitting, they're taking longer to sell. I think a lot more of this has happened. So let's go over this case. So we have an agent, and after I looked her up, she's one of the top agents down in the Hamilton area, and over the span of two years, she targeted the listings of a brokerage, not hers, and contacted the sellers whose houses were on the market. Oh yeah, exactly. So what she'd do is she'd call up the sellers and engage in a conversation with them, and she'd say, oh, I see your house has been on the market for the last two months or the last three months.

(02:48):

I'm just wondering why hasn't your property sold? And the sellers end this agent, we're getting into a conversation about why the property didn't sell or why they think the property didn't sell. And at the end, this agent would turn around and say, well, you're obviously with the wrong realtor or the wrong brokerage, and you probably have a lot more success if you used me as your listing agent and listed with me. So she would try to get them to terminate their current contracts with the brokers they're with and move on with here. Now, as you know of gents, we have had times where people who are under contracts, they get in touch with us and they say, my house isn't selling. Just wondering why. When the listing expires, we'd like to go with you or whatever. We're not allowed to initiate these conversations with people. We do get these calls and a lot of agents get these calls, but it is a no-no for agents to reach out and contact people who are currently under contracts for either selling or buy. Right.

Jennifer Scaife (03:58):

It's a big no-No,

Desmond Brown (03:59):

It is. It is. Okay. So the listing brokerage was informed by one of their clients that this agent had contacted them. And while they were going through this process with one of their clients, they found out that it had actually happened to four more of the clients that they had listed for sale.

Jennifer Scaife (04:23):

Oh my God.

Desmond Brown (04:24):

Four more clients who were under contract with them. So of course, a complaint was filed with RECO, and the agent was found guilty of breaching the code of ethics by communicating with other or with clients of other brokerages, and encouraging them to end their relationships with them. Wow. So we've heard about this, I mean, a lot more in the past, but I think I said, with the market changing now in property, sitting on the market a little bit longer, and if there's somebody out there who's listening who has their house list with somebody and they're wondering why it's not selling, you may get a call from an agent like this, don't fall for it. So you're not allowed to do that. It's just bad taste too. Not only is it a breach of our code of ethics, but it's just bad taste.

Jennifer Scaife (05:15):

Oh yeah, absolutely. Well, what does it say? But you're with a shitty agent. You

Desmond Brown (05:21):

Can't say that. I can't be saying that. You can't be doing that to your colleagues at all. Times are tough times are tough for listing agents right now. Listing agents put a lot of money into the listings when it comes to staging and photography, and it's a huge investment. And to have another agent come along and undermine you like that, boy, they should throw the book at this agent. So anyway, any other comments on this before we get into what the fine was?

Jennifer Scaife (05:54):

No. We all know the rules. We all know that that's not okay. And if you do it once, that's bad. But to do it repeatedly, you've got to know you're going to get caught.

Desmond Brown (06:10):

Oh yeah. Well, there was five incidents with the one brokerage that she targeted, and then another one that I read about with another brokerage. So who knows? This is probably this agent's business model, seriously going after people who I know are selling, they're listed with somebody else. Can you go find your own clients in? Totally incredible.

Jennifer Scaife (06:37):

So do we know if she was going after one agent or was it just one brokerage? Was it different agent

Desmond Brown (06:44):

Than broker? No, it said the broker brokerage. All it said in the decision was it was against the brokerage. So no. Yeah, I don't know. So what do you think, Jen? You're on RECO, and this comes in front of you. You find this agent guilty. What would you do?

Jennifer Scaife (07:01):

Well, it's interference. You're soliciting somebody's income. You're soliciting somebody's business. Repeated defenses. 17,000 was a big

Desmond Brown (07:16):

Three. Yeah, 17,000. How much? Sorry?

Jennifer Scaife (07:21):

15.

Desmond Brown (07:22):

Yeah, 15,000. 15,000. Well, the fine was $25,000. Oh, good. And she had to complete the Real Estate Institute, Institute of Canada's Ethics and Business Practice course. Wow. That's a real slap there, isn't it?

Jennifer Scaife (07:37):

Oh, yeah. Because we all know you can teach ethics.

Desmond Brown (07:40):

Yeah, that's right. She'll have ethics. She probably has ethics now. She's probably done the course, and she has ethics now and is probably really, really sorry for what she did. So yeah. Wow.

Jennifer Scaife (07:49):

She's really, really sorry. She got caught.

Desmond Brown (07:51):

Yeah, she's really sore. She got caught, yeah, $25,000 for doing that. Wow.

Jennifer Scaife (07:56):

Well, that's promising.

Desmond Brown (07:58):

It is promising. It's promising, I think. Well, if anybody wants to know the names of these agents, you can go to the RECO website and you will see the disciplinary actions. If you just go through the website, you'll find that and you'll find out who the agents are. This agent might be yours. Oh, yeah.

Jennifer Scaife (08:22):

Public records.

Desmond Brown (08:23):

Public records, yeah, definitely. It's all there for you, but I'm not going to name them. Okay. Here's case number two. And this case is a result of a person who was a tenant who filed this complaint with RECO, and the tenant lived in a property that was sold. I want to bring this up because this happens so much to tenants where they live in properties that are sold and then they have to move, and sometimes they don't have to move. The law says that they don't have to move, but they are under the impression that they do. Their landlord tells selling the property, you've got to move, and leases are broken, which is not allowed. And basically their rights are violated all the time. So I'm just going to bring this one up. So for tenants, so anyway, the property sold and the tenant receives an N 12, which is a form through the Residential Tenancies Act in Ontario here.

(09:18):

So this form was given to the tenant from the owner of the property. And on this form, it says that the new buyer is going to be moving into the property once they take possession and that the tenant has to move out. So the tenant agrees to move out, and four days before the actual closing of the transaction, the tenant does move out. But after the tenant moves out, the agent who represented the buyer, who told the listing agent and the landlord slash owner of the property that his client was going to be moving into the property, ends up listing the property for leases on the MLS, on the MLS of all places.

(10:10):

So there are a few things, a few things that you have to note here. Number one, the buyer does not yet own the property, and his agent goes ahead and lists it on the MLS. Now, you can't do that. You can do it however you need the owner's permission to do that, and the current listing agent's permission to do that. Okay? Second thing to note here is that the former tenant vacated the property because he or she was told that the new owner was moving in. Of course. So they left. So their life, it's put upside down because they've got to move out of their premises

Jennifer Scaife (10:51):

And paid a much higher rent. If this is happening anywhere around Toronto,

Desmond Brown (10:56):

Yeah, definitely, definitely

Jennifer Scaife (10:57):

Their rent is substantially higher.

Desmond Brown (10:59):

And then to top it offs, the asking price for the new lease is now $650 more than what that tenant who moved out was paying. So we hear about this a lot. We hear about this a lot,

Jennifer Scaife (11:17):

A lot,

Desmond Brown (11:18):

A lot.

(11:21):

So what do you think would happen here? Well, here's the result of it. Well, then you tell me,

Jennifer Scaife (11:29):

This does go on so much, and I just don't hear of the agents getting involved in the Todd side of it. Usually it's a landlord who's just taken to the board.

Desmond Brown (11:44):

It usually is. But you know what? I had a case to where this happened to me, and it was an income property that I was a listing agent for, and it had two units. The buyer wanted to, or said that they wanted vacant possession of the main floor unit because they were moving in. So my client gave the tenant the N 12 saying that the new buyer was going to be moving into the building, and that family had to vacate. Closing comes and they're out by now. Next thing you know, the new buyer goes in, starts renovating, and then puts it back on the market for a higher price. The thing that really, really bothered me here was that the new buyer was actually a real estate agent as well, and knew the rules and knew all of this and had this tenant evicted just so he could have a higher profit from the building.

(12:47):

And I was not pleased about that at all. Luckily, the tenants found something else, and I was actually helping 'em find something where they found something on their own. And of course, tenants don't want to bother going through the whole process of going to the residential or going to the landlord and tenant board to go through trying to get some type of something because first of all, we've got an eight month backlog for all of this. So a lot of people just want to get on with their lives. So anyway, in this particular case, Jen, the agent who represented the buyers, found to have breached the code of ethics by failing to obtain permission from the seller of the house and the seller's agent to list it for lease before the property closed and before his client took possession. So he was also found guilty under the same code of ethics of professional, I'm sorry, of unprofessional. Here we go. Unprofessional conduct and failing to exercise. Fairness and honesty. He was fine. What is the fine, Jen?

Jennifer Scaife (13:59):

Oh, of God. Oh, God. Happens all the time. I haven't heard of this hitting the board, though. The recall $10,000. Yeah,

Desmond Brown (14:14):

You're not too far off. It's 7,500 bucks. The agent was fined, but there's a lot more damage here that was done to the tenant, which is really too bad.

Jennifer Scaife (14:25):

Well, I understand they have to uproot from the neighborhood where they've built a community, they've up uprooted from a home that they've settled into. They have to move the moving expenses. They've got paying much more in rent. And who wants to be uprooted? Just because somebody says uproot.

Desmond Brown (14:43):

Yeah, no, exactly.

Jennifer Scaife (14:45):

Because I want more money.

Desmond Brown (14:47):

And it happens all the time, and it really does. For tenants out there, there are resources for you to know your rights. First of all, go to the Residential Tenancies Act and know your rights. And there are all kinds of advocacy groups out there for tenants that you can call free of charge and get some advice along the way. Never just take an eviction from a landlord without questioning it.

Jennifer Scaife (15:14):

Right? And also, the notice to leave is not an eviction notice. It's a notice that the owner wants to move in.

Desmond Brown (15:24):

That's right.

Jennifer Scaife (15:24):

Only the landlord. I mean, only the landlord tenant board can evict and add an eviction. The sheriff must attend. Well, a lot of people don't understand that. A lot of tenants don't understand that. So there are quite a few safety gates for them when there is an eviction. I had recently, you may remember, three young ladies I was finding an apartment for. They had in the West End, they had been given notice because the house was sold, and they loved their landlord. They didn't want to give him any grief, but they felt that it was in bad faith because this three unit, three apartment house had given notice to all three apartments. Now, that's not to say that the intention wasn't to revert it back to a single family home, but they were very suspicious, as was I. But they're watching MLS. I'm watching MLS while they're watching realtor.ca. Different from MLS, but they're watching. I'm watching. And they've got their neighbors watching too. So tenants, tenants aren't all daft or unaware. Uninformed.

Desmond Brown (16:44):

Exactly. Tenants, tenants aren't all bad. That's the thing. There are a lot of bad landlords and are a lot of bad tenants. And sometimes we end up in situations where we have to do what we have to do as realtors to represent our clients, whether they are our landlords or our tenants. It's a tough one out there, especially with the rental shortage. The rental vacancy rate is just so, so small and it's hard for people. It really, really is

Jennifer Scaife (17:17):

Terrible. Well, I'd say these folks cashed in because they found a great apartment, an amazing apartment.

Desmond Brown (17:26):

Yeah.

Jennifer Scaife (17:28):

Anyway,

Desmond Brown (17:29):

Okay, let's move on to our third case. So an agent and her husband buy a property. They buy it privately. It's not listed on the MLS, and they buy it for 1.7 million with a long closing. It's like seven month closing. They give a $50,000 initial deposit. And then there are two further deposits to be paid before closing because it is a long closing. In the case here, these amounts were not disclosed, but I would probably assume that the further deposits probably totaled another 50 grand. So if there was somewhere around a hundred grand in deposits tied up, or not tied up, but put into trust, put in the trust, and because it's a private sale, it went into the Lawyer's trust account, the Seller's Lawyer's Trust account. Okay? So it's sitting there. So in the Schedule A of the agreement of purchase and sale, it spelled out that the buyers and the sellers agree that the buyer can assign the agreement of purchase and sale to a third party before closing.

(18:44):

Oh, yet, okay. And this happened a lot, especially out in Vancouver where a lot of properties were going up like Frazee, like by a million dollars between the time that a contract was executed and the time was closed. We heard a lot about this and a lot of offshore money coming in, and a lot of agents were involved with this, unfortunately giving us all a bad name. So anyway, the stipulation in the agreement of purchasing sale says that the seller must be notified of any assignment of the agreement, and that an amendment outlining who the new buyer is going to must be signed by both the sellers and the original buyer. Okay?

(19:33):

So four Js, just four days after the agreement is executed, the buyers in fact assign the agreement to a number company, and they assign the agreement for $1,780,000, an $80,000 profit in four days. In four days. So really nice profit in four days. However, remember, we're not closing for seven months, okay? The property's not closing for seven months. Now, the original sellers are only entitled to the 1.7 from the original agreement of purchase and sale, just to make it clear to everybody out there, and the buyers who assigned it get that extra 80,000 on the 1.7 $1,780,000 sale. But here's where the problems start. The agent and her husband did not notify the sellers of the assignment as they were supposed to in the agreement of purchasing sale. They didn't tell them. And to top it off, the agent did not tell the sellers that she was in fact a registered real estate agent.

(20:44):

So no, we have to, whenever we're buying or selling, being registered real estate salespeople, we have to disclose to the sellers or buyers that we are registered that we are real estate agents because we can get additional knowledge that the general public doesn't know. We may know that a property is open for rezoning, where if we're picking up the property, we could unload it really quickly and make a ton of extra money because of that inside information. That's just one example of it. But that's one of the reasons why we have to disclose. So anyway, the agent did not disclose to the sellers that she was, in fact, an agent, even though she bought the property privately. Okay, that's cool. Buy it privately, get a good deal and not disclose. So fast forward now, seven months later, the closing date finally arrives, and the company that the agreement is assigned to, guess what?

Jennifer Scaife (21:52):

She's behind the numbered company?

Desmond Brown (21:54):

No.

Jennifer Scaife (21:55):

Oh, no.

Desmond Brown (21:56):

Just doesn't close.

Jennifer Scaife (21:58):

Oh,

Desmond Brown (21:58):

Just doesn't, doesn't close. Yeah. I was wondering too, when I was reading this case, if she was actually behind the numbered company as well, but doesn't close, and the sellers are still with the property. It still hasn't closed. So the sellers make a complaint to RECO, first of all, saying that the agent did not disclose who they were, did not disclose that they're an agent. So the agent is found guilty of failing to comply with the code of ethics by not providing, number one, did not provide an amendment outlining that the property had been assigned like she was supposed to, and failing to disclose before making the offer that she was a registered real estate agent. So she slapped with a fine by RECO of That's where Jen comes in. How much?

Jennifer Scaife (22:52):

Seven. 7,000,

Desmond Brown (22:54):

$7,000. Wow. You're soft. You're soft.

Jennifer Scaife (23:01):

This hasn't been agreed. This is about, well, it's actually about stupidity. Why wouldn't you disclose you're a realtor?

Desmond Brown (23:11):

Well, I know. Well, obviously, yeah, there is something going on there. The fine was 18,000.

Jennifer Scaife (23:18):

Oh, wow.

Desmond Brown (23:19):

18,000. There you go. Finally, one that, yeah, way off what you had thought. You're usually so hard on these people, but 18,000, and the other thing about this is that it isn't over yet. Okay? So the real estate council, yes, levies the fine of 18,000, but this has now gone to the courts. The deposit is still sitting in the Lawyer's trust account, and the sellers are trying to claim that deposit plus any additional damages as a result of their house not closing. So damages being their extra carrying costs or whatever other possibilities they had of selling it while it was tied up, whatever the damages are. We'll see how that goes.

Jennifer Scaife (24:09):

They were selling because of a job relocation and now they have

Desmond Brown (24:11):

To, or whatever it is,

Jennifer Scaife (24:12):

Transport, commute. And

Desmond Brown (24:14):

So again, I mean, these things do happen. Properties do not, not close. We understand that, and we are always advised to get good, strong deposits just in case, because in most cases, the sellers end up with that deposit if it doesn't close. But when this is a real estate agent doing this, acting as the buyer and just acting in such a way that hurts the public, hurts, the seller, seller is still stuck with the house and hurts the reputation of all the realtors out there, I would say this is something where I think the fine should have been much higher than $18,000. I really do think so in some cases, our colleagues should be losing their licenses. They really should

Jennifer Scaife (25:09):

Be. They don't follow their licenses. How often do you see a case where somebody's lost their license? It is only in the most egregious situations where they lose a license. I don't

Desmond Brown (25:23):

Understand. No, I know. And I've read cases where agents have signed fraudulently on behalf of clients and things like this, and yeah, initials and full signatures and all they get is a fine. They should be thrown right out.

Jennifer Scaife (25:42):

You know what, I'd like to see that. Of course, it's never going to happen. But when we go to do a listing presentation or a buyer consultation, we have to show police credit, check our RECO credit check. I promise. I swear as the undersigned that I have never been charged with anything, or I have been, but it was only this.

Desmond Brown (26:11):

I can explain. I can explain. Yeah. Yeah,

Jennifer Scaife (26:12):

Yeah. They didn't understand. You don't understand.

Desmond Brown (26:15):

Oh my goodness. Yeah. So that's it. So that's agenda. Those are three cases, ones from today. Good. Yeah, they're good ones. Nothing quite as earth shattering as our mooning guy, five or the agent who stole $5 a change out of the tenant's apartment. But things for our listeners to keep in mind out there when you are dealing with your agents and some things for them to know what agents are supposed to do when it comes to especially disclosure and the way they're supposed to be representing you, if you're a landlord, you if you're a tenant, and all that other stuff, that flower. And also,

Jennifer Scaife (26:56):

Alex, sorry, I didn't mean to interrupt. No,

Desmond Brown (26:59):

No. Go on.

Jennifer Scaife (27:00):

With tenants, if they need to get advice, they need to get advice, legal advice from a paralegal, not from a lawyer, but from a paralegal who takes on RTA courses cases, LTB cases, because those people are very, very specifically focused on the Residential Tennessee Act.

Desmond Brown (27:25):

Yeah, exactly. And they know it at the end. They know it inside. Yeah.

Jennifer Scaife (27:28):

The lawyers don't. Lawyers. Okay, great.

Desmond Brown (27:31):

Jen, thank you so much for joining me on Naughty Agents slash Stolen the six today.

Jennifer Scaife (27:38):

Good time as always.

Desmond Brown (27:39):

Thanks, Yeah, great. It's always a pleasure having you. Great. Thanks very much. Yeah, and you too. And that's our latest episode of Sold in the 6ix. Now don't worry out. There are a lot of great real estate agents out there, and not just me and Jen, but I have so many great colleagues that I've been working with for well over two decades. I'd like to thank my producer Doug Downs of Stories and Strategies for this latest episode of Sold in the 6ix. And if you'd like this episode, please subscribe, leave a rating, and send the episode to a friend. And to get in touch with me, you can email me at des@desmondbrown.ca and also follow with me on all of the social media platforms. And my handle is Des in the 6ix.

(28:20):

If you're a realtor outside of Toronto and need someone to look after your clients who are either moving to or from the GTA, please keep me in mind. I promise that your clients will be well looked after. Next time. I'm Desmond Brown.