As the regulator responsible for administering the real estate laws in Ontario, I have the unique opportunity to see the many sides of the real estate sector. I believe the vast majority of registrants are dedicated to providing professional service to consumers. They are committed individuals who work hard to earn the trust of their buyers and sellers and do their best for them. However, there are some in the industry who intentionally break the rules and cause consumer harm.
Based on 25 years in regulation, I believe that consumer protection is a shared commitment where both the regulator and those being regulated each play a part in protecting consumers. It’s RECO’s role to hold registrants to professional standards, but it’s also imperative that the sector work diligently to weed out those who are unethical.
Because of the nature of the real estate transaction, registrants are particularly well positioned to see how their fellow registrants conduct themselves. You interact with other registrants every day as you advocate on behalf of your clients while they advocate on behalf of theirs. (Contrast with doctors, engineers and architects whose day-to-day interactions are primarily with their own clients and patients, often behind closed doors.)
Is it any wonder, then, that many of our complaints – 35 per cent, to be specific – come from registrants? Many of these are about relatively minor breaches, but a good deal more address substantive issues that result in serious action. Of the 45 cases that went to a discipline hearing in 2016, almost half were initiated by a registrant.
This is good. RECO’s role is to protect consumers by enforcing the law and taking disciplinary actions as needed, but we can’t monitor every real estate trade that takes place in the province and we can’t punish bad behaviour we don’t know about. Registrants who are passionate about maintaining high ethical standards in the industry are key sources of information for us – most importantly regarding serious breaches of REBBA and the Code.
Let me share with you a few cases stemming from registrant complaints that resulted in significant disciplinary outcomes.
- A registrant sets out to start his own business, one not related to real estate, and uses fraudulent documents to apply for a loan. His former brokerage finds out about the fraud and immediately reports him to RECO. With the evidence identified by the former brokerage, RECO takes swift action to investigate and revoke his registration.
- A registrant complains to RECO that he has not been paid commission. While RECO does not generally get involved in commission disputes, there is indication here of a bigger problem so we conduct an inspection. This leads to an investigation and a prosecution of both the brokerage and the principal for failing to deposit sufficient funds into a trust account. Both parties surrender their registration, the brokerage is fined $250,000 and the principal is fined $20,000 and ordered to pay $100,000 in restitution.
- After investigating a complaint from a broker of record about one of their employees, RECO charges a salesperson with several offences, including providing false information or documents relating to a trade in real estate and accepting payment for a trade in real estate from a person other than his employer. The salesperson pleads guilty, is fined $7,500, receives suspended sentences and two years’ probation, and is also required to pay $13,700 in restitution.
In these cases, as in many others, industry co-operation was critical in dealing effectively with unprofessional behaviour that resulted in harm to consumers.
However, in contrast to the examples above, when CBC’s Marketplace ran an episode where registrants were caught on video flagrantly breaking the rules, very few people came forward to identify the individuals in the episode.
For 20 years, industry leaders have worked together to enhance professionalism to benefit buyers and sellers, but more must be done.
Brokers of record must set the tone. It’s their job to know what’s happening at their brokerage, and if they suspect or detect that someone is behaving unprofessionally, they must take action. Integrity cannot stop at one’s pocketbook.
Local boards can assist by continuing to show leadership and encouraging professional behaviour among members.
We look forward to working more closely with both brokers of record and local boards to continue to promote lawful, ethical and professional conduct.
And finally, individual real estate professionals have a role to play as well: provide exemplary service to your buyers and sellers and demand the same from your colleagues.
The cases outlined above show the importance of individuals who care about the reputation of their profession and that together, we can better address bad behaviour.
Dealing with unethical registrants in the real estate industry is our collective responsibility, and when bad behaviour is identified and addressed, it’s better for everyone.
Joseph Richer is registrar of the Real Estate Council of Ontario. He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube.
