By Brian Madigan LL.B.
Here is a new proposal to increase liquidity in the banking sector:
The Government of Canada through its Crown subsidiary Canada Mortgage and Housing Corporation (CMHC) will purchase up to $25 billion in mortgages from Canadian Chartered Banks. This announcement was made 10 October 2008.
Unlike the US, this is not a bailout. These are good mortgages, not in default. Besides, they have already been insured through CMHC. This will simply add liquidity to the mortgage market.
This arrangement places new money into the mortgage market so that ordinary commerce may resume.
This is an excellent step. It offers a good return to CMHC without assuming any additional risk.
Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Coldwell Banker Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com
By Brian Madigan LL.B.
This could present something of a problem! And, recently it did for an Ontario real estate agent who thought that it would be best if he failed to mention that he was related to the buyer. Maybe someone (namely, the vendor) might think that he had ulterior motives.
Mr. Smith came across on of his broker's listings. He thought it would be a good deal for his relative. So, he showed the property, submitted an offer, and negotiated a final purchase price.
Since this was an "in office" listing the rules of dual agency, now referred to as multiple representation applied. You might think that would prompt some additional disclosure. But, it didn't. Mr. Smith thought that it would be better simply to conceal this fact. Better to negotiate with the vendor while the vendor was under the impression that Mr. Smith was maintaining an even-hand between the parties.
This failure to disclose this special relationship is against the common law rules of agency. This is relevant information and an agent is duty bound to bring it to the attention of the principal. However, as you might imagine, it would be easier to trick the vendor if Mr. Smith kept this fact to himself. And, this is precisely the reason why the duty of disclosure goes back over 5,000 years. It is designed to prevent this little piece of trickery.
Nevertheless, there are other more specific ethical rules that were breached. There are statutory obligations pursuant to the Real Estate and Business Brokers Act that also apply.
In this case, shortly before closing this information came to the attention of the vendor, namely that the agent who brought the buyer was in fact related to the buyer. The vendor obviously questioned just how independent and impartial Smith's advice might have been. It should be mentioned that the listing agent was also present, but unaware of the relationship.
Summary of Allegations:
Mr. Smith acted unprofessionally when he failed on two occasions, to provide to the vendors written statements and have the vendors acknowledge in writing, his registration status and interest in the purchase of the property, thereby breaching the following Rules of the RECO Code of Ethics:
Rule 1 - A Member shall:
(2) endeavour to protect the public from fraud, misrepresentation or unethical practice in connection with real estate Transactions,
Rule 5 - Financial Disclosure:
A Member shall disclose the financial aspects of a Transaction and any personal interest of the Member in a matter to the Parties sufficient to enable them to make an informed decision.
Rule 23 - Obedience to Law:
A Member shall practice in accordance with all federal, territorial or provincial law or municipal by-law relevant to the Member fitness to practice.
Real Estate and Business Brokers Act, R.S.O. 1990, chap. R. 4
Statement where broker or salesperson purchases for resale
31. (1) No broker or salesperson shall purchase, lease, exchange or otherwise acquire for himself, herself or itself or make an offer to purchase, lease, exchange or otherwise acquire for himself, herself or itself either directly or indirectly, any interest in real estate for the purpose of resale unless the broker or salesperson first delivers to the vendor a written statement that he, she or it is a broker or salesperson, as the case may be, and the vendor has acknowledged in writing that the vendor has received the statement.
(2) Where real estate in respect of which a broker or salesperson is required to give a statement under subsection (1) is listed with the broker or, in the case of a salesperson, is listed with the broker by whom the salesperson is employed, appointed or authorized to trade in real estate, the statement shall include,
(a) full disclosure of all facts within the broker's or salesperson's special knowledge that affect or will affect the resale value of the real estate; and
(b) the particulars of any negotiations or agreement by or on behalf of the broker or salesperson for the sale, exchange, lease or other disposition of any interest in the real estate to any other person.
Rule 42 - Competence:
A Member shall render conscientious service with the knowledge, skill, judgement and competence, in conformity with this Code of Ethics and the standards which are reasonably expected of Members. When the Member is unable to render such a service, either alone or with the aid of other Members, the Member shall decline to act.
Reference should be made to the Guiding Principles of the RECO Code of Ethics. Please particularly refer to the Guiding Principles under Rules 1, 5, 23 and 42.
The matter proceeded before the Discipline Committee at the Real Estate Council of Ontario in March 2008 and Mr. Smith was ordered to pay a fine of $5,000.00.
Comment
The $5,000.00 fine is simply a penalty, it is not compensation to the vendors who were the victims of his deceit.
It should also be mentioned that Mr. Smith could be sued by the vendors for the diminution in the purchase price. The additional savings that he passed on to his relative would have to be remitted to the vendors.
The Committee made its decision in accordance with the statutory rules in effect in 2005. The Act was substainially changed in March 2006 when a new Act came into force
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., Realtor is an author and commentator on real estate matters, Coldwell Banker Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com
By Brian Madigan LL.B.
For most of the twentieth century, house designs divided houses up into a number of rooms for specific purposes. In the early 1900's, in addition to the regular rooms, parlours were commonplace and kitchens were small. The entire house would be divided up and most rooms were separated by doorways.
In the late 1950's, the American Architect Frank Lloyd Wright became quite creative with the open concept design. He removed the walls and he designated sepcial purpose areas throughout the house. This produced a feeling of spaciousness. Parlours were gone, so were the walls between living rooms and dining rooms and even hallways.
By the 1960's, family rooms were added to the main floorplate, and eventually the wall between kitchen and family rooms were eliminated creating the great room which became popular in the 1980's.
Today many older homes are in need of upgrading and modernization.. If there are walls separating the house into various rooms, you might consider taking them down. If they happen to be a supporting wall, then don't bother it's probably too costly. However, don't despair you might be able to remove almost all of the wall and replace it with a supporting steel post. These posts can be enclosed nicely with wooden posts and you might even consider an extra one (without the steel post) if you require some balance in the room.
New appliances, fans and windows can easily deal with cooking odours, so your kitchen can become an integral focus on the main floor.
You might remember that 1930's vintage houses, even the largest ones often had small galley kitchens. The trend today is to open up the space. Let the sunshine in! Add windows and skylights. Use continuous floors throughout the main level. Hardwood is also "in" and works as well in the kitchen as it does in the living room.
However, when it comes to the outside, purchasers still want the traditional look. Georgian, Colonial, Tudor, Victorian or Cape Cod will all outsell the "I can't find the front-door type" of design.
So, consider an old house and let you imagination remove some of the walls. You might be pleasantly surprised. Old traditional exteriors are in, but old interiors are out. Look for an older house in a good area, and you might find a real gem.
Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Coldwell Banker Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com
By Brian Madigan LL.B.
You might wonder what would prompt a real estate agent to steal from a home. By the way, the defence "I was just getting my own property back" didn't work for OJ, and didn't work for the agent either.
So, here's what happened. The agent, who was relatively new to the business wanted to sell a certain property. She had heard that it might be for sale. So, she contacted the owner, prepared a Comparative Market Analysis (CMA), which is basically an appraisal and took it over to the owner.
She left the CMA with the owner for a couple of days, hoping to get the listing. However, the owner listed with someone else.
She placed several telephone calls to the owner requesting the CMA. These calls were not returned.
Then, she "showed" the house to a "prospective purchaser" in February 2007. During the showing, she got the inspiration to open the drawer to a sideboard in the dinning room. There she found her CMA, and she took it.
The matter went before the discipline committee of the Real Estate Council of Ontario. She was fined $5,000 due to her breach of the following ethical guidelines:
Fairness, honesty, etc.
3. A registrant shall treat every person the registrant deals with in the course of a trade in real estate fairly, honestly and with integrity.
Unprofessional conduct, etc.
39. A registrant shall not, in the course of trading in real estate, engage in any act or omission that, having regard to all of the circumstances, would reasonably be regarded as disgraceful, dishonourable, unprofessional or unbecoming a registrant.
Comment
In essence this is a rather bizarre incident. When she did not have her calls returned, she got into the house and started rifling through the home owner's possessions.
The committee was kind by exonerating her in this fashion. Had the matter proceeded before a Criminal Court she would likely have been charged with breaking and entering and theft. The OJ defence just won't work. This was incredibly foolish conduct. You might have thought that there might be some kind of suspension of registration for a period of time. All in all, this was a lenient result.
Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Coldwell Banker Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com
Commercial and Residential Experience, focussing on complex transactions and real estate litigation
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