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Real Property - RECO - Discipline. Smith v. Real Estate Council of Ontario
In Smith v. Real Estate Council of Ontario (Div Court, 2024) the Divisional Court dismissed a JR challenging a RECO (Real Estate Council of Ontario) Appeal Panel disciplinary decision. These review cases are few in the courts.
Here the court reviews the disciplinary issue, a misquote of an agent's listing of real estate tax quantum:[36] Before considering the facts of Ms. Smith’s case, the Discipline Panel made five important findings:i. Realtors should only use a reliable source such a tax bill as the basis for statements made in listings about the taxes.
ii. Realtors should not use their own calculations as the basis for determining the taxes.
iii. Realtors should not put unverified information about taxes and local improvement charges in listings.
iv. If a realtor cannot confirm the tax figures, they should make it clear in the public information that the numbers presented are an estimate.
v. Disclaimers in the “Broker Notes”, which are not visible to the public, are not sufficient to relieve the selling agent from the obligation to confirm the figures in the listing. [37] Ms. Smith’s arguments on this judicial review application focus primarily on the first finding that realtors should use only a reliable source such as a tax bill as the basis for the tax information shown in a listing. Ms. Smith argues that the Discipline Panel unfairly created a new rule that realtors must obtain a tax bill from their client before listing a property for sale, which imposed an unreasonable burden on realtors. Ms. Smith also argued that the Discipline Panel created a standard of absolute liability if realtors do not obtain a copy of the municipal property tax bill.
[38] In my view, Ms. Smith has mischaracterized the Discipline Panel’s decision. The Discipline Panel did not say realtors must, in all cases, obtain a copy of the municipal property tax bill. The Discipline Panel accepted that municipalities will often only release tax or local improvement charge information to property owners. The Discipline Panel accepted that Ms. Smith could not confirm the taxes or local improvement charge herself.
[39] Rather, the Discipline Panel found that realtors should only include verified tax information in a listing and if the realtor cannot verify the tax information from a reliable source, the realtor must make it clear in the listing that the tax information is an estimate only. The real crux of this case is whether Ms. Smith made that clear in the listing in question.
[40] The facts in this case were not really in dispute. The Discipline Panel accepted that before Ms. Smith first listed the property, she asked the owners for information about the taxes and local improvement charges. The Discipline Panel accepted that the owners told Ms. Smith that they were paying about $3,700 in taxes a year and that the local improvement charge was paid in full.
....
[47] The Discipline Panel found that Ms. Smith removed any reference to the local improvement charge in the third listing because she was concerned that she had not received written confirmation from her clients that it had been paid in full. The Discipline Panel found that despite those concerns, Ms. Smith chose to keep the tax information the same in the third listing and made no mention of a local improvement charge. Once the problem was discovered, Ms. Smith acknowledged to her clients that she should have looked at their tax bill herself. If she had done so, she would have understood the “special charge” was a local improvement charge.
[48] There was no dispute that the tax and local improvement charge information in the listing was inaccurate. There was also no dispute that it is crucial for the tax information in a real estate listing to be accurate because purchasers and mortgage brokers rely on that information to secure financing. What was in dispute was whether the disclaimer Ms. Smith included in the listings clearly communicated to prospective buyers and other agents that she had not verified the tax information in the listing.
[49] Based on all the evidence, it was open to the Discipline Panel to find that a disclaimer in the listing that was visible only to other agents and brokers did not clearly communicate that the tax information was based on Ms. Smith’s own calculations, not verified information. And it would not have been obvious from the information Ms. Smith included that the amount listed for the taxes was only an estimate. Ms. Smith included a very precise figure in the listing for the taxes - $3,554.32. It was reasonable for the Discipline Panel to find that that $3,554.32 figure was misleading without a clear disclaimer, visible to anyone viewing the listing, that Ms. Smith had done her own calculation of the taxes and had not verified her calculation against the municipal tax records. The Discipline Panel’s finding that Ms. Smith did not treat everyone fairly, honestly and with integrity was, therefore, reasonable. The Discipline Panel’s finding that Ms. Smith did not act diligently was also reasonable given its finding that Ms. Smith did not clearly communicate that the information in the listing was unverified and was only an estimate.
[50] It was also open to the Discipline Panel to find that by including inaccurate information in the listing without a sufficient disclaimer, Ms. Smith exposed her clients to various forms of harm, including a civil claim. The Discipline Panel also found that by including inaccurate information in the listing, Ms. Smith created “stressful last-minute issues.” And she created a risk that the transaction would be aborted when the purchaser figured out that the tax information was incorrect the day before the property was to close. It was reasonable for the Discipline Panel to find that, by including inaccurate information in the listing without a proper disclaimer, Ms. Smith was not acting in a way that protected the client’s best interests.
[51] Finally, it was open to the Discipline Panel on all the evidence to find that Ms. Smith failed to make best efforts to prevent an error or misrepresentation. Again, the Discipline Panel did not say Ms. Smith was required to obtain a tax bill from her clients. Rather, the Discipline Panel found that she “should have made it clear that the figure she included in the MLS listing for the annual taxes was an estimate” and she should have said the local improvement charges had not been confirmed given her concerns.
[52] The Discipline Panel’s decision on the merits was reasonable. The Appeal Panel’s decision to uphold the Discipline Panel’s decision was also reasonable.
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