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Derrick Penner
Sun

The Real Estate Council of British Columbia has handed out some of its stiffest penalties for the transgressions of realtors in a year that has been busier than 2007’s record pace for disciplinary action.

As of this week, the Real Estate Council, the self-regulatory body that governs the industry, has handed down 56 disciplinary decisions, compared to 52 for the first seven months of 2007.

Among the decisions, the council issued suspensions to 29 licensed realtors or their firms, including:

– The cancellation of Richmond property manager Randall Charles Frederick Lewis’s managing broker’s licence for professional misconduct relating to the failure to keep proper books, failing to respond to clients’ requests for documents, and failing to file a required accounting report to the council.

– The cancellation of property manager Kim Wayne Lem’s managing broker’s licence for professional misconduct related to failure to maintain proper books, and failing to immediately rectify the negative balance in a trust account.

– A two-year suspension of Nanaimo realtor Allan Joseph Lupton’s managing broker’s license for professional misconduct related to his failure to actively supervise activities in the office, failing to keep separate trust ledgers and ensure his brokerages realtors complied with council rules.

– A one-year suspension of strata property manager Daniel Arthur Bourke’s licence for professional misconduct related to his failure to maintain proper books, permitting payments out of a trust account resulting in a negative balance, and misappropriating funds from a trust account by making withdrawals for purposes other than those allowed under the Real Estate Services Act.

“We’ve raised the bar,” Maureen Coleman, senior compliance officer for the Real Estate Council, said in an interview.

“There is no doubt that in the disciplinary decisions over the last few years, year-over-year, penalties have increased for licensees.”

The council has been building up precedents for its rulings since taking over full regulatory authority for the industry in 2005 from the B.C. Financial Institutions Commission.

Coleman added that over the Real Estate Council’s last reporting year, which ran from July 1, 2007, to June 30, her compliance department received 563 written complaints, versus 543 for the year ending June 30, 2007, which was a record at that time.

The complaints added up during a year when the council also had a record 20,310 realtors licensed in B.C. That compares with a low of 12,678 licensees in 2001-02.

However, Coleman said the council still does not find that the inexperience of new licensees factors into the number of complaints and disciplinary measures being meted out.

Late last year when The Vancouver Sun reported on realtor discipline, Coleman said a rising number of cases had more to do with the torrid pace of transactions taking place in the market before it began to cool in 2007.

Coleman said that is still the case.

“The longer you’re in business, and the more productive you are, it may be a possibility that sooner or later something is going to go awry,” she added, “even with the best of intentions.”

Coleman said rising expectations of professionalism, and awareness of the council’s role among consumers, also continues to prompt complaints.

Realtors, Coleman said, “are trusted advisers with specialized expertise, and the consumer quite rightly expects that when he’s dealing with a licensee, he should be delivered a professional service.”

Coleman said “dual agency” — when realtors act for both the buyer and seller in a transaction — continues to be a particular concern that shows up in disciplinary actions.

Transgressions of dual-agency rules were behind one of the more serious penalties handed down this year, a 180-day suspension of Langley realtor Kenneth Edward Heppner’s licence.

Heppner, while working at Royal LePage Wolstencroft realty, “committed acts of deceptive dealing,” related to his role as a dual agent in six transactions over 2005 and 2006, which amounted to professional misconduct in the eyes of the Real Estate Council.

In several transactions, Heppner did not inform the property sellers in a timely fashion that the buyer was assigning the sale contract to another party, and misled his managing broker by saying he had no role in assigning the contracts when he did offer some assistance by providing the assignment document that the buyer used.

In one instance, Heppner advised a buyer to deposit with his bank a $200,000 cheque, which was not the certified cheque required, and wound up being returned because of insufficient funds.

The decision said Heppner testified that, while he knew his duties as a dual-agent, he acknowledged that he “was sloppy and failed to pay proper attention to detail,” and that “his conduct was substandard,” which he resolved to correct.

Coleman said about 60 per cent of complaints are resolved administratively. Council investigators can decide there was either no offence, the commission does not have jurisdiction, or it can issue a warning letter when transgressions were minor and did not harm a consumer.

For the cases that do proceed to investigation and review by a council complaints committee, Coleman said she is satisfied that they serve an educational function for other realtors.

“When we publish disciplinary decisions, we’re hopeful that that raises the bar and makes licensees very mindful of what their professional obligations are,” she added.

Discipline delineated

The Real Estate Council of B.C. has handed down some of its strictest penalties this year to realtors who have violated the provincial Real Estate Services Act and regulations.

Decisions handed down: 56

Licence cancellations: 3*

Reprimands to individuals

or brokerages: 42

Suspensions of individuals

or brokerages: 29

*(includes the brokerage and

individual licence in one instance)

Breakdown of suspensions

7 days: 12

14 days: 3

21 days: 5

28 days: 1

30 days: 1

45 days: 2

60 days: 1

180 days: 2

1 year: 1

2 years: 1

Source: Real Estate Council of B.C.

 

© The Vancouver Sun 2008

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Ozzie Jurrock
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Is it fair, I asked B.C.’s revenue minister, to charge property transfer tax on someone’s own assets — on improvements they’ve long since paid for, and paid the sales tax on — when, after a period of leasing, they finally buy the land?

Is it rational, I asked the small business minister, to nail some start-up businesses with an extra tax that richer competitors don’t pay just because a cash-strapped owner must lease land for a few years until he can afford to buy?

I asked these questions a dozen different ways on Monday. And the minister I asked — in both cases Kevin Krueger, who took over both portfolios a month ago today — assiduously ducked.

Krueger’s rationale for dodging is that these issues relate to a case that may come before him on appeal.

He’s right, of course, to assume I’d report on and interpret his answers in the context of at least one specific case. I wrote last week about how theme park owner Gary Semft of Harrison Hot Springs was hit with $3,700 in extra PTT on the value of improvements he had made to leased land he eventually bought.

Readers have also told me about several more PTT injustices, including the particularly offensive practice of charging PTT on people’s own cottages when they buy formerly leased recreational land from the Crown. Talk about sharp business practices — the government nails its own clients with a spurious charge just because it can.

This is a bully’s tactic. No private firm could pull it off, and most would be ashamed to try. So I understand why Krueger might not want to give a writer grist for a column on these issues.

But I still think his excuse for ducking my questions is a crock. Taken at face value, it would mean he could never say anything about any tax, because every tax his department collects could conceivably lead to an appeal that comes before him.

On the plus side, Krueger did talk a bit — in very general terms — about his duty to be fair.

He made the point, no doubt true, that sometimes legislation gives him and his staff absolutely no leeway, even if they think an outcome is unfair. But he also conceded — and this is significant, if he follows through — that when inflexible legislation leads to an unfair outcome, he and his colleagues have a duty to fix it.

He even gave an example — a first-time homebuyer who, thanks to a technicality that wasn’t his fault, lost his eligibility for a tax break. Although the law left no room for him to intervene, he said, it did convince him the law needs amending to make it flexible enough to deal with similar cases in future. This may be cold comfort for the poor sap who got stuck with a few thousand dollars in extra expenses, but it’s a much better outcome than when the bureaucracy shrugs at an unfairness and does nothing.

Krueger refused, however, to signal whether he thinks the property transfer tax law is too inflexible, too prone to unfairness, and thus due for reform.

I’m guessing that, if he hasn’t already felt a lot of pressure on this already, he soon will. My in-box these days is reflecting a heightening concern with the PTT, which seems to be the latest area where tax auditors are throwing their weight around in ways that are, at best, hard-nosed and, at worst, arbitrary and mean.

Businesses, especially, seem to have legitimate gripes. They’re supposed to pay PTT on “fair market value,” but that’s an elusive number that BC Assessments often doesn’t get around to calculating until a year after a sale. Even then, the assessment is often an “estimate” (i.e., an assessor’s wild guess). Thus the business must — usually at the cost of considerable time and money — fight to have it reduced to a realistic amount. This adds not only costs but also an unnecessary amount of uncertainty to business property transactions.

In a perfect world, the property transfer tax would be scrapped. It’s an ill-conceived policy. It’s a drag on business start-ups, and an extra cost on the already daunting cost of home ownership.

These problems are made worse because the law hits at the worst time, when people who’ve just made a big investment can least afford it.

it so perverse — sky-high property prices — also makes it a cash cow for the government, which is not going to stop squeezing this teat any time soon.

That leaves the moral issue: Fairness. Government should feel obligated to spurn the kind of sharp practice that makes most voters squirm. Even if I had the power to do so, I simply would not try to impose on people whom I do business with a charge for retaining assets they already own. I think it’s wrong. And I’m betting a big majority of my readers — i.e., other voters — agree.

If we wouldn’t do it, Mr. Minister, neither should you or your colleagues do it on our behalf. So add this to the list of bad tax law that you guys have a duty to fix.

© The Vancouver Sun 2008

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Government of Canada Moves to Protect, Strengthen Canadian Housing Market

The Government of Canada today announced adjustments to the rules for government guaranteed mortgages aimed at protecting and strengthening the Canadian housing market. The new measures include:

• Fixing the maximum amortization period for new government-backed mortgages to 35 years;
• Requiring a minimum down payment of five per cent for new government-backed mortgages;
• Establishing a consistent minimum credit score requirement; and
• Introducing new loan documentation standards.

Today’s announcement marks a responsible and measured approach by the Government to ensure Canada’s housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada.

The new limits are planned to take effect October 15, 2008. This would allow existing mortgage pre-approvals with the common 90-day duration to be used or expire. Certain exceptions would also be permitted after October 15. The Government will work closely with all stakeholders to ensure timely and effective implementation of these measures.

As these measures relate only to new, government-backed insured mortgages, Canadians who already hold mortgages will not be affected by this announcement.

The measures announced today will build on the strength of Canada’s housing market. According to the International Monetary Fund, the increase in house prices in Canada is based on sound economic factors such as low interest rates, rising incomes and a growing population. A recent Statistics Canada report concluded that home ownership is at record levels, with over two-thirds of Canadians owning their own home.

Mortgage arrears—overdue mortgage payments—have also remained low. In recent years, the percentage of mortgages in arrears for three months or more continues to be at low levels not seen since 1990.  

Don Cayo
Sun

Canada‘s establishment bankers have come up with a way for consumers and businesses to protect themselves from fraudsters who deal at Money Mart or other cheque-cashing companies that don’t belong to the Canadian Payments Association.

The problem, as regular readers will know, is that when someone cashes a legally stopped cheque at Money Mart — and this seems to happen a lot — the company often sues the issuer of the cheque, not the casher. This is true even in cases of obvious fraud, as in the frequent scenario where a scammer pretends to lose a cheque, then cashes both the original and the replacement.

As noted in previous columns, the Bills of Exchange Act, which is more than a century old, does include an arcane provision for “crossed cheques” that, in theory, offer some protection.

In law, crossing a cheque by drawing two parallel lines across the face of it means that only the recipient can cash it. In fact, this law is so little understood in Canada — though the practice is routine in places like the U.K. and Australia — that this is generally impractical. The lines are often misunderstood. They’re thought to void the cheque, not limit the cashing options so a third-party cheque-cashing company like Money Mart can’t sue the issuer if it’s rash enough to accept a properly stopped cheque.

Thus many people won’t accept such cheques, and tellers at many mainstream institutions don’t know enough to process them for payment.

In addition, the Canadian Payments Association, which represents banks, credit unions and trust companies, worries that the parallel lines could interfere with the electronic scanners that handle virtually all cheques these days. So I can see why it discourages crossed cheques, though I’d still advocate them if there weren’t a workable alternative.

Fortunately, however, there is a workable alternative.

True to its word, the CPA has taken this issue seriously since my first columns on the subject. On Thursday Roger Dowdall, the association’s vice-president of communications and education, wrote to me with a solution.

Dowdall cites a section of that same old Bills of Exchange Act that says, “When a bill (legalese for a cheque) contains words prohibiting transfer, or indicating an intention that it should not be transferable, it is valid between the parties thereto, but it is not transferable.”

He suggests writing “for deposit to the account of the named Payee only” or similar words on the face of any cheque you’re concerned about — for example, a post-dated cheque for work not done yet, or a payment to someone you don’t know very well.

“The phrase could be written on the memo line of the cheque, or at the top middle of the cheque (i.e. between the account holder’s information that is normally in the upper-left corner and the date, which is in the upper-right corner), provided that it does not interfere with any key information on the cheque, such as the name of the Payee, the amount, the date, etc.

“This wording would be clearly understood by all parties, and would therefore avoid the potential confusion resulting from crossing cheques.

“Financial institutions have reviewed this option and agree it is much more workable than crossing cheques would be.”

Dowdall’s solution is in line with what a number of readers have suggested over the months I’ve been writing about this issue. I did pass on some of those suggestions, though a bit timidly because I am neither a banker nor a lawyer and I didn’t know if any of these wordings had been legally vetted or tested in court.

I suppose a court challenge of Dowdall’s wording could still lie ahead. But if this solution is good enough for his group’s corporate members, it’s good enough for me. So that’s the wording that’ll I’ll use on the handful of cheques I write to strangers or limited acquaintances each year.

In fact, I see no reason why this phrase can’t be printed on my cheque blanks next time I pick up a new batch.

Meanwhile, there’s still every reason for MPs of every stripe to support the private member’s bill put forward two weeks ago by Vancouver East MP Libby Davies. It would put an end to Money Mart’s ability to routinely pursue people who are already victims rather than the scammers who victimized them.

While I hope and trust that businesses and consumers who see this column will take the recommended steps to protect themselves, it’s unreasonable to assume that the practice will be universally — or even widely — adopted any time soon. So Davies’s amendment will be needed for a long time to come.

© The Vancouver Sun 2008