Baxter (Re), 2019 SKREC 14 Commission File: 2016-51 · 2019. 3. 13. · multitude of other subjects. Ms. Baxter believed that the Corporation 1 and Corporation 2 easements had been

Decision and Consent Order SREC #2016-51 1

DECISION OF THE SASKATCHEWAN REAL ESTATE COMMISSION

AND CONSENT ORDER Baxter (Re), 2019 SKREC 14

Date: March 12, 2019 Commission File: 2016-51

IN THE MATTER OF THE REAL ESTATE ACT, C. R-1.3 AND

IN THE MATTER OF RITA BAXTER Before: A Saskatchewan Real Estate Commission Hearing Committee comprised of the following: David M. Chow - Chairperson

Lori Patrick

Robert Volk

CHARGE and ADMISSION OF MISCONDUCT:

[1] The registrant is charged with and is admitting to professional misconduct as

follows:

Count 1: That, contrary to section 39(1)(c) of The Real Estate Act, Ms. Baxter breached s. 58(1)(a) of the Act by failing to obtain witness signatures on offers to purchase.

Count 2: That, contrary to section 39(1)(c) of The Real Estate Act, Ms. Baxter breached s. 58(3)(a) of the Act by failing to obtain the Sellers’ acceptance of an offer to purchase in writing. Count 3: That, contrary to section 39(1)(c) of The Real Estate Act, Ms. Baxter breached Commission Bylaw 702 by failing to protect and promote the interests of her buyer client.


LEGISLATION: [2] Section 39(1)(c) of The Real Estate Act states:

“Professional misconduct is a question of fact, but any matter, conduct or thing, whether or not disgraceful or dishonourable, is professional misconduct within the meaning of this Act, if…it is a breach of this Act, the regulations or the bylaws or any terms or restrictions to which the registration is subject.”

[3] Section 58 of The Real Estate Act states, in part:

“(1) An offer to purchase obtained by a registrant:

(a) is to be in writing, dated and signed by the buyer in the presence of a witness;

…

(3) Where a registrant presents an offer mentioned in subsection (1) and the offer is accepted:

(a) the acceptance is to be in writing, and to be dated and signed by the seller in the presence of a witness who shall also sign the acceptance;”

[4] Commission Bylaw 702 states:

“A registrant shall protect and promote the interests of his or her client. This primary obligation does not relieve the registrant from the obligation of dealing fairly with all other parties to the transaction.”

FACTS: [5] In accordance with subsection 9(4) of The Real Estate Regulations (“the

Regulations”), the Hearing Committee accepts Rita Baxter’s Statement of Facts and Admissions, which includes the following relevant points:

[6] Ms. Baxter was continuously registered as a salesperson under the provisions of The Real Estate Brokers Act, 1987 and The Real Estate Act in the Province of Saskatchewan with the Saskatchewan Real Estate Commission from March 20, 1996 until June 30, 2003.

[7] Ms. Baxter has been continuously registered as a broker under the provisions of The Real Estate Act in the Province of Saskatchewan with the Saskatchewan Real Estate Commission since July 1, 2003.

[8] Ms. Baxter has taken the following real estate courses:

Real Estate 150; and

Real Estate Broker Practice in Saskatchewan.


[9] Ms. Baxter has completed the continuing professional development seminars

each registration year since 2001-2002. [10] Ms. Baxter is presently registered under the provisions of The Real Estate Act as

a broker with Real Estate Centre Inc. O/A Real Estate Centre. [11] Ms. Baxter was contacted by Seller A in January of 2015 to discuss listing the

property Seller A owned with her two sons. At this time, Ms. Baxter pulled title to all 34 quarter sections that made up the property, but Seller A later advised that they would not be listing the property for sale at that time.

[12] Seller A contacted Ms. Baxter again in March of 2015 to list the property for sale.

[13] On March 18, 2015, Seller A, Seller B and Seller C (the “Sellers”) signed an MLS® System Seller’s Brokerage Contract listing 34 quarter sections of land (the “Property”) for sale with Real Estate Centre.

[14] The MLS® Data Input Form completed with respect to the Property states that the Property was farmed approximately 15 years ago and that the Sellers believe it could easily be farmed again.

[15] On September 8, 2015, Mr. X viewed the Property along with his wife, his children and Ms. Baxter. After viewing the land, he asked if there were any easements on any of the quarter sections included in the package. The Sellers told him there was easement for the road allowance and one other small easement, but that was it.

[16] On September 11, 2015, Ms. Baxter sent a fax to Mr. X and his wife with additional information about the Property. The message includes the following: “Something that the Sellers have stated is that approximately half the land could be broken by way of tandem disc and seeded and sold as organic.” Attached to this fax was a spreadsheet justifying the asking price for the Property.

[17] On September 14, 2015, the Buyer, a corporation represented by Mr. X, wrote an offer to purchase the Property.

[18] Mr. X’s signatures on this offer and the attached schedules were not witnessed.

[19] The Sellers did not accept the September 14 offer.

[20] Ms. Baxter drafted a Counter Offer increasing the purchase price and reducing the number of round bales the Sellers had originally stated.

[21] The Buyer rejected the Counter Offer before the Sellers were able to sign it.

[22] On October 1, 2015, the Buyer wrote a second offer to purchase the Property.



[24] The Sellers accepted the offer on October 7, 2015.

[25] The signature of one of the sellers on this offer was not witnessed.

[26] During the process, Mr. X asked if he could ever lose his deposit. Ms. Baxter advised him that, once they had an accepted offer, the only way to lose the deposit would be if he did not try to remove his conditions or if, once conditions were removed, he changed his mind.

[27] On October 28, 2015, the Buyer signed an Amendment extending the deadline for removal of the conditions. The Sellers also signed this Amendment, but the document does not indicate when they did so.

[28] Mr. X’s signature on this Amendment was not witnessed.

[29] The signatures of two of the three sellers on this Amendment were not witnessed.

[30] The contract between the Sellers and the Buyer expired in November because Mr. X’s farm had not sold.

[31] On November 30, 2015, Real Estate Centre returned the Buyer’s deposit.

[32] At this point in time, Ms. Baxter reviewed the titles to the quarter sections that comprised the Property and discovered the easements held by Corporation 1 and Corporation 2.

[33] The agreement between Seller A and her former co-owner and Corporation 1 was signed on November 22, 2002. Pursuant to the agreement, approximately 840 acres of land on 8 quarter sections would be converted to a forage crop. The agreement required that the owner delay grazing until after July 1 of each year of the agreement and only permitted temporary haying of the land after July 10 of any year. The agreement would be for a term of 21 years beginning the year of forage stand establishment.

[34] The agreement between Seller A and her former co-owner and Corporation 2 was made on March 8, 2006. The agreement places restrictions on the owner’s use of the land. Pursuant to the agreement, the owner agrees, among other things, not to: construct additional buildings, structures or roads; cultivate native rangelands; introduce non-native species of plants or animals except the introduction of cattle or horses; extract or remove surface materials including soil, sand or gravel; establish or maintain Intensive Livestock Operations; use a mobile home or trailer for overnight or short term accommodation; continue cropping of the cultivated land; or use pesticides, herbicides, chemical or other toxic material of any type or description except to protect native flora and fauna. Pursuant to the agreement, all cultivated lands are to be reseeded to a


permanent cover of forage grasses within two years of the date the agreement was signed and maintained as such for the duration of the agreement. The agreement applies to thirteen of the 34 quarter sections that make up the Property.

[35] The agreement with Corporation 2 requires that, in the event the property or any portion thereof is sold to any person other than Corporation 2, it shall be made a condition of such sale that the purchaser has agreed in writing to be bound by the terms of the agreement.

[36] The listing expired sometime thereafter.

[37] On March 2, 2016, Mr. X called Ms. Baxter to ask if the Property was still for sale because he had an accepted offer on his farm. Ms. Baxter advised him that the Property was no longer listed for sale, but told him she would contact the Sellers to see if they would still be interested in selling.

[38] Ms. Baxter contacted Seller B and was advised that the Sellers would definitely look at another offer.

[39] On March 2, 2016, the Buyer wrote a third offer to purchase the Property.


[41] This offer was not accepted by the Sellers.

[42] On March 7, 2016, the Buyer wrote a fourth offer to purchase the Property.


[44] This offer was not accepted by the Sellers.

[45] On March 7, 2016, the Buyer wrote a fifth offer to purchase the Property. The offer states that the purchase of the Property will be subject to the reservations and exceptions appearing in the existing Certificate of Title and free and clear of all encumbrances except such encumbrances as are hereafter expressly accepted.


[47] Ms. Baxter added a handwritten note to the fifth offer to purchase the Property stating that the offer was “verbally accepted by sellers March 7, 2016 @ 3:35 p. RB”.

[48] The Sellers signed acceptance of the offer on March 18, 2016.

[49] Mr. X viewed the Property again with Seller C.


[50] Ms. Baxter spoke to Mr. X after he viewed the Property with Seller C. Mr. X told Ms. Baxter that he and Seller C had discussed the easements as well as a multitude of other subjects. Ms. Baxter believed that the Corporation 1 and Corporation 2 easements had been discussed between the parties and accepted by Mr. X.

[51] The Sellers told Ms. Baxter that Mr. X knew about the easements.

[52] On March 18, 2016, the Buyer and Sellers signed an Amendment to Farm/Ranch Contract of Purchase and Sale that, among other things, extended the deadline for conditions and changed the possession date.

[53] Mr. X’s signature on this Amendment was not witnessed.

[54] On March 29, 2016, the Buyer signed a Notice to Remove Conditions removing all conditions on the purchase of the Property.

[55] Mr. X’s signature on the Notice to Remove Conditions was not witnessed.

[56] Ms. Baxter made arrangements for Mr. X to speak directly to Seller B on a couple different occasions. Mr. X did an excessive amount of research on his own and asked numerous questions of numerous people. He left no stone unturned when it came to learning about the Sellers, the Property and the ranching business.

[57] On April 1, 2016, Mr. X received a telephone call from his lawyer advising that there were conservation easements involving both Corporation 1 and Corporation 2 on 21 of the 34 quarter sections. He was told these easements restrict the use of the land such that some quarters cannot be cultivated or farmed and cows cannot graze until July 1 on others. He was told the Corporation 2 contract requires that, if the land is sold, the seller must make it a condition of the sale that the purchaser has agreed in writing to be bound by the terms of the easement.

[58] Mr. X called Ms. Baxter after he spoke to his lawyer. He told Ms. Baxter that he no longer wanted to proceed with his purchase of the Property. Ms. Baxter asked him why and he replied that he was not buying what he had been led to believe he was buying. He talked about the Corporation 1 Miscellaneous Interest registered against 8 quarters and a Corporation 2 Easement registered against 13 quarters. Mr. X felt he had been taken advantage of and lied to. Ms. Baxter was shocked to find out that Mr. X had not been aware of any of this as he had assured her he was fine with the easements every time they talked about them. Ms. Baxter felt sick. Nothing like this had ever happened in all her years in real estate.

[59] Ms. Baxter told Mr. X that she needed to contact the Sellers to make them aware of the situation.


[60] On April 1, 2016, Mr. X’s lawyer sent Ms. Baxter a letter advising that title searches of the quarter sections comprising the Property had disclosed a Corporation 1 Miscellaneous Interest registered against 8 quarter sections and a Corporation 2 Easement registered against 13 quarters. The letter states that, despite repeated inquiries as to whether there were any caveats or easements registered against the land, the Buyer was repeatedly reassured that there were none. The letter advises that, as neither encumbrance was permitted by the Buyer and their registration substantially detracts from the value of the land, there would have to be some price concessions or the interests and easements would have to be removed if the transaction were to proceed.

[61] Ms. Baxter spoke to the Sellers and told them what was taking place. She also told them they needed to speak to their lawyer.

[62] The Sellers were prepared to offer some compensation to Mr. X. Ms. Baxter communicated their offer to Mr. X, but he did not respond.

[63] On or about April 4, 2016, Mr. X left a voicemail for Ms. Baxter advising that he had put a stop payment on the cheque he had provided to cover the balance of the deposit. Ms. Baxter contacted the Sellers to advise them of the stop payment and suggested they pass the information on to their lawyer.

[64] Ms. Baxter contacted REIX and was told that, from that point forward, due to the breaches and the fact that she was in limited dual agency, everything would need to be handled by the lawyers.

[65] On advice from her errors and omissions insurer, Ms. Baxter advised the Sellers and Mr. X that everything pertaining to the deal needed to be handled by the lawyers.

[66] Mr. X sent a letter to Ms. Baxter advising that, because the Miscellaneous Interest and Easement were not disclosed to him, he would not be proceeding with the purchase of the Property unless both registrations could be removed. He requested that both of the registrations be removed or that he be released from the contract and his deposit returned.

[67] Ms. Baxter advised the Sellers of Mr. X’s letter.

[68] Ms. Baxter sent a Proposal for Consideration to the Buyer and the Sellers. The proposal suggested that the Sellers remove the Corporation 1 Registrations and that the 13 quarter sections that were subject to the Corporation 2 Easement be omitted from the sale and the purchase price adjusted accordingly.

[69] On April 6, 2016, the lawyer representing the Sellers sent a letter to Ms. Baxter advising that his office had entered into negotiations with the lawyers representing the Buyer. Before signing the agreement terminating the existing contract of purchase and sale, the Sellers’ lawyer wanted Ms. Baxter’s assurance


that she would not be entitled to a commission or that she would waive any claim for commission on the existing contract.

[70] Ms. Baxter signed a release agreeing to waive commission payable to her brokerage in exchange for the brokerage being released from any potential claims for damages by the Buyer and the Sellers.

[71] Ms. Baxter returned the deposit her brokerage had been holding to the Buyer.

[72] The Sellers were willing to remove the Corporation 1 easements, which would mean that 21 of the 34 quarter sections that comprised the Property could be cultivated. The 13 quarter sections which were subject to the easement from Corporation 2 are rocky, hilly land with some marsh. Ms. Baxter believes that, owing to its attributes, this land could not be cultivated or farmed and that its best use is as pasture land, which is permitted by the easement.

REASONS: [73] The Investigation Committee and Rita Baxter considered the following as

relevant in agreeing to the within consent order: Mitigating Factors [74] Ms. Baxter has no previous sanction history.

[75] Ms. Baxter has been a registrant since 1996.

[76] Ms. Baxter was co-operative with the investigation. Aggravating Factors

[77] Ms. Baxter is registered as a broker. As the people responsible for ensuring that the registrants and employees under their supervision are complying with the legislation, brokers are held to a higher standard of conduct.

[78] Ms. Baxter was representing both the Sellers and the Buyer as a limited dual agent. Registrants in limited dual agency must be especially diligent in protecting and promoting the interests of their clients, as there is no other registrant involved in the transaction to notice or correct any errors.

[79] Ms. Baxter failed to obtain witness signatures on multiple offers to purchase. Prior Decisions & Other Considerations [80] In May of 2012, the Appeals Committee of the Real Estate Council of Ontario

rendered a decision In the Matter of Suzette Thompson (“Thompson”). The Appeals Committee in Thompson set out a series of factors to be considered

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when determining the appropriate sanction for a registrant found in breach of the legislation. The factors are as follows:

1. The nature and gravity of the breaches of the Code of Ethics. 2. The role of the offending member in the breaches. 3. Whether the offending member suffered or gained as a result of the

breaches. 4. The impact of the breaches on complainants or others. 5. The need for specific deterrence to protect the public. 6. The need for general deterrence to protect the public. 7. The need to maintain the public’s confidence in the integrity of the

profession. 8. The degree to which the breaches are regarded as being outside the

range of acceptable conduct. 9. The range of sanction in similar cases.

[81] These factors are reasonable considerations and can offer guidance to members

of a Hearing Committee tasked with crafting an appropriate sanction for a registrant found to have committed professional misconduct. These factors have been consistently applied in Saskatchewan Real Estate Commission consent orders since September 2016.

1. The nature and gravity of the breaches of the Code of Ethics.

[82] Ms. Baxter drafted five offers to purchase that were not properly signed by witnesses to the signatures of the parties to the contract. Ms. Baxter’s seller clients decided to accept the Buyer’s fifth offer to purchase the Property. On March 7, Ms. Baxter added a note to the offer stating that the sellers had verbally accepted the offer. The Sellers did not actually sign this offer until March 18.

[83] Ms. Baxter knew that the Buyer was concerned about easements affecting the

Property. Despite her awareness of the Buyer’s concerns, Ms. Baxter did not review title to the quarter sections included in the Property prior to the Buyer writing its first offer. Some time thereafter, Ms. Baxter became aware of easements registered against title to 21 of the 34 quarter sections that comprised the Property. Ms. Baxter did not specifically discuss these easements with her Buyer client.

2. The role of the offending member in the breaches.

[84] Ms. Baxter was the only registrant involved in the breaches.

3. Whether the offending member suffered or gained as a result of the breaches. [85] There is no evidence to suggest that Ms. Baxter enjoyed any benefits or suffered

any losses as a result of her breaches of the legislation.

4. The impact of the breaches on complainants or others. [86] The Buyer ultimately decided to collapse the transaction as a result of the

easements registered against title to 21 of the 34 quarter sections that made up the Property.


5. The need for specific deterrence to protect the public. [87] Ms. Baxter must be reminded of the importance of ensuring that all documents

that come to exist in the course of a trade in real estate are properly signed and witnessed.

[88] It must be made clear to Ms. Baxter that, when a client raises a specific issue as being especially important in a transaction, she must take steps to ensure that the client has sufficient information about the issue to make an informed decision respecting how to proceed.

6. The need for general deterrence to protect the public.

[89] Registrants must be reminded of the importance of ensuring that all documents that come to exist in the course of a trade in real estate are properly signed and witnessed.

[90] It must be made clear to all registrants that, when a client raises a specific issue as being especially important in a transaction, a registrant must take steps to ensure that the client has sufficient information about the issue to make an informed decision respecting how to proceed.

7. The need to maintain the public’s confidence in the integrity of the profession.

[91] Members of the public rely on registrants to ensure that all documents that come to exist in the course of a trade in real estate have been properly signed and witnessed.

[92] Members of the public must be confident that, when they raise a specific issue as being especially important to them, the registrant they have engaged to represent their interests in the transaction will take steps to ensure that they have sufficient information about the issue to make an informed decision respecting how to proceed.

8. The degree to which the breaches are regarded as being outside the range of

acceptable conduct. [93] Ms. Baxter’s conduct falls below the standard expected of registrants, but it was

not egregious.

9. The range of sanction in similar cases.

A. What is an appropriate sanction for Ms. Baxter’s breach of s. 58(1)(a) of the Act?

[94] In Amichand (Re), 2018 SKREC 9 (file #2016-74) (“Amichand”), Will Amichand

was issued an order of reprimand and a $1,000 fine for allowing his buyer clients to write an offer to purchase a property that did not include the name, address or telephone number of Mr. Amichand’s brokerage and for not ensuring that the buyers’ signatures on the offer were witnessed.

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[95] Mr. Amichand did not have a previous sanction history and was co-operative with the investigation. He signed a Consent Order acknowledging his error.

[96] The offer Mr. Amichand provided to his buyer clients was lacking several elements required by the Act. He had an interest in the corporation from which the buyers were purchasing the property. A registrant’s personal involvement in a transaction places a higher onus on that registrant to ensure that all necessary documents are properly completed. Mr. Amichand was a representative of the seller building company and represented the buyers as a limited dual agent. Registrants must be even more diligent when there are no other registrants involved to ensure the information presented to the parties is accurate and the transaction is managed properly.

[97] Ms. Baxter’s breach of s. 58(1)(a) of the Act is similarly serious to that of the registrant in Amichand. Mr. Amichand’s breach of the Act is made more serious by the fact that he was personally involved in the transaction. However, Ms. Baxter is registered as a broker and failed to obtain witness signatures on several offers to purchase.

[98] In Peters (Re) (file #1997-50) (“Peters”), Del Peters was ordered to pay $10,000 to his broker to be paid into the brokerage trust account and issued an order of reprimand. Mr. Peters failed to ensure that the signatures of the buyers were witnessed on the original offer to purchase and counter offer. He did not receive the $10,000 deposit as stated on the offer and failed to physically present the seller’s counter offer to the buyer.

[99] Mr. Peters acknowledged his mistake and stated he had learned from it. He had no previous sanction history. There was no deception by the buyer, buyer’s brokerage or seller’s brokerage that the deposit was being held anywhere else than the trust account of the brokerage in British Columbia. The actions of the seller and previous transactions with the buyer were considered additional mitigating factors.

[100] The decision in Peters does not offer much assistance in determining an appropriate sanction for Ms. Baxter’s breach of s. 58(1)(a). While both registrants failed to obtain witness signatures on documents, the situation in Peters was complicated by the fact that Mr. Peters had failed to receive the deposit as stated on the offer. The Hearing Committee determined that, rather than paying a fine, Mr. Peters should deposit money into his brokerage’s trust account to address the shortfall caused by his failure to obtain the deposit. As such, the decision in Peters is of limited value as precedent.

[101] An order of reprimand and a $1,000 fine are appropriate sanctions for Ms. Baxter’s breach of s. 58(1)(a) of the Act.

B. What is an appropriate sanction for Ms. Baxter’s breach of s. 58(3)(a) of the

Act?


[102] There are two previous decisions under s. 58(3) of the Act, neither of which bears much factual similarity to the case at hand.

[103] In Millsap (Re), 2007 SKREC 1 (file #2006-41) (“Millsap”), Trevor Millsap was issued an order of reprimand and a $3,000 fine and ordered to take educational upgrading for failing to advise the listing brokerage that he had received a signed Notice to Remove Conditions from his buyers on or before the required date and time.

[104] Mr. Millsap had a previous sanction history and the failure to deliver the removal

of conditions to the listing brokerage was a significant error. As a result of his actions, the transaction failed. The only mitigating factor was that Mr. Millsap was able to assist the buyers in purchasing another property.

[105] Ms. Baxter’s breach is less serious than that of the registrant in Millsap. Although Ms. Baxter is registered as a broker and was representing both parties as a limited dual agent, she does not have a previous sanction history and her failure to obtain the sellers’ signature on the offer in a timely manner was not the cause of the collapse of the contract of purchase and sale between her seller clients and the Buyer.

[106] In Bernhardt (Re), 2008 SKREC 1 (file #2007-70) (“Bernhardt”), Reg Bernhardt was issued an order of reprimand and a $3,000 fine for allowing a business partner of the property owner to sign a counter offer in the owner’s absence. The owner of the properties was away when Mr. Bernhardt received the offer and he believed that the owner’s business partner was authorized to deal with the properties in the owner’s absence. The buyer removed conditions and attempted to finalize the sale. When the owner became aware of the offer and counter offer, he refused to complete the transaction.

[107] Mr. Bernhardt had no previous sanction history and the length of time he had been in the real estate industry was considered. There was no evidence that Mr. Bernhardt intended to harm the parties. It appeared that he had trusted the parties and he felt like they took advantage of him. Mr. Bernhardt was clearly remorseful.

[108] The whole situation could have been avoided if Mr. Bernhardt had obtained a Power of Attorney from the owner authorizing the business partner to sign documents. The Hearing Committee noted that it is not appropriate to assume that such an authorizing document is in place. The Committee also stated that presentation of an offer and proper dates and signatures of the parties are core elements of a transaction and are elements which the public are entitled to assume will be completed properly by registrants.

[109] Ms. Baxter’s breach is less serious than that of the registrant in Bernhardt. Ms. Baxter failed to get her seller clients to sign acceptance of an offer in a timely manner, while Mr. Bernhardt failed to confirm that the person he allowed to sign a counter offer had been authorized by the owner to deal with the properties. As

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a result of Mr. Bernhardt’s failure to confirm whether or not the business partner had signing authority, the property owner refused to complete the transaction.

[110] There are two relatively recent hearing decisions that deal with breaches of s. 58(4) of the Act that bear some similarly to the case at hand.

[111] In Anton (Re), 2018 SKREC 29 (file #2016-31) (“Anton”), Dianne Anton was issued an order of reprimand and a $1,250 fine for signing a counter offer on behalf of her seller client “as per telephone call”. Ms. Anton represented the seller of a property. She received an offer from another registrant and her seller client responded with a counter offer. Ms. Anton contacted the other registrant to discuss the seller’s counter. The other agent came back with another suggestion, which Ms. Anton discussed with her client. The seller agreed to the new suggestion and Ms. Anton prepared a new counter offer. Ms. Anton signed this new counter offer on behalf of her seller client at his request. The seller did not want Ms. Anton to drive all the way back to the function he was attending to get his signature, nor did he want to have to exit the function to sign the document. The seller signed the counter offer the next morning.

[112] Ms. Anton had no previous sanction history and was co-operative with the investigation. At the time of the breach, she had only been registered for a few months. There was no evidence of consumer harm and her client ultimately signed the counter offer himself. Ms. Baxter’s breach of s. 58(3)(a) is more serious than the breach of s. 58(4) by the registrant in Anton. Ms. Baxter is registered as a broker and her breach occurred while she was representing both parties as a limited dual agent.

[113] In Pylychaty (Re), 2016 SKREC 1 (file #2013-07) (“Pylychaty”), Lorna Pylychaty was issued an order of reprimand and a fine of $1,500 for failing to have both sellers sign a counter offer and amendment. Ms. Pylychaty represented Seller A and Seller B, both owners on title, in the sale of their property. Seller A and Seller B received an offer to purchase the property. They wrote a counter offer, but Seller A did not sign the offer. An amendment to the contract of purchase and sale was completed, but Seller A did not sign the Amendment. Seller A did not sign these documents because he was out in the field working at the time. Ms. Pylychaty reviewed the documents with him over the phone, and they proceeded without his signature to expedite the paperwork. The property was transferred to the buyers.

[114] Ms. Pylychaty had been registered for just over 10 years and she had no previous sanction history. She was co-operative with the investigation and she admitted her misconduct and signed a Statement of Facts and Admissions. Ms. Pylychaty had discussed all the forms with Seller A, so he was aware of the contents of the documents and verbally consented.

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[115] Ms. Pylychaty was a broker at the time of the breaches. The documents that were not signed by Seller A were integral to the purchase and sale of the subject property.

[116] Ms. Baxter’s breach of s. 58(3)(a) is similarly serious to the breach of s. 58(4) by

the registrant in Pylychaty. Both Ms. Baxter and Ms. Pylychaty were registered as brokers at the time of the breaches and the documents that were not properly executed were integral to the purchase and sale of the subject property. However, Ms. Pylychaty failed to obtain Seller A’s signature on two documents and Ms. Baxter’s seller clients did eventually sign the offer to purchase. However, Ms. Baxter’s breach of the legislation occurred while she was representing both the Sellers and the Buyer as a limited dual agent.

[117] An order of reprimand and a $1,500 fine are appropriate sanctions for Ms. Baxter’s breach of s. 58(3)(a) of the Act.

C. What is an appropriate sanction for Ms. Baxter’s breach of Bylaw 702?

[118] In Harbottle (Re), 2018 SKREC 16 (file #2017-20) (“Harbottle”), June Harbottle

was issued an order of reprimand and a $2,000 fine for failing to protect and promote the interests of her clients. Ms. Harbottle had listed the property for sale. A few months after the property was listed for sale, the owner passed away. Ms. Harbottle continued to deal with the children of the owner who had been named as executors of his estate. Ms. Harbottle believed that a copy of the owner’s death certificate and the page of the will that named his children as executors were sufficient authority to proceed with the listing and sale of the property.

[119] Ms. Harbottle also represented the buyers as a limited dual agent. She did not tell her buyer clients that the owner had passed away or that the property would have to go through probate before they signed the offer to purchase the property. Ms. Harbottle did not know that the property was in probate until after the buyers had removed conditions and the paperwork was sent to the lawyers. Two days before the scheduled possession date, the buyers were sent a Tenancy at Will agreement which they were required to sign in order to take possession of the property.

[120] Ms. Harbottle had no previous sanction history and was co-operative with the investigation. At the time of the transaction, she believed she was doing everything right. Ms. Harbottle signed a Consent Order acknowledging her error.

[121] There was actual consumer harm as the buyers’ purchase of the property was complicated by the legal consequences of the death of an owner of the property and the buyers were not made aware of the death or its potential impact in a timely manner. Ms. Harbottle’s breach occurred while she was representing both parties as a limited dual agent. Registrants in limited dual agency must be especially diligent in protecting and promoting the interests of their clients, as there is no other registrant involved in the transaction to notice or correct any errors.

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[122] Ms. Baxter’s breach of Bylaw 702 is more serious than that of the registrant in

Harbottle. Ms. Harbottle did not realize that the death of an owner would be important to her buyer clients, while Ms. Baxter was aware that the existence and nature of easements on title to the Property was of particular importance to her buyer client. The seriousness of Ms. Baxter’s breach of the bylaw is exacerbated by the fact that she is registered as a broker.

[123] In Merriman (Re), 2006 SKREC 13 (file #2006-14) (“Merriman”), Carole Merriman was issued an order of reprimand and a $750 fine for breaching Bylaw 702 by failing to include conditions concerning water testing on an offer to purchase a property that was located in an area known for having different water conditions. Ms. Merriman represented the buyers and sellers as a limited dual agent. The first offer she wrote on behalf of the buyers was made subject to a satisfactory report concerning the water supply and quality at the property. The offer was not accepted. The buyers wrote a second offer that did not contain any conditions concerning water testing. The offer was accepted and the transaction completed. After taking possession of the property, the buyers had an issue with the water quantity and quality. Ms. Merriman had knowledge that the area was known for having different water conditions and should have been tested. Additionally, after taking possession of the property, the buyers discovered a large hole in the basement floor and damage to the exterior of the building.

[124] The Hearing Committee found that Ms. Merriman’s knowledge of the water problems in the area was important to the transaction, as the previous offers had contained conditions that a water test be completed. If the buyers were adamant that no water test be done, Ms. Merriman should have had them complete an Ancillary Services form acknowledging they had been advised that such a test would have eliminated any issues. Ms. Merriman’s failure to properly inspect the property led to further issues surrounding the building itself. The Committee noted that protecting and promoting the interests of a client includes taking reasonable steps to ensure the facts provided to them by the sellers are correct.

[125] Ms. Baxter’s breach of Bylaw 702 is more serious than that of the registrant in Merriman. In both instances, a registrant failed to ensure that important information about a property was communicated to a buyer client. Ms. Baxter’s breach of the bylaw is more serious because she is registered as a broker and because she knew that her buyer client was particularly concerned about easements on the property.

[126] In Ostlund (Re), 2004 SKREC 5 (file #2003-59B) (“Ostlund”), Colleen Ostlund was issued an order of reprimand and a $500 fine for breaching Bylaw 702 by failing to obtain information about the annual taxes payable with respect to a property. Information provided by the listing agent indicated that the 2003 taxes on a property were $1,365. Ms. Ostlund’s buyer clients made her aware that they were not prepared to assume liability for a potential pavement tax levy and that they could not afford additional tax payments beyond the $1,365. Ms. Ostlund assumed the information about taxes was accurate and did not investigate any

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further. The parties came to an agreement and the sellers agreed to pay the pavement levy in full. The buyers later learned that the taxes for 2003 would be $2,104.

[127] Ms. Ostlund had been a registrant for just over a year and she immediately directed the buyers to their legal representative when an issue arose.

[128] The Hearing Committee found that Ms. Ostlund had failed to make the appropriate inquiries with respect to the potential tax costs; her failure to investigate the facts surrounding the taxes went against her duty to protect and promote her clients’ interests. The buyers, who were first time home buyers, relied on Ms. Ostlund’s expertise. Ms. Ostlund could have easily accessed the tax information.

[129] Ms. Baxter’s breach of Bylaw 702 is more serious than that of the registrant in Ostlund. In both instances, the registrant was aware that some aspect of the transaction was of particular importance to the client and failed to make the necessary inquiries to ensure the client had the information needed in order to determine how to proceed. However, Ms. Baxter is registered as a broker and her breach of the bylaw occurred while she was representing both parties to the transaction as a limited dual agent.

[130] In Seager (Re) (file #2001-13B) (“Seager”), Jeffrey Seager was issued an order of reprimand and a $500 fine and ordered to pay $1,481.50 in hearing costs for breaching Bylaw 702. Mr. Seager was assisting clients in their purchase of an acreage. Water supply was a critical issue to the buyers. Mr. Seager obtained a water sample from a well on the property and sent it for testing, which revealed nitrate concentrations that significantly exceeded the acceptable levels. Mr. Seager attempted to negotiate an amendment to the contract of purchase and sale that would make the seller responsible for installing a reverse osmosis water filter system, but the seller declined. Mr. Seager hired a company to shock the well in hopes of reducing the nitrate levels. The buyers also raised concerns about water quantity issues, but Mr. Seager advised that the current supply should be sufficient and, if water quantity issues arose in future, the buyers could discuss it with the seller and sue her if necessary. The buyers completed their purchase of the property. A few weeks after the buyers took possession of the property, the well ran dry. Although he acknowledged having concerns about the quantity of water in the well when he completed shocking the well, Mr. Seager did not take any actions to determine the actual flow of the well beyond conducting a flow test.

[131] The Hearing Committee found that Mr. Seager failed to protect and promote the interests of his clients when he failed to take further action to determine the quantity of water in the well. He did not provide the buyers with any documentation from the seller as to the quality or quantity of well water; he also erred in giving legal advice by recommending that the buyers take possession of the property and deal with the seller with respect to any water problems that arose in future.


[132] Mr. Seager expressed remorse for his actions and believed that what he was

doing was right at the time. There was no evidence that his actions were a deliberate attempt to mislead the buyers.

[133] Ms. Baxter’s breach of Bylaw 702 is more serious than that of the registrant in Seager. Ms. Baxter is registered as a broker.

[134] In Harvey (Re) (file #1997-40) (“Harvey”), George Harvey was issued an order of reprimand for breaching Bylaw 702. Mr. Harvey assisted the buyer in searching for a new home. The buyer had mentioned that noise was a major concern for her and that she wished to purchase a property in an area with a low noise level. The buyer submitted an offer to purchase a property. Mr. Harvey did not make any inquiries about the noise level in the area and it turned out that there were train tracks only two blocks from the property. The contract was terminated on the basis of the buyer not having been informed of the train noise in the area. The seller’s solicitor requested that the buyer’s $1,000 deposit be forfeited.

[135] The Hearing Committee found that Mr. Harvey had failed to act in a manner that protected and promoted the interests of his client. He was aware of the buyer’s concerns about noise, but either carelessly overlooked his knowledge of the train tracks or failed to investigate the neighbourhood.

[136] Ms. Baxter’s breach of Bylaw 702 is similarly serious to that of the registrant in Harvey. Both registrants were aware that an issue was of particular concern to a buyer client and failed to make the appropriate inquiries and ensure the client was properly informed with respect to the issue.

[137] The decisions in Merriman, Ostlund, Seager, and Harvey were all issued prior to an expansion of the real estate market in 2008 that saw significant increases in property values. As property values rise, so do the commissions registrants can expect to earn on trades in real estate. When using older decisions as precedent, the impact general inflation and rising property values have had on the commission payable to registrants on trades in real estate must be considered. Failure to account for these factors could lead to disciplinary action by the Commission coming to be seen as a “cost of doing business”.

[138] A letter of reprimand and a $2,500 fine are appropriate sanctions for Ms. Baxter’s breach of Bylaw 702.

[139] As Ms. Baxter has agreed to sign this consent order, there will be no order as to costs.

CONSENT ORDER: [140] In accordance with The Real Estate Act, its Regulations, and the Commission

Bylaws, and with the consent of Rita Baxter, and the Investigation Committee of


the Saskatchewan Real Estate Commission, the Hearing Committee hereby orders:

[141] With respect to Count 1, the charge of professional misconduct contrary to

section 39(1)(c) of The Real Estate Act for breach of s. 58(1)(a) of the Act: 1. Rita Baxter shall receive an order of reprimand for the violation of s. 58(1)(a)

of the Act; 2. Rita Baxter shall, within 30 days of the date of this order, pay to the

Saskatchewan Real Estate Commission a $1,000.00 fine for the said violation of the Act; and

3. Rita Baxter’s registration shall be suspended if she fails to make payment as set out above.

[142] With respect to Count 2, the charge of professional misconduct contrary to

section 39(1)(c) of The Real Estate Act for breach of s. 58(3)(a) of the Act: 1. Rita Baxter shall receive an order of reprimand for the violation of s. 58(3)(a)

of the Act; 2. Rita Baxter shall, within 30 days of the date of this order, pay to the

Saskatchewan Real Estate Commission a $1,500.00 fine for the said violation of the Act; and


[143] With respect to Count 3, the charge of professional misconduct contrary to section 39(1)(c) of The Real Estate Act for breach of Bylaw 702: 1. Rita Baxter shall receive an order of reprimand for the violation of Bylaw 702; 2. Rita Baxter shall, within 30 days of the date of this order, pay to the

Saskatchewan Real Estate Commission a $2,500.00 fine for the said violation of the bylaw; and


[144] There shall be no order as to costs. Dated at Moose Jaw, Saskatchewan this 12th day of March, 2019. “David M. Chow” , David M. Chow, Chairperson

Documents

Baxter (Re), 2019 SKREC 14 Commission File: 2016-51 · 2019. 3. 13. · multitude of other subjects. Ms. Baxter believed that the Corporation 1 and Corporation 2 easements had been