A real estate sold sign is shown outside a house in Vancouver on Jan. 3, 2017.Jonathan Hayward/The Globe and Mail
A British Columbia realtor who failed to represent the best interest of her client when she sold a Richmond home to her daughter, who then flipped it for a total profit of more than $200,000, has been fined just $5,000, a remnant of an oft-criticized disciplinary system before it was overhauled.
Guo Xin Bo, also known as Angela Guo, listed a three-bedroom Richmond home for $1,388,000 in January, 2016. She then sold the house to her daughter for $1,285,000.
A disciplinary decision by the Real Estate Council of British Columbia found Ms. Guo had violated, among other things, conflict-of-interest rules by not disclosing she was related to and acting on behalf of the buyer.
Land records show the house was sold again in April, 2017, for $1,490,000; a posting for the home that remains on a real estate site includes Ms. Guo's contact information.
Ms. Guo, along with Angela Guo Real Estate Corp., was ordered to pay a $5,000 fine, complete a remedial education course and pay $3,000 in enforcement expenses. She retains her agent's licence.
The Globe and Mail has reported extensively on Metro Vancouver real estate agents whose misconduct yielded hefty commissions and only paltry penalties that critics dismiss as merely the cost of doing business in a busy market. The previous maximum penalty had been just $10,000 and most realtors who broke the rules were fined an average of $4,850 or less.
The B.C. Real Estate Council in late 2016 introduced a host of new consumer protections that include fines of up to $250,000 for agent wrongdoing. The massive increase in fines was a major recommendation of a 2016 independent panel that found the council had become dominated by industry members who had taken disciplinary action only reluctantly over the past decade. But Ms. Guo's offence is subject to the old regulations. There has yet to be a significant penalty handed down under the new ones.
Ron Usher, a lawyer and member of the independent panel that guided the overhaul, said cases such as Ms. Guo's are why change was sought.
"Even though the profit was her daughter's profit, it's clear this was exactly the kind of behaviour, in terms of representing all parties, flipping, that the changes were fully intended to address," Mr. Usher said. "It's a good example of why change was needed and we'll see going forward how that plays out with the Real Estate Council."
The matter was discovered during an audit.
Last year, the council said it was struggling to clear a mountain of public complaints and expected to carry more than 700 open disciplinary files into the current fiscal year, which began last July. The council is in the midst of modernizing its complaints process as part of a continuing organizational overhaul.
Low fines for ethics violations by real estate agents have also been a point of contention in the Toronto area, which has seen an overheated housing market.
A Globe and Mail investigation last year found that the average fine for realtors who violated ethics rules has fallen significantly over the past decade, sitting at just $4,100 for the first half of 2017. In addition, the maximum $25,000 penalty has been imposed only once in recent years, and was later halved on appeal.
Despite the steady reduction in fines, the Ontario government doubled the maximum fine for individual realtors to $50,000 late last year, saying that the existing system is "outdated" and fines are too low to deter misconduct. Brokerages that violate ethics rules face a top penalty of $100,000.
In the face of mounting concern about unethical practices, industry support is building for a more painful punishment: Forcing realtors who break the rules to repay commissions from improper transactions, a practice known as disgorgement. Premier Kathleen Wynne's government says it may review the measure later this year.
With a report from Mike Hager.
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The Canadian Press