Skip to main content

The Globe and Mail

Vancouver real estate agents face weak penalties for misconduct

Janet MacKenzie, shown at her condo in North Burnaby, B.C., had an agent who admitted forging her signature on a fraudulent offer. ‘Some people have done some really bad things and they just get a slap on the wrist,’ she says.

Rafal Gerszak/The Globe and Mail

Real estate agents in Metro Vancouver who are disciplined for wrongdoing face fines and suspensions that are dwarfed by the hefty commissions they earn in B.C.'s superheated housing market, a Globe and Mail investigation has found.

Records from more than 100 recent disciplinary proceedings, some confidential, obtained by The Globe show only a fraction of agents ever lose their licences over misconduct, and that fines averaged $4,850 or less.

The data also show suspensions handed down by B.C.'s self-regulating industry body lasted an average of six weeks for those disciplined for misconduct, while Greater Vancouver's private real estate board often gave much longer suspensions.

Story continues below advertisement

Critics say the penalties amount to little more than the "cost of doing business" in Metro Vancouver's real-estate market, where agents on either side of a transaction typically gain at least $22,500 in commission on a detached house selling for $1.78-million – the average price paid in the re-gion for such homes last month.

"Some people have done some really bad things and they just get a slap on the wrist," says Janet Mackenzie, a Vancouver regulatory affairs executive whose former agent admitted forging her signature on a fraudulent condo offer several years ago. "Having [agents] policing [agents] has shown to not be the best model."

More than two years after she lodged a complaint with the Real Estate Council of British Columbia, Ms. Mackenzie's former agent agreed to a fine of $1,250 for the cost of the investigation, and a suspension of almost four months. His penalty was later increased by two months after he was found to be violating the terms of his original suspension. He agreed to pay the same amount for the second investigation.

A year and a half after the council's first ruling, the Real Estate Board of Greater Vancouver assessed a $10,000 fine for his misconduct and suspended his membership for a year, which also banned him from using the Multiple Listings Service. The board's decisions are not made public, and Ms. Mackenzie only heard about the stiffer penalties through The Globe and Mail.

Amid an uproar over the practices of some real estate agents – methods decried by buyers, sellers, other agents and even B.C. Premier Christy Clark – The Globe and Mail has examined all of last year's disciplinary actions published by the province's real estate council in an effort to assess the penalties handed out to incompetent or unethical agents.

Of the 89 agents disciplined, just under half faced no repercussions other than a reprimand and an order to pay for the investigation of their misconduct, which typically was assessed at $1,500. Another quarter of those agents were suspended for periods ranging from a week to a year, with an average length of six weeks.

Five agents agreed to surrender their licences permanently, and the council also cancelled the licences of three agents, including one who was suspended earlier that year. The four most common allegations found in the council's misconduct cases involved failing to act in the best interest of clients, acting "in a deceptive manner," failing to properly disclose something to the client and incompetence.

Story continues below advertisement

British Columbia has almost 23,000 licensed real estate agents.

The council has regulated the industry since 2005, when it took over the responsibility from the Superintendent of Real Estate, a government-appointed watchdog. But it was the superintendent's office that the province called upon to examine the industry after recent stories by The Globe and Mail and others about practices that appear to allow agents to boost their own incomes without the knowledge of buyers and sellers. A task force is due to release an interim report on that investigation on Friday.

Under provincial law, the council can fine a real estate agent a maximum of $10,000, unlike in Alberta and Ontario, where the maximum fine is $25,000 for similar misconduct. Last year, the council fined four B.C. agents the maximum penalty, while 60 per cent of those fined paid $2,500 or less.

Maureen Coleman, a professional standards adviser for the council, who oversaw investigations for a decade until this year, said her agency asked the province to increase the fines in December, 2014, and expects that the superintendent's task force will address the issue. She said that, as a regulator, she cannot comment on whether the current fines are a disincentive to unethical agents, but added that the council must work with the existing regulations.

"Because $10,000 is the maximum [fine], you can't apply the maximum to all discipline orders – it would be disproportionate depending on what the conduct is," she told The Globe. "We have broad powers to discipline and we're looking for a change with respect to the level of fines."

That is what the Real Estate Board of Greater Vancouver, which guards access to the Multiple Listings Service for its 12,500 members in the region, voted for at its annual general meeting two weeks ago. Noting that market forces had made the existing fines ineffective, the board immediately tripled the potential penalty for any member caught subverting rivals or violating their professional code of conduct from a maximum of $10,000 to $30,000.

Story continues below advertisement

While the board issues its private disciplinary orders much less frequently than the council, its fines average out to a slightly higher amount – $4,821 according to the 22 reports from the past five years that were obtained by The Globe. Those decisions also showed that the average suspension was 30 weeks, which is five times the average length given by the council last year.

But agent Gary Wong says as long as the penalties remain low, bad agents will continue cheating to gain greater profits.

"A $2,000 fine, a repeat of the educational course and, oh, a two-week suspension or 'vacation?' It doesn't affect someone's business," said Mr. Wong, who started selling real estate in the region four years ago after completing an MBA.

Report an error Editorial code of conduct
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

If your comment doesn't appear immediately it has been sent to a member of our moderation team for review

Read our community guidelines here

Discussion loading…

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.