Disturbing stories in real estate: more and more brokers in the crosshairs of investigators

Troubling stories in real estate: more and more brokers in the crosshairs of investigators

UPDATE DAY

The number of brokers under investigation doubled during the pandemic, as prices soared and buyers had to jostle for hope of finding a home. 

The fines imposed by the Organisme d'autoréglementation du courtage immobilier du Québec (OACIQ) have also more than doubled over the past two years. During this period of strong increases in home values, it was not uncommon for many buyers to make an offer above the asking price.

At the same time, several brokers did not hesitate to praise their success and prosperity on social networks in particular. Several have made gold business during the crisis.

“I work at Sotheby’s. It is a luxury banner. […] Last year, people must have made on average between $400,000 and $500,000, but the other years maybe they made $150,000,” says Paul Azar, a real estate broker.

Christiane Privé and Nelson Defoy, a couple from Saint-Lin-Laurentides, had to visit 54 homes during the pandemic before finding the rare pearl. 

The couple presented a memoir in Quebec within the framework of a consultation on the practices of brokers. 

Christiane Privé and Nelson Defoy say that the real estate market has become a real jungle.

He says he has seen the worst as well as the best.

“It's a jungle,” says Ms. Privé.

QUESTIONABLE CASES

Our Bureau of Investigation has gone through dozens of recent disciplinary decisions and proceedings and found stories that raise questions.

  • In Gatineau, a broker was suspended after having bought a client's house for $450,000 before reselling it for $880,000 two years later
  • On the South Shore of Montreal, a broker is being prosecuted by the OACIQ in particular for having placed herself in a conflict of interest by wanting to buy the house of clients. She also sued to force one of her clients to give her a property 
  • In Montreal, an agent who boasts of selling more than 100 houses a year has been found guilty about fifteen counts of offense in connection with transactions in which she was involved
  • On the North Shore, a broker forged the signature of a childhood friend in several official documents
  • In Marieville, a broker encouraged his clients to participate in an illegal price-inflating operation.

CHANGES

According to the OACIQ, this darker side of the last real estate boom must be attributed in part to changes in the way the organization handles complaints from the public.

Troubling stories in real estate: more and more brokers in the crosshairs of investigators

Caroline Champagne
OACIQ

“We transfer cases more quickly to the syndic's office,” mentioned Caroline Champagne, vice-president, management, at the OACIQ, in an interview with our Investigation Office.

She referred to operational changes and an “optimization” of the processes carried out during the pandemic.

She added that the organization had also been very proactive last year in doing more mandatory inspections.

WELL PROTECTED?

According to Ms. Champagne, complaints against brokers also jumped in the first half of last year, before the situation corrected itself in the second half of 2021.

If the OACIQ wants to be above all reassuringly, other experts to whom our Investigation Office spoke are severe and believe that the public is not always well protected by the system in place.  

Explosion of sales during the pandemic Rise in prices
of houses March 2020 to March 2022 48% median price of $278,000 versus $411,000 Transaction volume Brokers in numbers Number of sales Increase between 2019 and 2021 13.6% Active agencies and brokers in Quebec 2021 16 656 Active investigations
of brokers 2020 869 2021 1706 Fines given

Clients poorly protected

Real estate experts believe that the public is not not always well protected when doing business with a broker.

“The OACIQ is trying to protect its back, but […] it is a mock professional order. […] They will do actions that are intended to protect the public, but are they protecting it [well]? […] No, I'm not ready to give them that credit,” says Nick Maltais, an experienced real estate broker in the Quebec City region.

According to him, the system is currently designed to that there is a maximum number of people who can become brokers.

According to him, the public would be better served if the basic training were enhanced.

His point of view is shared in part by Isabelle Sirois, a lawyer specializing in real estate law in the Quebec City region, who pleads for more control of the OACIQ.

COMPLEXIFICATION

The latter wants to make the public aware of the major legal risks involved in a transaction today.&nbsp ;

The recent evolution of the law makes it more and more complex to buy a property, according to her.

She believes that it is much safer to use the services of a broker to buy or sell a property than to try to do it yourself. Nevertheless, she thinks that a handful of brokers are “tarnishing the reputation of the whole”.

“I don't endear myself when I say that, but it's made so difficult and full of enormous responsibilities to be a broker that in my opinion it should take more than the current college education,” she says.

OVERBIDS

In a brief submitted in 2021, the Option consommateurs organization expressed concern for its part about the role that real estate brokers could play in the phenomenon of overbids.

“It is clear that, in many cases, real estate brokers are not completely unrelated to the exacerbation of real estate overheating,” noted the organization. 

Luce Duchaussoy found it difficult to be involved in disciplinary proceedings against a broker at the OACIQ.

Luce Duchaussoy, a resident of the South Shore met by our Bureau of Investigation, said that she found the complaint process against a broker at the OACIQ difficult. She told us that she was forced to testify against a broker by whom she then had to continue to be represented because she had signed a contract with her. 

“They use you for their file, then after, they drop you. They don't take into account the reprisals you may have,” she told us. 

She also deplored the “great slowness” of the OACIQ's analyses.    

New rules

The Government of Quebec launched a consultation in June 2021 to examine the practices of brokers.

This resulted in changes to the brokerage law, which came into force in June 2022. It will no longer be possible in general for a broker “to act for both the buyer and the seller in a transaction” .

The broker must now also enter into a written brokerage contract with buyers before representing them.

Sanctioned brokers

Troubling stories in real estate: more and more brokers in the crosshairs of investigators

Sandra Mercierhad her license revoked in 2019. She notably borrowed sums of money from 15 people on the basis of false representations and did not repay them. Photo taken from Facebook

Troubling stories in real estate: more and more brokers in the crosshairs of investigators

< p>Marie-Josee Dumaswas found guilty in connection with a fraudulent scheme to defraud a banking institution. She was suspended for six years in 2019. She was trying to make a substantial profit on the sale of her son's house, according to the OACIQ.

Troubling stories in real estate: more and more brokers in the sights of investigators

Maxime Lequin< /strong>received a fine of $22,000 and reprimands, in addition to having his license suspended for 18 months in 2020. He is accused of numerous breaches, including promises to purchase “not reflecting reality”. Photo taken from Facebook

Troubling stories in real estate: more and more brokers in the crosshairs investigators

Irinia Dondikovawas fined $3,000 and her license was suspended for 180 days in 2021. Among other things, she allowed someone to sign in place of the seller in a promise to purchase. Photo taken from LinkedIn

Troubling stories in real estate: more and more brokers in the crosshairs of the investigations tors

Bibiane Fortin notably declared bankruptcy in order to evade her tax obligations and made false declarations to the OACIQ. She was fined $6,000 and had her license suspended for 24 months in 2021.

Troubling stories in real estate: more and more brokers in the crosshairs of investigators< /p>

Sylvain Clermont received fines of $12,000 and was suspended for 60 days in 2021. He failed to fulfill a promise to purchase that a buyer wanted to present and provided inaccurate information. Photo courtesy of Proprio Direct

Troubling stories in real estate: more and more brokers in the crosshairs of investigators< /p>

Alessandro Monteferrante was suspended for 135 days in 2021 in connection with making false statements and refusing to provide documents. He closed the agency he ran when it owed money to the government. Photo taken from Facebook

Troubling stories in real estate: more and more brokers in the crosshairs of investigators< /p>

Denis Paradis had his license revoked in 2021. He placed himself in a conflict of interest and appropriated sums. Among other things, he failed to repay $300,000 loaned to him by a client. According to a prosecutor, he is an inveterate liar.  Photo taken from Twitter

Troubling stories in real estate: more and more brokers in the crosshairs of the investigators

MAJOR SURVEY – REAL ESTATE Brokers
in the crosshairs

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