B.C. Realtors fined $200K for failure to disclose relevant information to clients

Pender Harbour, B.C. is seen from above. (Shutterstock.com)

Two B.C. real estate agents have been fined a combined total of more than $200,000 for professional misconduct they committed during the sale of a waterfront property on the Sunshine Coast in 2017.

Joel Patrick O'Reilly and Denise Anne Brynelsen acted as dual agents in the transaction, representing both the sellers and the buyers, according to a consent order with the B.C. Financial Services Authority, which was published online last week.

The property in question was home to an 800-square-foot cabin and a dock, both located on the foreshore in Pender Harbour, B.C. The foreshore is the space between the high and low tide watermarks in a body of water. In British Columbia, it is Crown land.

'Not legalized'

The cabin was built "in or around the 1960s and was originally a shed-type structure," according to the consent order.

"During their ownership, the sellers completed, without permits and/or authorizations from the Sunshine Coast Regional District (SCRD), a major remodeling of the cabin into a residence," the order reads, adding that the sellers had corresponded with the province about the property and signed an agreement in 2010 acknowledging that the cabin could not be used as a permanent residence.

While the sellers did not communicate this limitation to O'Reilly and Brynelsen, the Realtors inquired with "a foreshore tenancy consultant" on behalf of a prospective buyer, and were informed that the cabin was "not legalized" and was a "non-conforming use."

The email sent to the consultant by a provincial official, which is quoted in the consent order, went on to say that "generally speaking, such a use on Crown foreshore is contrary to provincial policies and likely would not be approved."

O'Reilly shared this email with the sellers, opining that he thought there was "zero chance" of a government agency ordering the removal of the cabin, according to the consent order.

When showing the home to the eventual buyers, the Realtors told them the cabin was "legal non-conforming." The consent order indicates their marketing of the property did not mention the foreshore agreement or the fact that the cabin was suitable for seasonal use only. They also did not provide a copy of the provincial government email to the buyers.

After they purchased the property for $900,000, the buyers were surprised to find that the provincial government refused to transfer the foreshore agreement from the sellers to them "until non-conforming uses cease to exist," according to the consent order.

The agreement was ultimately transferred to the buyers in 2021, once they had finished removing the cabin from the property. The consent order indicates the buyers built a new home on the land – away from the foreshore – in 2023, six years after their initial purchase.

Professional misconduct

In the consent agreement, O'Reilly and Brynelsen each admitted to advertising the property with "false and/or misleading representations," failing to conduct "independent verifications" regarding the restrictions on the use of the cabin and failing to disclose "material information" to their clients.

O'Reilly further admitted to providing the buyers with "false, misleading and/or inaccurate information" in an email responding to questions they had asked about the property.

The pair acknowledged that these various failings amounted to professional misconduct under the provincial Real Estate Services Act, specifically violating the provisions prohibiting false or misleading advertising, requiring Realtors to act honestly and with reasonable care and skill, and to act in the best interests of the client.

They also committed misconduct by violating the act's provisions regarding Realtors' duty to "use reasonable efforts to discover relevant facts respecting real estate," "disclose all known material information respecting the real estate," and disclose any "material latent defect" in real estate.

In the consent order, O'Reilly and Brynelsen agreed to pay discipline penalties of $100,000 each to the BCFSA, along with "enforcement expenses" of $2,500 each.

They also agreed to complete the "Real Estate Trading Services Remedial Education Course" at UBC's Sauder School of Business.

"It is imperative that licensees disclose all pertinent information to their clients about a property or transaction," said Jonathan Vandall, the BCFSA's senior vice-president for compliance and enforcement, in a news release about the consent order.

"In this case, the licensees' failure to disclose information was harmful to their clients. The penalties handed down are reflective of the severity of their misconduct and serve as a reminder to all real estate licensees about the importance of disclosing crucial information to clients."