B.C. Realtor receives maximum penalty for misconduct related to assignment sales

A real estate sign is pictured in Vancouver, B.C., Tuesday, June, 12, 2018. THE CANADIAN PRESS Jonathan Hayward

A Realtor and his personal real estate corporation have had their licences suspended for six months and been ordered to pay $16,000 to the BC Financial Services Authority over misconduct that occurred eight years ago.

In a consent order signed last month and posted online last week, David Chian Wei Yang and David C.W. Yang Personal Real Estate Corporation admitted to the misconduct and agreed to the penalties, which the regulator says were the maximum allowed in 2015 and 2016, when the misconduct occurred.

The penalties stem from five "assignment sales" Yang facilitated for four clients, each of which followed the same basic pattern, according to the consent order.

In each case, Yang represented a buyer who entered an agreement to purchase a property, then "assigned" the contract to a third party before completing the transaction.

The third party agreed to pay a higher price than Yang's client had agreed to pay the original seller, and Yang reported the difference in prices to his brokerage as his commission for the transaction, before retaining a predetermined portion of that amount and passing the rest on to the client.

Three of the five properties involved in this misconduct were located in Vancouver. The other two were in Richmond. They are identified in the consent order only as Property 1 through Property 5.

Details of the transactions were as follows.

• Property 1, Vancouver: Client agreed to purchase for $3 million; assignment sale for $4,060,000; Yang claimed $1,060,000 as commission, retaining $251,851.36 for himself and paying the rest – after brokerage fees – to his client
• Property 2, Richmond: Client agreed to purchase for $850,000; assignment sale for $895,000; Yang claimed $45,000 as commission, retaining $6,790 for himself and paying the rest – after brokerage fees – to his client
• Property 3, Richmond: Client agreed to purchase for $2,068,000; assignment sale for $2.3 million; Yang claimed $232,000 as commission, retaining $19,790 for himself and paying the rest – after brokerage fees – to his client
• Property 4, Vancouver: Client agreed to purchase for $3.8 million; assignment sale for $4,450,000; Yang claimed $650,000 as commission, retaining $188,225.43 for himself and paying the rest – after brokerage fees – to his client
• Property 5, Vancouver: Client agreed to purchase for $3,630,000; assignment sale for $3,890,000; Yang claimed $260,000 as commission, retaining $100,084.32 for himself and paying the rest – after brokerage fees – to his client

In total, based on the figures in the consent order, Yang pocketed more than $566,000 by handling the assignment sales in this way.

Typical Realtor commissions in Metro Vancouver are seven per cent on the first $100,000 of the sale price, plus 2.5 per cent of the remaining total, with the total commission split between the buyer's and seller's agents.

Using these typical figures to calculate commissions on five homes sold at the assignment sale prices in the Yang transactions would have amounted to a little more than $412,000, before being split among Realtors.

In the consent order, Yang admitted to professional misconduct for providing documentation to his brokerage suggesting that his commission was higher than it actually was, and for failing to disclose that he would not be retaining the full commission amount he claimed.

He also admitted to failing to provide proper written disclosure of his commissions to his clients, failing to provide proper documentation to his clients, and failing to avoid conflicts of interest on two occasions in which he personally provided money to clients to help them complete their purchases.

The consent order also describes Yang's behaviour as "conduct unbecoming" that was "contrary to the best interests of the public, undermining public confidence in the real estate industry, or bringing the real estate industry into disrepute."

The Realtor agreed to a six-month suspension of his licence, during which time he will also be prohibited from working as an unlicensed assistant.

Yang must also pay an administrative penalty of $10,000, plus enforcement expenses of $6,000.

"The penalties imposed by BCFSA on this real estate licensee were the maximum allowed when the misconduct occurred," said Jon Vandall, the BCFSA's vice president for compliance and enforcement, in a news release published alongside the consent order last week.

“In 2016, discipline penalties were increased to $250,000 per contravention in order to address and deter misconduct that harms homebuyers and the public interest. New safeguards were also put in place to bring transparency to the practice of contract assignments.”