Real estate agent who loaned client $50K for deposit committed misconduct, B.C. regulator finds

A real estate agent who lent a client $50,000 so she could afford to make a deposit on a property in Richmond, B.C., committed professional misconduct by doing so, according to a provincial regulator.

The B.C. Financial Services Authority, which investigates real-estate-related complaints from members of the public, has concluded that Wei "Vicky" Wang's loan constituted a conflict of interest, and that Wang had committed misconduct by failing to avoid the conflict and by failing to advise her client of it.

The BCFSA's chief hearing officer Andrew Pendray issued his decision on the matter earlier this month. It was published online Wednesday. 

In it, Pendray wrote that the evidence before him supported the conclusion that the $50,000 Wang provided was a loan, and thus a conflict, despite Wang's arguments to the contrary.

THE PURCHASE

Pendray's decision came after hearings on the BCFSA's fifth amended notice to Wang about the complaints against her from her former client.

All of the iterations of the notice centred on the client's purchase of two homes – one in Richmond and one in Vancouver. Both addresses are redacted throughout the decision, as are the names of the client, her husband and other witnesses.

The loan related to the Richmond purchase, for which a contract of purchase and sale was executed on June 9, 2016, with a completion date scheduled for Oct. 4 of that year, according to the decision.

The agreed purchase price was $1,688,000, with a deposit of $90,000 – slightly more than five per cent of the total price.

Pendray's decision indicates that Wang's brokerage provided the BCFSA with two "receipt of funds records" relating to the deposit, one for $40,000 from the client's account and one for $50,000 from Wang's account.

The record for the $50,000 transaction included the note "loaning to the buyer temporarily," according to the decision, and both Wang and the client acknowledged that Wang provided $50,000 toward the purchase of the Richmond property.

WANG'S DEFENCE

The real estate agent argued that the $50,000 she provided to her client should not be considered a loan because it wasn't provided with the expectation of repayment with interest.

"When asked what she would call the $50,000 towards the (Richmond property) deposit, if it were not described as a loan, Ms. Wang indicated that she did not know, though she subsequently suggested that one could consider it to be a gift," Pendray wrote in his decision.

"Ms. Wang stated that she and the client were friends, and that she had not thought much of providing the $50,000 at the time."

Despite Wang's suggestion that the money could be considered a gift, Pendray noted that she made efforts to secure repayment of it.

The money was wired back to Wang on June 29, 2016, after she and her client had exchanged WeChat messages about how and when she would be paid back, according to the decision.

In her defence, the decision indicates, Wang declined to say she had been repaid, insisting that the money had been "returned" in the same way one would return a car after borrowing it.

She also argued that the entire hearing had been unfair to her, submitting three times that it ought to be adjourned because the BCFSA had revised its allegations against her five times.

THE DECISION

Pendray rejected all of these arguments, writing that Wang has "long known the nature of the allegations against her" and that there was "no unfairness in proceeding with the hearing."

He concluded that both Wang and her client understood the $50,000 to be a loan, not a gift, and that Wang expected to be repaid.

"Even if I was to accept Ms. Wang's submission that in order for the $50,000 to be considered a loan, it is necessary that the loan have been provided in exchange for future repayment plus something more, the facts of this case lead me to the conclusion that there was, in this case, something more," Pendray wrote.

The chief hearing officer noted that Wang received a commission of $22,538.78 for her role in the transaction. She could not have received that amount, he concluded, if the client had backed out of the purchase for lack of funds.

"In order to receive that commission, the purchase of that property had to complete," Pendray wrote. "In order for the purchase to ever have had the chance to reach completion, the deposit on the property, as required by the contract of purchase and sale, would have had to have been paid."

Having concluded that Wang provided the client with a loan, Pendray determined that doing so was a conflict of interest under the provincial Real Estate Services Act, and that Wang had committed misconduct.

He ordered Wang and the BCFSA to make submissions on what sanctions Wang should face for her behaviour, with specific penalties to be determined at a later date.