A Lower Mainland real estate agent has been suspended for 45 days and must pay $8,000 in penalties after he failed to disclose he was also the owner of a construction company that purchased a multimillion-dollar home and then tried to flip it.
The disciplinary decision was one of two released this week by the Real Estate Council of British Columbia involving New Coast Realty.
The council launched a broader investigation into New Coast and its links to "shadow flipping" last year after a series of stories in The Globe and Mail. That investigation is continuing.
Shadow flipping, or contract assigning, happens when a property is resold to a new buyer before a deal between the seller and a previous buyer has closed. Typically, the profit in such deals has gone to the real estate agents or speculators involved, not the original sellers.
In a statement, New Coast said it accepts the council's findings in the two cases.
"New Coast Realty works diligently to provide outstanding real estate services and to be in full compliance with all rules and regulations," it said.
In one of its decisions, the real estate council ordered Xiao Zhong (Jordan) Guo to pay a $5,000 disciplinary penalty and $3,000 in enforcement expenses after it found he committed professional misconduct.
Because the incidents involving Mr. Guo occurred before Sept. 30, 2016, when new provincial legislation took effect, he faced a maximum disciplinary penalty of $10,000.
If the incidents had occurred after that date, he would have faced a maximum fine of $250,000 for every contravention.
The council said Mr. Guo offered $7.5-million for a Richmond home in 2015 through his company, Vancouver JIA Construction Ltd.
The council said Mr. Guo and New Coast were listed as the designated agents for the buyer, but Mr. Guo did not disclose to the seller that he was also a shareholder, director and officer of the construction company.
After the offer was accepted, Mr. Guo attempted to sell the home through assignment for $7.9-million, the council said.
It said Mr. Guo did not have the owner's permission to flip the Richmond property through assignment. It said he also attempted to assign a West Vancouver home without authorization. In addition to the financial penalties and the suspension, the council said Mr. Guo must successfully complete a real estate remedial education course and be under the enhanced supervision of a managing broker for at least one year.
Mr. Guo, who began working in real estate in 2014, told the council he had not understood the rules around disclosure and the authorization needed to market a property. He said he has since completed additional training.
He reiterated those points in an interview Wednesday.
"I didn't take enough training. There are so many rules I didn't know," he said. "So after those incidents, I attended those training [sessions]."
Mr. Guo, who recently left New Coast for another firm, said he believed the discipline was significant – particularly the suspension.
Marilee Peters, a spokeswoman for the real estate council, when asked about the size of the disciplinary penalty noted Mr. Guo's case occurred under the old system, not the new one that allows for larger fines. Ms. Peters said she could not provide a timeline for the broader investigation into New Coast, though she said the firm is under licence restrictions.
"This is a complex investigation," she said in an interview.
In the second case involving New Coast posted to the council website this week, it ordered Qing (Daniel) Deng to pay a disciplinary penalty of $3,000 and enforcement expenses of $1,500.
The council said Mr. Deng failed to list all of the representatives involved in a sale. It said he also failed to quickly disclose to the seller changes involving the commission structure as well as a payment to the seller's friend, who had referred Mr. Deng's services.
The council said the seller did not file a complaint.
Mr. Deng in a phone interview said the matter was complicated by the fact the seller made a lengthy visit to China soon after the agreement was entered into and was not easy to reach.