Canadian Law

Martha, an 84 year old widow could no longer maintain her cottage property which she and her husband had owned for 40 years. The annual taxes and upkeep were more than she could afford and Martha had not felt well recently. She felt that she had no choice but to sell the property.

Martha contacted her nephew, Gary a local realtor who specialized in cottage properties and asked if he could find a buyer for the property. After listening to Martha discuss her financial and health problems Gary asked how much she wanted for the property. Martha told him that although she really had no idea of the value, the property must be worth at least $200,000.00. Gary told her that he would list her property for sale at that price.

Two days later Gary presented Martha with an offer of $195,000.00 from Lakeview Properties Ltd. When Martha asked what she should do, Gary recommended that she accept the offer since it was close to her price and Lakeview Properties Ltd. was a reputable developer. He also said that the real estate market was very slow and she might not get a better price. Finally Gary said that he would lower his commission from 5% to 4% ($7,800.00) if she accepted the offer. Martha didnt understand contracts or finances since her husband had looked after everything and, feeling pressured from Gary, she signed.

Before the sale was completed, Martha learned that Lakeview Properties Ltd. had entered into an agreement to sell her property for $400,000.00 to Walter. Martha also learned that Gary was the sole owner of Lakeview Properties Ltd. She had thought, based on what Gary had said, that Lakeview Properties Ltd. was a Toronto developer.

Marthas daughter, Mary when informed of the circumstances also discovered that Garys licence as a realtor has been suspended. Section 22 of the Real Estate & Business Brokers Act states:

S.22(i) No person shall trade in real estate as a broker or salesperson unless that person holds a valid licence under the Act.

(ii) Any person who violates Section 22(i) shall be subject to a fine of not less than $5,000.00.

Martha does not want to complete the sale and comes to you for advice.

Required:

(i) Discuss whether there is any legal basis for Martha to refuse to sell the property or pay commission.

(ii) Assume that Martha learns that Gary owns Lakeview Properties Ltd. after the property is resold to Walter. Does she have any basis to insist that Walter reconvey the property to her?