What Happened After A BC Realtor Loaned A Client $50K For A Deposit

What Happened After A BC Realtor Loaned A Client K For A Deposit

On June 9, 2016, Metro Vancouver-based realtor Vicky Wang executed a contract of purchase and sale for a client of hers to purchase a property in Richmond for $1,688,000, with a deposit of $90,000.

The $90,000 for the deposit arrived in the trust account of Wang’s brokerage — Sutton Group West Coast Realty — in two installments, both on June 11. The first installment — $40,000 — came from the account of the purchaser. The remaining $50,000 came from the account of Wang herself.

At the center of a BC Financial Services Authority investigation, for which a decision was issued in May, is whether that $50,000 from Wang was a gift or a loan, and whether it represents a conflict of interest in either case.

In her testimony, Wang said that although she noted on a receipt record document that the $50,000 was “loaning to the buyer temporarily,” she did not see it as a real loan. Her argument, according to the decision, was that it was not a loan because she did not ask for any interest off of the $50,000, pointing to a dictionary definition defining a loan as an amount given to another party in exchange for future repayment of the loan value plus interest.”

Equally as critical to the case is the commission — $22,538.78, plus GST — Wang received for her services as the realtor, which she would not have received were it not for the money she provided the client for the deposit to close the purchase.

The managing broker at Wang’s firm at the time told the hearing officer for the case, Andrew Pendray, that Wang did not inform him that she provided money for the deposit, saying that he would have advised her not to do so, in order to avoid a conflict of interest.

According to the case details, however, it appears that Wang almost got away with it, as the BCFSA, which integrated with the Real Estate Council of British Columbia in August 2021, was not aware of the situation until a complaint was filed over a year later, on October 10, 2017, by — in a cruel twist — the client.

In the complaint, the client alleged that Wang had failed to provide the client with a 55% commission rebate — sometimes paid to buyers after a transaction closes — and that Wang had collected rental payments generated from the property on his behalf but failed to deposit the checks on time for several months.

While this was the crux of the complaint, the case ultimately became focused on the $50,000 and Pendray did not rule on commission rebates or rental payments.

According to a letter Wang wrote to the investigator, the client was the one who asked if she could lend her the $50,000 after they accepted the offer on the property, saying that she did not have enough money on hand in her account to pay the deposit .

Wang said she verbally agreed without hesitation, because she had been friends with the client for eight years at that point. Elsewhere in the case decision, Pendray notes that Wang described the client “like a friend or a sister.”

Wang said that the client went back to China shortly after the purchase and neither the client nor her husband — listed as the second complainant — mentioned when they would return the $50,000. The husband later wired her the money, but short-changed her, transferring only $49,982.50, before later returning the full amount.

“In her testimony at the hearing of this matter, Ms. Wang indicated that she felt that the client had taken advantage of her when the client had requested the $50,000 towards the deposit,” Pendray noted.

Despite the fact that she asked about when the $50,000 would be returned, Wang “subsequently suggested that one could consider it to be a gift.” She also said that she didn’t think the $50,000 was a conflict of interest because she provided it to the client after the offer was accepted, not before, so she shouldn’t be seen as having induced the client to make the purchase.

Wang said that subjects on the purchase were removed on June 27, but the client did not inform her of when the $50,000 would be returned, which “she did not feel good about” and which led to her asking the client to repay the amount.

In response, Wang says, the client asked him about a commission rebate, despite not having agreed to one previously.

Wang told the investigator that “she felt that the client had forced her to agree to the commission rebate, as Ms. Wang was worried that if she did not agree to that rebate, the client would not return the $50,000.”

Wang also argued that she was not “repaid” but rather the money was “returned” to her, comparing it to someone borrowing her husband’s car and then returning it.

Pendray, however, notes that even were he to accept the definition of a loan that Wang provided, that the loan has to 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 — pointing to the commission Wang received from the sale, which she would not have gotten otherwise.

“In sum then,” Pendray wrote, “I consider it to be more likely than not that Ms. Wang provided the $50,000 with a view of ensuring that she received her commission upon the completion of the purchase.”

Pendray also noted that he does not doubt that the client asked Wang for the $50,000 and that Wang felt like the client tricked him, but he still believes that the evidence shows that she provided the loan to ensure the purchase could proceed and she would receive it commissions.

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“The reality of the situation is that once Ms. Wang’s own money became part of the transaction for the purchase, she had a personal financial interest in the transaction beyond that which a licensee would normally have,” Pendray concluded, and that Wang did not take steps to meet her duty to her client to avoid any conflict of interest, and therefore “committed professional misconduct” as defined by the Real Estate Services Act.

The sanctions to be levied against Wang, if any, have yet to be determined and Wang will afterward have the right to appeal the sanctions.