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Sunday, February 25th, 2024

B.C. realtor fined $258,000 for selling home twice

By Mark Weisleder

A B.C. real estate agent was fined $258,000 when he unilaterally cancelled a contract to sell a home and resold it to a second buyer for a higher amount.

Hwang Soo Lee of Surrey, B.C., ended up having to compensate his first buyer for behaviour described by a judge as “high-handed and outrageous.” The lesson is that sellers who think they can change their mind and get out of a deal, should a better offer arise, must beware of the consequences.

Here’s what happened:

In mid-January 2009, Lee signed a deal to sell his home in Surrey for $740,000. He needed to sell the house in a hurry, so the price was $26,000 less than he owed on the mortgage and the commission payable to the buyer’s agent.

But before that deal closed, Lee sold the home to a second buyer for $779,000, which would have covered all his costs. In an effort to get out of the first deal, he refused to let the buyers, Kundan and Puja Khullar into the home to do a home inspection. Then he tried to change the terms of the deal by increasing the price, without any right to do so.

Lee figured out a way to close the deal with the second buyers without obtaining a release from the Khullars. The Khullars were not able to get something registered on title in time to stop the second deal from happening. Prices had started to escalate in the area and after losing their opportunity to buy Lee’s home, the Khullars bought a smaller home, two doors away, for $917,000.

The Khullars sued Lee for $258,000, which they calculated as the difference in price between the smaller home they purchased and the one Lee sold them and then cancelled. The Khullars had an appraisal that stated that on the date they signed with Lee for $740,000, the home they eventually bought was worth $81,000 less than what they offered Lee.

In his December 2011 ruling, B.C. Supreme Court Justice Randall S.K. Wong awarded the $258,000 in damages to the Khullars. The judge said: “Mr. Lee’s duplicitous behaviour was high-handed and outrageous. Since he was also negotiating in his role as a realtor in the sale of his own property, his actions were not only surprising and unprofessional, it was simply dishonest.”

Related: Agent sues for $3,340 after deal goes sour

Among the lessons: Buyers can sue to force you to sell to them, or they can sue you for the difference if they have to find another similar home. If the real estate market is changing, this may cost you even more.

If sellers want to accept a second offer, it must be conditional on the first agreement being properly cancelled. You need to get legal advice to make sure you both word the condition correctly in the second offer and to make sure the first deal is properly terminated before proceeding with the second deal.

The seller does not have an obligation to tell their first buyer about the second buyer. Sellers cannot use bad faith in trying to cancel the first deal. However, for example, let’s say the first buyer does a home inspection and then tells the seller that unless they fix something or give a credit, they will not go ahead with the deal. Now the seller, knowing he has another buyer waiting, can just say no. That is not acting in bad faith.

The other lesson of this case is to be very careful when you act for yourself in any real estate deal. Always get expert advice before you make any signed commitment. Remember, a person who acts for himself usually has a fool for a client.

Related: They walked away from house deal and were sued

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