“If we had known, we would never have bought it”

Caroline Des Becquets and Marc Gagné discovered with amazement that they could not be compensated by the Professional Liability Insurance Fund of Real Estate Brokerage of Quebec (FARCIQ) for the problems they had with the purchase of their acquired house of two real estate brokers. A clause unknown even by experts.

FARCIQ is a professional liability insurance fund that offers protection in the event of fault, error, negligence or omission that could be committed by a brokerage license holder in the exercise of his activities. However, this protection is excluded when a broker sells a house he owns.

Myriam Marouani and Sirivanh Malichanh, from the Sutton Group on the island, represented themselves with their brand and displayed their house for sale on the Centris real estate platform.

The case was the subject of a complaint by the trustee of the Organisme d’autoréglementation du courtageimmobilier du Québec (OACIQ) against the two brokers. Hearings before their professional tribunal will take place over the next 12 months.

However, even if the disciplinary committee were to conclude that the two brokers committed ethical misconduct, the sanctions (fines, license suspensions or others) would affect the brokers and would do nothing to compensate the victims.

The house was not what they thought they saw

Brokers Myriam Marouani and Sirivanh Malichanh paid $330,600 in 2017 for the property, which they sold for $880,000 to the couple Des Becquets and Gagné three years later after having done major work.

The couple fell in love with the 1965 house, renovated up to date and with a view of the river. The transaction closed in 2020 and the couple was not represented by a broker.

“We felt secure buying a brokerage house. But if we had known the true history of the house and that we would have to pay $300,000 more than expected, we would never have bought it, never,” says M, on the verge of tears.^me Spoilers.

For four years, the couple has had to deal with a series of structural problems and water infiltration, which led M^me Des Becquets on sick leave, according to what she told The Press.

The brokers, for their part, claim to have repaired the defects that affected the property at the time they owned it. According to them, the problems denounced by the couple after the transaction were visible during the pre-purchase inspection or were the result of normal wear and tear of an older property.

The couple claims that when they bought the house, they were unaware of the existence of a pre-purchase inspection report carried out by Almo Inspection in 2017 for brokers which noted the presence of mold and traces of water infiltration as well as a residential evaluation report as part of a financing request prepared for the brokers by the B2B Bank, which ultimately refused to finance the purchase.

Obligation to disclose reports, regardless of year

These two reports, obtained as part of the civil action brought by M^me Des Becquets and Mr. Gagné, however, should have been disclosed to the buyers prior to the transaction, confirmed by email to The Press the OACIQ.

“If the real estate broker is aware of facts mentioned in an inspection report, he has an obligation to communicate them to the buyer. He must disclose any factor of which he is aware and which may adversely affect the buyers or the very subject of the transaction.

“Whether the broker is the seller of his property or is the intermediary (seller’s broker), he has the obligation to transmit all the information he possesses concerning the property,” affirms the OACIQ.

According to Marc-André Harnois, general director of the Consumers’ Association for Quality in Construction (ACQC), all owners, whether they are brokers or not, should be obliged to provide inspection reports. “These reports show that I am aware of certain things. If I do not declare this to a potential buyer, it is fraud (fraudulent maneuvers intended to deceive). I have to pass on what I know,” he says.

Not when the broker is also the seller

The FARCIQ covers this type of omission on the part of a real estate broker unless he is selling a property that he owns.

The general director of the ACQC maintains that he did not know that by purchasing the house from a broker who represents himself, the consumer loses the protection of FARCIQ.

“I’m really not convinced that the average consumer understands this nuance when dealing with a broker. Especially since the latter possibly promoted himself as a broker, possibly made a marketing argument out of it,” he underlines.

Other problems

This isn’t the only problem buyers face. In addition to structural problems and water infiltration, the concrete of the swimming pool crumbled in the spring following the purchase of the house. Three specialists working in the sector testify by email that they have already noticed the problems at the time when the brokers were owners. The three wrote to the couple that M^my Marouani and Malichanh had asked them to “seal the cracks”, do a “surface repair” and “temporary work”, rather than carrying out work costing around $20,000.

Another issue: the couple Des Becquets and Gagné assert that when they indicated that they wanted to make an offer on the house, the two real estate brokers would have imposed an unusual condition on them: to submit a promise to purchase on their property , they demanded that they be granted the mandate to sell Mr. Gagné’s condo and specified that they would have a 4% commission for this sale, as indicated in the paragraph added to the promise to purchase.

Questioned by The Press on this unusual condition of sale, the OACIQ indicated by email that no, “a real estate broker must not urge a person in a pressing and abusive manner to use his professional services. In addition, a real estate broker must at all times avoid placing himself in a real or apparent situation of conflict of interest.”

Failure to disclose prior reports is normally covered by FARCIQ. The couple therefore only learned when their request for compensation was refused, six months after filing, that it was useless.

“The absence of intervention from the Insurance Fund does not mean that we condone the actions of the brokers Myriam Marouani and Sirivanh Malichanh,” writes the FARCIQ claims service analyst in his letter of refusal.

Another request for compensation, this time made to the Real Estate Compensation Fund (FICI), took two and a half years before being refused.

The fund, which compensates consumers who do business with a broker or agency and who are victims of fraud, fraudulent tactics or embezzlement during a transaction, concluded that there is no preponderant proof that the couple was the victim of fraud or fraudulent maneuvers on the part of the brokers who sold them the house. The couple has requested a review of this decision and is currently awaiting a response.

View the document OACIQ protection mechanisms