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Real Estate Licensee Suspended for Misconduct Involving Commission Misrepresentation
BCFSA found David Chian Wei Yang of Royal Pacific Realty Corp. committed professional misconduct and conduct unbecoming when he misrepresented his commission amounts to his brokerage.
BC Financial Services Authority (“BCFSA”) has suspended real estate licensee David Chian Wei Yang and his personal real estate corporation for six months after he admitted to conduct unbecoming and multiple instances of professional misconduct.
Yang was licensed as a trading representative with Royal Pacific Realty Corp. when the misconduct occurred. He misrepresented to his brokerage that his commission amounts were higher than his true commission in relation to five assignment transactions.
In all transactions Yang represented buyers who, after entering into an accepted offer on a property, transferred their purchase contract to a third party for a profit.
Yang also failed to avoid conflicts of interests by using his personal funds to assist his buyer clients.
In addition to the licence suspensions, BCFSA ordered Yang and David C.W. Yang Personal Real Estate Corporation to pay a discipline penalty of $10,000, which represents the maximum discipline penalty available under the legislation in place at the time of the misconduct. BCFSA also ordered that Yang pay $6,000 in enforcement expenses.
Yang admitted professional misconduct from 2015 to 2016 when he and his personal real estate corporation failed to:
- Accurately disclose in writing the commission amounts he received in relation to the assignments of properties for his clients. All of the assignment profits were received as gross commission by his brokerage, and Yang received the profits (minus brokerage fees) from the brokerage as his commission amounts. Yang then kept a portion of the profits as his true commission and paid a majority of the profits back to his clients. In doing so, he misrepresented to his brokerage that his commission was an amount higher than his true commission;
- Act with reasonable care and skill and avoid conflicts of interest when he used his personal funds to assist two transactions in closing by funding a $100,000 holdback requested by a buyer in December 2015 and funding a $100,000 deposit on behalf of a buyer in June 2016; and
- Provide disclosure of the representation and agency relationship to his clients in writing.
Yang initially told BCFSA that the commission misrepresentation had happened only once, but later admitted to misrepresenting the commission amount on four other transactions, all in Vancouver and Richmond. The listing commissions he received from the brokerage after brokerage fees totalled more than $2 million, but the true commission he received from his clients totalled approximately $466,000.
“The penalties imposed by BCFSA on this real estate licensee were the maximum allowed when the misconduct occurred,” said Jon Vandall, BCFSA’s Vice President, Compliance and Enforcement.
“In 2016, discipline penalties were increased to $250,000 per contravention in order to address and deter misconduct that harms homebuyers and the public interest. New safeguards were also put in place to bring transparency to the practice of contract assignments.”
Legislation introduced by the B.C government in 2016 amended requirements surrounding the assigning of contracts in B.C. to prevent a buyer from “shadow flipping.” The requirements provide for standardized contract terms ensuring sellers consent to assignments and receive any related profits, or receive notice if the standardized assignment provisions are not present in a purchase contract.
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Kate Bilney
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