Helmut Klingel and his dog Remy
By Bill Johnston
It was October of 2007 and Helmut Klingel was a happy man. He double-ended a nice country property near Windsor, Ont. with a November closing. Everyone knew that the septic system on the property was under repair, because it had been dug up when the deal was made. The buyer was a senior manager with a local construction company, so he understood the issue. The seller undertook to do all necessary repairs by closing and a clause was inserted in the offer that stated: “The Seller shall complete the repair of the septic system prior to completion of this transaction.”
The seller thought he had repaired the septic system, but after closing it was discovered that a new system was required. Like a good professional, Helmut met with the clients to resolve the matter and the seller paid for a new system to the tune of about $25,000. At that point, things started to turn sour for Helmut. The buyer thought that Helmut and the seller knew that the septic system needed not just repair but replacement before closing, and complained to the Real Estate Council of Ontario (RECO) that Helmut had intentionally withheld that information.
RECO launched an investigation and charged Helmut with various offences, including fraudulently withholding information from the buyer and inserting a “vague” clause regarding the septic system in the agreement, to the detriment of the buyer and the seller. Helmut was shocked, because no one knew about the need for replacement of the septic system until after closing. The buyer simply was misinformed. Also, Helmut felt that the septic system repair clause was adequate to protect the interests of the buyer and the seller.
RECO disagreed and the matter dragged on for several years. In early 2012, Helmut and his broker contacted me to represent Helmut in the matter. Finally, a pre-hearing was scheduled for June 28, 2012. At the pre-hearing, the RECO lawyer and RECO’s head of discipline proposed a fine of $18,000 for Helmut’s allegedly fraudulent and unprofessional behaviour. This despite the fact that they had a letter from the seller and other documentation confirming that no one knew that the septic system needed replacement until after closing. When I pointed this out to them, the RECO representatives had a private consultation and agreed to drop the allegation of fraud as long as Helmut agreed to a $12,000 fine for the allegedly “vague” septic system repair clause in the offer! I was irate, and said that I thought they were trying to intimidate Helmut into paying the outrageous fine to avoid a hearing. We told them that we would “see them in court”.
The hearing was held on Nov. 6, 2012, fully five years after the deal was made. Through all of that time, Helmut had the spectre of false accusations hanging over his head. The seller and the buyer were called as witnesses by RECO. As is standard procedure, a panel of three sat as “judges”, two of whom are experienced real estate professionals. The panel found that RECO had provided no evidence to support its allegations against Helmut. They concluded: “The registrar (RECO) simply failed to prove that the registrant, Helmut Klingel, had breached any of the sections of the Code of Ethics he was alleged to have breached…… There was simply no evidence presented at the hearing to support such allegations.”
The panel went on to say: “…Mr. Klingel provided competent and conscientious service…. The panel also finds that at no time did Mr. Klingel act unprofessionally.” After five years of doubt, Helmut was completely exonerated.
The panel invited us to claim costs from RECO for pursuing the unwarranted charges against Helmut. The panel awarded him the maximum amount of costs permitted by law, and in doing so stated: “… the panel has concluded that (RECO’s) conduct or course of conduct in this proceeding was ‘unreasonable’. In the panel’s view, given the lack of evidence to support the serious allegations made against Mr. Klingel, it is the panel’s determination that this matter should not have proceeded to a disciplinary hearing.” The panel went on to say that RECO “… had ample time… to realize that there was a lack of evidence against Mr. Klingel,” but still proceeded with its false accusations anyway.
Bill Johnston
Throughout this sordid affair I had the distinct impression that the RECO employees involved in the matter were less interested in finding the truth than they were in extracting a large fine from Helmut. I hope I am wrong, but I have heard that other registrants may have fallen victim to the same tactics. Also, while I have met several RECO employees who are bright and professional, I have also met several who appear to lack the competence that we as paying members of RECO have the right to expect. A reading of the panel’s entire reasons for their decision will demonstrate what I mean.
Helmut is back at work and feeling vindicated, but he has a lighter wallet and a much dimmer view of RECO and its employees than he had in 2007.
Bill Johnston is manager of the 276 Merton Branch of Bosley Real Estate in Toronto and a past-president of the Toronto Real Estate Board.
