Law Times

Law Times • apriL 16, 2018 Page 5 www.lawtimesnews.com Court dismisses appeal in disbarment of real estate lawyer BY AIDAN MACNAB For Law Times T he Ontario Superior Court of Justice has dismissed an appeal brought by a former lawyer whose licence was re- voked by the Law Society of Ontario for her participation in mortgage fraud. The appeal in Chin v. The Law Society of Upper Canada came to the Superior Court af- ter two law society tribunals found that Rebecca Chin had performed mortgage fraud in six real estate transactions and engaged in conduct unbecom- ing a lawyer for having "inten- tionally failed to protect her lender clients and attempted to mislead the law society," mak- ing Chin a "continuing danger to the public," according to the court's decision. Eldon Horner, a partner at Horner & Pietersma in Morris- burg, Ont., says the case could be an example of what happens when real estate lawyers do not give the time and attention nec- essary to their files. "The practice of real estate is not a commodity, it's a profes- sional service, and if you don't pay attention to your profes- sional obligations to all of your clients in every transaction, you're going to find yourself in this type of circumstance and it would appear that this is a law- yer who was at best far too busy and at worst was deliberately be- ing dishonest," he says. Overextended lawyers is a growing concern in real estate, says Horner, and the Law Soci- ety should be taking proactive measures, as opposed to just re- acting with punishment. "An awful lot of them have started to compete based solely on price, and when they reduce their price to get more business, there's a tendency to reduce the service and reduce the time spent on the file and that causes situations like this one," he says. The court's decision stated that, in Chin's first year in prac- tice, she performed between 300 and 400 transactions. "That's a very big number and, in my opinion, you would have a very hard time provid- ing professional services to any clients, especially when you're new," Horner says. Chin had been a lawyer since 2000 and was first was called to the bar in Hong Kong. In 2007, she received her call in Ontario. In the first transaction, closed in December 2007, Chin acted for the purchaser and the lender, and Chin's former col- league acted for the vendor, who sold the property for $248,000, after buying it three days before for $110,000. TD Canada Trust financed the purchase and asked Chin why she had not told them the transaction was a "f lip." Chin replied she knew it was a f lip but did not think it was suspicious or that she had to report it, according to the court's decision. Later, Chin was interviewed by a law society investigator and said she did not know it was a f lip until TD told her about it. Under sworn testimony to the investigator, Chin also said she had a colleague insert back- dated documents into the file to reference the f lip. Chin later told the law soci- ety she was unaware of the f lip before TD told her and denied backdating documents. In another transaction, Chin knew the purchaser and vendor were related but did not tell her client, the Bank of Montreal. In that transaction, the pur- chasers had originally agreed to pay $269,000 with a $5,000 deposit. The agreement was amended to increase both those numbers by $41,000, bringing the price of the property to $310,000, for which the bank provided $278,464. The original $5,000 deposit was already paid, but the vendor and Chin stated that $46,000 was in fact put down, according to the court's decision. Because of the size of the de- posit credited to the purchaser, the bank's mortgage advance was more than what was owed to close the deal. The purchaser received $16,900 and did not pay any- thing to close the deal. Chin did not tell this to her client, the lender. "That's the problem. So, there was an artificial price increase. The purchaser buys the property with no money down and gets $16,000 back," says Bob Aaron, partner at Aaron and Aaron in Toronto. In another transaction be- tween relatives, the lender — this time the Royal Bank — was made to believe the pur- chase price was nearly $70,000 more than it was. "When a lender advances money on a property, they do it based on the credit of the pur- chaser, the deposit of the pur- chaser and the purchase price," Aaron says. "If the deposit or the pur- chase price is faked by an artifi- cial value increase, which is not substantiated by the market and if it's a fake f lip, then the lender is advancing more money than they otherwise would because they're basing it on an artificial- ly inf lated value." Aaron says there is nothing inherently illegal about flip- ping properties between fam- ily members, but the nature of the transaction needs to be ac- curately communicated to the lender. "If family members f lip properties back and forth to each other, that's fine," he says. "But when the bank is misled as to what the real underlying cost is, then that's fraud." LT NEWS Visit gpllm.law.utoronto.ca Questions? gpllm@utoronto.ca Apply today. ONE YEAR | PART-TIME | FOR LAWYERS AND BUSINESS LEADERS Master the Law. Canada's leading law school offers a graduate degree in four unique streams: Business Law Canadian Law in a Global Context Innovation, Law and Technology Law of Leadership Untitled-6 1 2017-07-27 2:46 PM Bob Aaron says there is nothing inherently illegal about flipping properties between family members, but the nature of the transaction needs to be accurately com- municated to a lender.

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