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REIQ Journal : September 2008
28 LEGAL ISSUES In the Williams case, the seller alleged that her property, which had been listed with a real estate agent for sale, had been sold by the sales agent below its fair market value, notwithstanding that it was sold close to the price at which the seller had listed it. The seller based her case on the fact that the property had been on-sold by the buyer, pursuant to a “back to back” contract, for an additional $18,000. The first buyer was a property marketeering company. The seller alleged that the sales agent knew that the marketeer had purchased the property in order to immediately on-sell it to a second buyer for an inflated sum. Accordingly, the seller sought damages from the agent of the difference between the two contract prices, which was $18,000; plus a refund of the commission, interest on those sums at 10 per cent per annum, and exemplary damages predicated on the basis that the agent had engaged in “deliberate, intentional, contemptuous and contumelious disregard” of the seller’s interests and rights. The seller argued that the agent was aware of the “back to back” contract and knew that the marketeer was selling the property to a second buyer for a higher price, and yet had failed to disclose this arrangement to the seller, or to afford the seller a chance to sell to the marketeer herself for a higher price. The sales agent gave evidence that she had been contacted by a representative of a property investment company and asked to open the subject unit for inspection. The inspection was attended by the sales agent and two women, one a representative of the property investment company, and the second, the buyer to whom the investment company was showing the property. The agent was not introduced to the second woman, who turned out to be the second buyer of the property. The sales agent testified that she was not privy to any negotiations between the marketeer and the second buyer and had no reason to believe that the second buyer had any interest in the transaction. The sales agent had no involvement in the preparation of the second contract, nor did the agency receive any commission from the second contract. A representative of the property marketeering company gave remarkably frank evidence to the District Court that it was their standard practice to keep sales agents “in the dark” about the fact that, at the time that the marketeers were inspecting the property, they were in fact showing it to their clients for the purposes of on-sale at a profit pursuant to a “back to back” contract. The sales agent was entirely unaware of the conduct of the marketeer which, on balance, was not a surprise. It was the marketeer’s express intention to keep its client away from the sales agent, so that its client could not gain any appreciation or understanding of REIQ Journal September 2008