Real-estate ‘flipping’ a breach of trust

Re: “Real-estate fraud allegations will be probed, province says,” Feb. 9

I am surely not alone in finding the news about “shadow flipping” in the Vancouver real estate market profoundly depressing.

The Supreme Court of Canada has confirmed that Realtors are in a fiduciary relationship with buyers or sellers with whom they have an agency agreement. This means that they have a trust-like obligation to act in their client’s best interests.

Such an obligation has been described as a duty of loyalty, and a Realtor who profits from breaching this duty has been unjustly enriched. I am therefore having a difficult time understanding how using an “assignment clause” in a contract with a seller to justify such enrichment is consistent with this duty of loyalty, however legal it may be contractually. In this sort of situation, should not trust law — or what courts have called “good conscience” — trump contract law?

An obsession with land prices and even sharp practice has a long history in Vancouver. As a member of a literary club that flourished there between 1914 and 1928 said, the club was an “outlet for whatever small talents we possessed in a city in which the buying and selling of real estate was the preoccupation of the majority of the inhabitants.”

My memory does not, of course, go back that far. But I do recall the crash of the early 1980s, when a sudden spike in interest rates ruined many slick operators in Vancouver who had been flipping houses and even — like today — interim sales agreements. And it was sudden: That is how bubbles burst. Oliver Goldsmith, in his 1770 poem The Deserted Village, saw the larger danger: “Ill fares the land, to hastening ills a prey,

Where wealth accumulates, and men decay.” Hamar Foster Victoria