OSOYOOS TIMES-October 27, 2010

By Paul Everest – Osoyoos Times

The Real Estate Council of British Columbia has reprimanded another Osoyoos realtor for professional misconduct.
Last month, the council ordered Kenneth Davreux, managing broker of Osoyoos’s Strata Pro Property Management Services, to pay a $1,500 discipline penalty and $1,000 in enforcement expenses to the council.
The council is B.C.’s licensing and regulatory body for realtors.
Davreux was also ordered to successfully complete a “Trading Services Remedial Education Course” and an “Advanced Strata Management Course” as provided by Vancouver’s Langara College.
Furthermore, Strata Pro Property Management Services was ordered to undergo and pay for an inspection of its books and records within six months.
The reprimand stems from two issues where the council discovered that Strata Pro violated B.C.’s Real Estate Act through improper bookkeeping and making a payment out of a rental account that held a negative balance and for failing to notice or report that a licensee acting on behalf of the company had entered into a tenancy agreement before she was employed with the company and while her licence was inoperative.
In September, 2008, an auditor from the council conducted an office-and-records inspection of Strata Pro’s financial records and accounts dating from April 30, 2008, to Sept. 22, 2008.
The inspection found that Strata Pro failed to complete trust liability listings for the company’s rental pooled trust account for July and August of 2008.
Trust liability listings show how much money is being held by a management company on behalf of each client or property owner while a pooled trust account holds cash from various property-owning clients.
When Davreux sent the completed records for the pooled rental trust account for August and September, 2008, the council’s accounting and auditing staff found that the account was in overdraft by $13,628.55, which goes against policies set out in B.C.’s Real Estate Act.
The accounting and auditing staff advised Davreux to fix the overdraft problem and to provide the council with information on the trust account for October and November of 2008.
In December, 2008, Davreux provided the staff with a summary of the outstanding balances in the pooled rental trust account for each of Strata Pro’s clients as of September, 2008, which totalled an overdraft of $7,865.09.
Davreux eventually applied for a line of credit to cover the overdraft and on Jan. 16, 2009, he submitted information to the council confirming that $7,865.09 had been transferred into the pooled trust account to take care of the overdraft.
Information about the account from December, 2008, revealed an additional shortfall in the account of $1,206.09.
The council’s accounting and auditing staff requested confirmation that the shortfall be addressed by no later than March 5, 2009, which Davreux provided.
On March 24, 2009, Davreux sent a written response to the council explaining that the shortages in the rental pool trust account were due to accounts receivable from clients which Strata Pro erroneously believed should be included in the total trust reconciliation.
Because Strata Pro did not believe there was a negative balance in the account due to this incorrect belief that their clients’ accounts-receivable totals should be included in the company’s total trust reconciliation, the company did not believe the account had a negative balance and so did not notify the accounting and auditing staff of any problem, Davreux told the council.
He also said Strata Pro took immediate action to fix the cash shortfall once it was learned that the negative balance should not be included in the pooled rental trust balances.
According to a consent order against Davreux, however, the council remained concerned with the length of time it took Strata Pro to fix the problem.
The second issue behind Davreux’s reprimand stemmed from a tenancy agreement executed by Sandra Rea in January, 2009.
According to council documents, the council was notified in February, 2009, by the managing broker of Desert Aire Realty that Rea had rented out a property on behalf of Strata Pro, even though Desert Aire held the management agreement for the property with the property’s owners.
The agreement was dated Jan. 15, 2009, but Rea was not licensed by the council at that time and she was not employed by Strata Pro until Jan. 19, 2009.
Strata Pro did not receive the agreement or its accompanying deposit until Feb. 1, 2009.
Later that month, Davreux informed the council that he had discovered that Rea had prepared a lease on behalf of Strata Pro charging the tenants $650 a month.
She had altered the lease agreement, however, to increase the rent by $200, which she paid out of her own pocket.
At that time, Davreux advised the council he was terminating Rea’s licence and she remains unlicensed at this time.
This is the third time the council has reprimanded Davreux since 2007.
The council had found in December, 2007, that Davreux had committed professional misconduct in his responsibilities with Strata Pro when he failed to ensure an accountant report was filed with the council by a certain date.
And in April, 2009, Davreux was found to have committed professional misconduct for failing to file an accountant’s report with the council by a prescribed date and failed to ensure records were kept up to date.
In an interview on Oct. 25, Davreux said he felt the council has acted in a “heavy-handed” manner towards him even though he took the appropriate courses of action to fix the problems identified by the council once they came to his attention.
He said he fired Rea as soon as it became clear inappropriate transactions were taking place and paid off the overdrafts when it became clear Strata Pro had made an honest error in its rental management accounts.
Davreux said he understands a firm’s managing broker is responsible for the company and its employees, but added he feels the council is being unfair in how it punishes realtors.
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