A disciplinary decision related to a multimillion-dollar real-estate scandal in Saskatchewan has kicked off a war of words between the provincial regulator and the professional realtor association.
Saskatchewan Realtors Association (SRA) chief executive Chris Guérette is calling for an inquiry and overhaul of the Saskatchewan Real Estate Commission over what she called “wholly inadequate” sanctions and suspensions for two local realtors who breached provincial and commission rules.
The two men, Paul Chavady and Jerry Hallgrimson, are business partners who performed key roles for Epic Alliance Inc., a real-estate investing and property-management company that collapsed in 2022, after it was found to have broken securities trading rules in raising $211-million from investors across Canada.
“Real estate is built on trust,” Ms. Guérette said in an e-mail to her association’s members on Oct. 1, criticizing the penalties faced by Mr. Chavady and Mr. Hallgrimson. “That trust depends on consumers knowing that the people participating in our profession are held to meaningful standards of ethics, accountability and transparency, and that there are meaningful consequences when those standards are breached.”
According to consent agreements released on Oct. 1, the real-estate regulator found that on 67 occasions, Mr. Chavady and Mr. Hallgrimson violated its own bylaws and the provincial Real Estate Act by failing to represent the interests of buyers when they were acting in dual agency for both buyer and seller. Consent agreements are typically a substitute for formal hearings and judgments, and are negotiated with participation from those facing the allegations.
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The consent agreements detailed dozens more violations related to failing to remove conditions on sales contracts, and in one case, failing to disclose the presence of asbestos in a home they sold in dual agency.
The two realtors are each required to pay $100,000 in cumulative fines to the commission and serve a six-month suspension. Mr. Hallgrimson’s suspension begins immediately, but Ms. Guérette noted Mr. Chavady’s suspension does not begin until six months later in March. She said this allows at least one of the two business partners to continue practising real estate while the other is suspended.
“What the SRA states to be a ‘wholly inadequate response’ are the most punitive sanctions on record in Saskatchewan,” the regulator’s executive director and registrar Aaron Tetu said in a statement on Oct. 2, responding to Ms. Guérette’s concerns. “The evidence demonstrated that Mr. Chavady and Mr. Hallgrimson’s conduct constituted a complete lack of basic professional duties and representation but fell short of demonstrating criminality.”
In an e-mail to The Globe and Mail, Mr. Tetu said that Saskatchewan’s legislation does not require proof of criminality to permanently revoke the licence of a realtor. He said the six-month, staggered suspensions fell “within the range of reasonableness for the hearing panel.” He suggested the negotiated agreement was a better outcome than a hearing, given the large amount of evidence in the case that could have taken more time to sort through “and may have yielded a less predictable result.”
Before its collapse, Epic Alliance bought and sold more than 700 homes in Saskatoon and North Battleford, Sask., with funds borrowed from investors. No one has been charged criminally. However, the two founders, Rochelle Laflamme and Alisa Thompson, agreed to a settlement in 2024 with the province’s Financial and Consumer Affairs Authority to pay $300,000 in fines and accept a 20-year ban on trading or working in securities.
Mr. Chavady and Mr. Hallgrimson were key players in the Fund-a-Flip and Hassle-Free Landlord programs offered to investors by Epic Alliance. According to a report from bankruptcy trustee Ernst & Young Inc., investors gave Epic Alliance $170-million to buy rental properties in Saskatoon and North Battleford between 2014 and 2021. That investment was mainly in the form of mortgages that were “in excess of the properties’ purchase price in order to provide funding to renovate the properties.” The company collected more than $14-million in excess mortgage money.
Of the 700 homes, about 280 Fund-a-Flip properties were sold to other Epic Alliance investors for $72.6-million, typically with a conventional mortgage and 20-per-cent down payment from the buyers, who were represented by the same agent as the sellers. The 67 dual-agency sales referred to in the regulator’s disciplinary order were from this total.
According to EY, most of those properties sold as Hassle-Free landlord properties had received minimal renovations. In one case, it could find only $824 worth of renovation costs spent on a home purchased for $198,000 that was appraised for $265,000 one year later, even though “interior pictures of the kitchen and bathrooms showed outdated appliances, countertops and cupboards which were not indicative of a renovation occurring.”
The same day that home was listed, it was sold to an Epic investor for $260,000 – a $62,000 gain after $824 in renovations. The listing agents received $1,700 for the sale.
“This was a big deal, and I’m still waiting for someone to do something about it … to make sure it doesn’t happen again,” said lawyer Mike Russell, who represented 120 Epic Alliance investors through the court-ordered insolvency of the company. The investors collectively lost about $10-million, Mr. Russell said. He said the company had almost no money left to recover for his clients.
Ms. Guérette expressed frustration that the regulator’s consent agreements did not name Epic Alliance as the party that the two men dealt with, referring to the company only as “InvestCo.”
“The decision doesn’t say Epic Alliance, but it’s common knowledge in Saskatchewan. It is a failure of that consent order that it’s not very clear,” she said in an interview.
Mr. Chavady confirmed that the regulator had agreed to leave out the company’s name in the consent agreements. Speaking on behalf of himself and Mr. Hallgrimson, he said it was unfair to tie them to Epic Alliance, and disputed that the penalties were light. “It’s been quite a nightmare for us. Frankly, when weighed against what’s been published and what’s there, I would say it’s borderline heavy-handed,” he said in an interview.
Ms. Guérette said her association has moved quickly to close a loophole in its own rules that would have allowed either of the realtors to access its services and tools as “administrative assistant and business partner accounts (non-members)” while a suspension was pending.
Ms. Guérette said the real estate commission needs an overhaul so it can act more quickly and effectively on disciplinary matters. “You cannot have a weak structure and culture at the top and expect to have a strong corporation,” she said.
Editor’s note: Due to incorrect information provided by the source, a statement attributed to the Saskatchewan Real Estate Commission’s Aaron Tetu stated that Saskatchewan’s legislation requires proof of criminality to permanently revoke the licence of a realtor. Mr. Tetu advised the Globe after publication that proof of criminality is not required to permanently revoke the licence of a realtor.