An Ottawa entrepreneur who pleaded guilty to fraud on a disguised auto loan in 2009 is back in court — this time as a plaintiff, putting his latest reputation to the test. I accused three industry groups of trying to hurt me. Venture and banish a self-proclaimed disruptor from the established turf of the real estate industry.
Michael He Ryan O'Connor, who ran a chain of used car dealerships in Ontario and Quebec, is now the founder and CEO of online real estate auction platform He's Unreserved. This allows people to buy and sell homes like oversized his eBay.
In a civil lawsuit filed in mid-July, O'Connor's firm sued the Ottawa Real Estate Board (OREB), the Ontario Real Estate Association (OREA), and the Canadian Real Estate Association (CREA) for defamatory claims. claim to have issued a statement. Unreserved is trying to scare consumers away with its novel approach to selling homes.
It also supervises these three organizations on behalf of all real estate agents and brokers registered in the capital and operates an exclusive central listing network for properties known as the Multiple Listing Service (MLS). organization) claims to have been unfairly lobbied. Regulators are seeking to end decades of legal exemptions critical to Unreserved's business.
OREB, OREA, and CREA all say they believe the Unreserved claim is baseless.
Neither claim has been proven in court.
Meanwhile, the CBC uncovered court documents dating back more than a decade to him, and the state revoked O'Connor's license as a car salesman. It details the history. He pleaded guilty to two counts of fraud involving him inflating a buyer's income in order to qualify for a used car loan that the buyer could not afford. After hundreds of customers complained of unmanageable debt in 2007, the RCMP raided one of O'Connor's car dealerships. , filed a lawsuit against him. ``I paid the price. said O'Connor.
O'Connor said he believes he's rebuilt trust — first online dealer-to-dealer vehicle auctions where he pivoted to the platform and now has similar real estate model is adopted.
The current lawsuit reveals several competing interests, according to real estate law experts, as new legal battles begin. Billions of dollars in commissions and fees for realtors. Limitations of regulation in protecting consumers and enforcing ethical codes within the industry.
As a result, observers say legal battles can be costly and protracted.
Online property bidding angers industry
Founded in 2021, Unreserved has positioned itself as a real estate industry disruptor. I'm calling it.
The tech start-up will raise about $34 million in venture capital in early 2022, with more than 250 properties in Ottawa and several other Ontario cities in an unconventional way. It is said that it was put up for auction. traditional real estate company.
The company's website allows users to bid and buy anything from $250,000 condos to multi-million dollar single-family homes "with the click of a mouse" in his real-time auctions. I can do it. explained.
Prospective buyers can register to bid in increments as low as $2,500 after submitting a mortgage pre-approval from their bank.
While laws prohibit traditional realtors from sharing content from competitive bids on homes, Unreserved allows participants to view their entire bid history. can see
This site takes advantage of the Ontario Real Estate and Business Brokers Act (REBBA) exemption to allow auctioneers to buy and sell real estate outside of the normal regulation of brokers. You can do this.
The broad exemption dates back to his 1950s and was originally intended to be used for auctioning family farms.
He is one of Canada's largest lobbies with more than 90,000 members on dozens of real estate commissions. One of his groups, the OREA, offers auctioneers exemptions for "trying to buy homes." A loophole with terrifying implications for unsuspecting consumers." website in June.
OREA also commissioned asurveythat found that "70% of Ontarians supported regulation of auctioneers selling homes in a public bidding process." there are,” he said.
The association declined to speak to him for CBC, but CEO Tim Hudak said in a statement that real estate auctioneers have a "serious adverse effect" on consumers. said it was affecting
"OREA is not afraid to stand up to protect Ontario home buyers and sellers," the statement read.
Two other groups named in the Unreserved lawsuit — OREB and CREA — also use online auction platforms warns consumers about buying and purchasing sell the house
"We feel it was a joint effort on all fronts to pressure the government to repeal [this exemption]," O'Connor said.
"They're doing it all in the name of consumer protection...and when you peel the layers off, it's just a lie."
In the civil lawsuit, OREB, OREA, and CREA contacted the state's real estate regulator, the Ontario Real Estate Council (RECO), which later Claims to be Minister of State. The government and consumer services are lobbying to shut down Unreserved's business.
OREB and CREA both declined to interview him with CBC.
Billions of dollars at stake
Mark Morris, a real estate attorney and former lecturer at the Ontario Real Estate College, was not involved in the case. , spoke of a legal battle over the auctioneer's exemption. It is inevitable because "there is money in it".
"If this starts disrupting tens of billions of dollars in real estate," Morris said. End of the rainbow.
Morris noted that real estate associations, like other regulated professions such as law and medicine, naturally protect their control over the industry. I added that there are
"It's kind of their job, actually," he said. “They represent a lot of people who would benefit greatly from exclusivity.”
Founders indicted for fraud
is not the first lawsuit against consumer protection law.
In the early 2000s he founded his Find-A-Car Auto Sales & Brokering Inc. He operated a small chain of used car dealerships registered under the name
.
In 2007, the RCMP issued a search warrant for items seized from Find-A-Car's Kingston location and premises.
O'Connor has since received complaints from hundreds of customers who claimed they faced financial bankruptcy after signing auto loans with Find-A-Car, resulting in more than $5,00011 He was charged with fraud, document forgery, and a global fraud of over $5,000.
The indictment alleges that O'Connor's business "deliberately [obtained] credit for those who were ineligible and unable to pay their debts." I did.” Making false statements in writing to financial institutions.
In December 2009, O'Connor pleaded guilty to two counts of his fraud over $5,000. He received a conditional sentence shortening his sentence by two years to one day and was placed under house arrest for his first six months.
Find-A-Car went out of business and O'Connor testified that he liquidated inventory to pay off bank loans related to the business.
In 2011, the Ontario Automobile Industry Council (OMVIC) Licensing Tribunal, which regulates all automobile sales in the province, canceled O'Connor's registration, effectively denying him the right to sell the car. deprived.
"His past conduct gives reasonable grounds to believe that he will not conduct business in accordance with the law and with integrity and integrity," the court wrote in its judgment.
O'Connor now says that he 'was wholly owned everything that happened in that business'.
"Twenty years ago I made some mistakes," he said. "I was surrounded by some of the wrong people."
In 2016, O'Connor founded EBlock, an online dealer-to-dealer vehicle auction platform, after which he sold cars. I re-registered to
"I was able to get his second chance and... pivot to technology," he said.
Wholesale auctions are exempt from the Automobile Dealers Act and do not need to be registered.
This business grew rapidly and its parent company, his E Automotive Inc. will launch his $1 billion-plus initial public offering on the Toronto Stock Exchange in 2021.
O'Connor said he had sold most of his positions in the company and resigned from his board.
He declined to disclose how much he made from his EBlock, but said the profits were "life-changing."
His latest business, his venture, his Unreserved, applies similar online his auction philosophy to real estate.
View | Litigation highlights real estate auctions
Founder of real estate auction firm Unreserved Ryan O'Connor alleges that the Ottawa Real Estate Commission, the Ontario Real Estate Association and the Canadian Real Estate Association have made defamatory statements and wrongfully lobbied to end exemptions allowing real estate auctions. . All three organizations say the claims are baseless.
Industry's core issue of consumer protection
At the center of legal battles as disruptors like Unreserved seek to take share of real estate market There is consumer protection. A legal expert in another industry.
The real estate and business brokerage laws that auctioneers can circumvent are essentially consumer protection laws, explains David Carter, a professor at York University's Osgood Hall Law School.
Operating as a broker comes with licensing, insurance and training requirements.
"The real purpose here is to make people who claim to help buy and sell public real estate know what they are doing," Carter said. .
Similar to his OMVIC role in the world of auto sales, the Ontario Real Estate Council has the power to impose harsh penalties on realtors and brokers who violate its ethical code or the law. This could include fines of up to $50,000 and he could get up to two years in prison per day.
Carter adds that the auctioneer's loophole is "a very broad exemption from carte blanche."
"So you can do just about anything that falls under that global exemption."
``at your own risk''
Unreserved's website legal section contains numerous disclaimers .
"USE OF THE WEBSITE IS AT YOUR SOLE RISK," states the site's Terms of Use.
Unreserved's purchase agreement states that the property is "as is" and "with all defects". The buyer is responsible for verifying the boundaries of the property and for hiring his own attorney if a real estate agent is not representing him.
Unreserved advertises that their homes are inspected prior to auction and includes a brief inspection report as part of each listing on their website.
In traditional home sales, buyers often include an inspection clause in the offer to purchase and pay for their own inspection costs themselves. The terms of Unreserved state that the buyer must accept so-called patent defects that the buyer could have discovered during the inspection of the home.
"They don't want to be bound by representations or warranties that could be sued in a transaction," Carter said.
Unreserved offers his 1 year, $100,000 limited warranty on properties sold on the site.
When asked about the consumer protection measures Unreserved has in place, O'Connor said the security deposit from the winning bidder is a cooperative trust account. said to be kept in mediation.
He then said the risk was low because "the lawyer is the one who does all the work."
"When the hammer fell, everyone washed their hands, and the paperwork was left to the lawyers. Lawyers really protect the buyer, protect the seller, and make sure the transaction runs smoothly." "O" said Connor.
