Winnipeg lawyer's practising certificate cancelled, reissued over botched real estate deal

A Winnipeg-based real estate lawyer with more than 20 years of experience had his practising certificate cancelled and a new one issued with conditions after he changed the terms of a real estate deal without consulting the buyer and seller.

Neil Sullivan ordered to pay fines after 3 properties instead of 2 transferred to new owners

The Manitoba Law Society has ordered Neil Sullivan pay $10,000 in fines.

A Winnipeg-based real estate lawyer with more than 20 years of experience had his practising certificate cancelled and a new one issued with conditions after he changed the terms of a real estate deal without consulting the buyer and seller.

The Manitoba Law Society ordered Neil Sullivan pay $10,000 in fines plus $30,000 in costs and cancelled his practising certificate after he had the title to three lots transferred to his clients instead of the two lots they had purchased. His practising certificate was reissued with the condition that within three months, he complete real estate law and ethics courses, the decision says.

"This panel finds the member guilty of professional misconduct in failing to discharge his legal responsibilities in the circumstances with integrity, as well as, his failure to provide his clients with service that was competent," says the law society's Nov. 14 written decision.

The law society's discipline committee held a hearing in early 2018 into Sullivan's handling of the real estate deal in Stonewall, Man., in March 2016.

Sullivan represented both the buyers and the bank that supplied their mortgage in the March 2016 deal to buy two adjacent lots with a home on them.

While the seller had three attached lots for sale, the buyers only wanted to purchase the two lots with the house because they couldn't afford the extra $90,000 for the third lot.

The seller agreed to sell just the two lots for $263,000, and the sale was approved by the end of March 2016.

In many documents, the property was simply referred to by its street address, and in the negotiations, the buyers and seller all believed the lots with the house on it were numbered 16 and 17 and the vacant lot was 18, when in fact, the vacant lot was lot 16.

When the error was discovered, the disciplinary committee hearing says more confusion ensued. "The best that can be said about it is, that neither now has a precise recollection of what happened," the committee's record from early 2018 states. 

The Law Society found that a correction letter was sent from Sullivan's office to the Land Titles Office, saying there had been "a typographical error" and instructing the office to transfer all three lots to the buyers.

The new owners moved into their home unaware that on the books, they owned all three lots.

They found out they were registered as owners of all three lots when they went to pay their property taxes in June 2016. They reached out to Sullivan, telling him they hadn't purchased the third lot and asking for help in fixing the situation.

'Wait and see if they catch on'

Sullivan responded in an email, telling his clients, in part, "that sounds like good news," and advising them to treat the lot as their own and not to involve the seller's lawyer, the law society's decision says.

The law society called Sullivan's actions a "wait and see if they catch on" approach.

The original owner did catch on when it was her turn to pay her tax bill on the third lot in October 2016.

She contacted her lawyer when the tax office told her she no longer owned the third lot.

The three lots were eventually transferred back to the original owner, and then the two lots with the house on them were transferred back to the buyers, according to the Law Society. 

While counsel representing Sullivan during the hearing argued their client's failures were minor in nature and of little consequence, the discipline committee ruled he failed to "discharge his professional duties with integrity" and failed to "provide legal services to his clients in a competent manner."

"The member's behaviour towards his clients … and his 'advice' to them, if it could be called that, demonstrated, to be kind, a careless and cavalier attitude toward what had suddenly become a potential crisis for [the buyers]," the decision says.

"What for example would have happened if the clients, relying on his instruction, had built a permanent structure on the third lot, which they had not purchased but with respect to which they had been advised to treat as their own."

Under the law society's ruling, Sullivan's practising certificate was reissued subject to the condition that he complete a course on real estate law, practice and ethics within three months.

Corrections

  • We initially reported that Neil Sullivan's licence was suspended and his fine was $40,000. In fact, his practising certificate was cancelled and a new one was issued with conditions. He was fined $10,000 and ordered to pay $30,000 in costs.
    Nov 26, 2018 9:11 AM CT