BC realtor deceived client, put in higher offer and made $1M
A BC realtor, who used his insider knowledge to purchase a house that this client wanted to buy, has been ordered to pay the client half of the profit he made when he flipped the house for more than $1.2 million soon afterwards.
According to a Jan. 10 BC Supreme Court decision, realtor Alan Hu intentionally undermined his client's efforts to buy the property so he could buy it instead.
The South Surrey property was ripe for development and Hu picked it up for $2.1 million, selling it two-and-a-half-years later for $3,350,000.
Hu's client, Pei Hua Zhong, didn't even realize Hu had bought the house until he saw him six months later standing in the front yard.
Realizing his realtor had outbid him on the property Zhong took him to court arguing Hu should give him any profit he made on the house.
"Mr. Hu’s conduct was deceptive and underhanded," BC Supreme Court Justice Amy Francis said in the decision. "His conduct represents a marked departure from ordinary standards of behaviour and is deserving of denunciation."
The story dates back to November 2017 when Zhong was introduced to Hu by a friend.
Zhong had moved to Canada from China in 2008 and bought a house in South Surrey for $748,000.
He told Hu he wanted to sell it and had his eye on a property at 2038 174 Street that was listed for $2.5 million.
He knew the neighbourhood would be a good investment and put an offer in for $2.1 million, but hadn't sold his house.
At this time Hu went to Las Vegas with his wife and another couple, and they got talking about real estate.
READ MORE: BC granddaughter must return cash after dementia diagnosis, legal powers revoked
Over the course of their Christmas vacation, the two couples decided they would buy the property Zhong was interested in as an investment. It was decided Hu's friend Lingxia Tao would be the original buyer.
During this period Zhong had organized a bridging loan so he could buy it before his house sold and told Hu to put in an offer for $2,050,000.
Zhong later upped the offer to $2.1 million, but Hu didn't put this offer in.
He did however, that same day, put in his own offer for $2.1-million and purchased the house.
Hu gave the sale to another realtor to avoid the obvious conflict of interest and they paid him $19,000 for the referral.
During the trial, Hu argued it was his friend who purchased the house and he only decided to get involved at a later date.
READ MORE: Tourism boost in Thompson-Okanagan a silver lining to declining Canadian dollar
However, Justice Francis didn't buy it.
"I find Mr. Hu to be an unreliable witness about the events that occurred during the critical three-day period when he was vacationing in Las Vegas," the Justice said. "He has given different versions of these events at different times in this proceeding."
The Justice said as a realtor Hu had a duty to act loyally and transparently and in the best interests of his client.
However, the Justice said Hu had purposely undermined his client and was actively working against him.
Ultimately, the Justice ordered Hu to pay Zhong his share of the profits he made flipping the house.
However, Hu and his wife are involved in separate legal action against the other couple they bought the house with as they fight over who gets what.
The Justice ordered that whatever the court determined Hu is owed from the profits has to go to Zhong – $626,000 would be 50%.
Hu also has to pay Zhong the $19,000 he made on the referral.
According to the BC Financial Services Authority, Hu is still licenced as a realtor and works for Pacific Evergreen Realty.
To contact a reporter for this story, email Ben Bulmer or call (250) 309-5230 or email the editor. You can also submit photos, videos or news tips to the newsroom and be entered to win a monthly prize draw.
We welcome your comments and opinions on our stories but play nice. We won't censor or delete comments unless they contain off-topic statements or links, unnecessary vulgarity, false facts, spam or obviously fake profiles. If you have any concerns about what you see in comments, email the editor in the link above. SUBSCRIBE to our awesome newsletter here.
