May 17, 2023

Legal corner: Falsifying documents result in disciplinary action

Note to reader: This matter was prosecuted under the Real Estate and Business Brokers Act, 2002.

Falsifying trade-related documents can have significant implications and consequences for some, or everyone involved in the trade. Here is an example and the sequence of events that resulted in disciplinary action involving a falsified mortgage pre-approval letter.

Case summary

Registrant A was a real estate broker and mortgage broker conducting both mortgage and real estate business at their brokerage office. Registrant B was representing buyers in the purchase of a pre-construction home. Both Registrants were employed by the same brokerage.

Registrant B’s buyers were interested in buying a preconstruction home and the developer required a mortgage pre-approval before finalizing the transaction, so Registrant B introduced their buyers to Registrant A for the purpose of obtaining financing.

Registrant A provided a pre-approval letter indicating that the buyers had been pre-approved for a mortgage, but the developer was not satisfied with the letter as it was not drafted from a financial institution.

After receiving notice from the developer that the letter was not sufficient, Registrant A produced a pre-approval letter on the letterhead of a financial institution. Due to the irregularities in this letter, including unusual looking bank letterhead, incorrect phone number and staff name, it was believed that Registrant A had created and provided a falsified mortgage pre-approval letter to the developer.


RECO’s discipline panel found that Registrant A breached sections 37, 38 & 39 of the Code of Ethics by creating a falsified mortgage pre-approval letter and submitting it for use in a real estate trade. The panel ordered a fine of $25,000, along with a requirement to complete an intensive ethics training course.

Learning opportunity

Registrants are prohibited from falsifying any trade-related documentation. Registrants that are also acting as mortgage brokers should be extra cautious during their dealings with clients. Their communication with all parties to any real estate trade must be honest, transparent, and not over-promise on any commitments.

For more information on this topic, please review the MCE Course,

Mortgage Financing: Guiding Client Conversations . The course reviews professional conduct and legal requirements concerning what a registrant can and should provide to residential buyers about mortgage financing, and how to prevent error, fraud, and misrepresentation.