A BC realtor has been ordered to give up the profits he pocketed from the sale of a house that his client was trying to buy.
According to a BC Supreme Court decision, plaintiff Pei Hua Zhong asked local realtor Alan Hu to help him sell his South Surrey home on Poplar Drive and purchase a new home in November 2017.
A few weeks later, Zhong told Hu he was interested in buying a home at 2038 174th Street in Surrey.
At the time, the home was listed for sale for $2.5 million, but Hu advised Zhong that its assessed value was $2,044,000, states the ruling.
Alan Hu (Pacific Evergreen Realty)
Zhong proceeded to make two offers to purchase that home but both attempts were unsuccessful.
On the first offer, Zhong completed a contract to purchase the 174th Street property for $2.1 million. This first contract came with three buyer’s subjects: financing, a home inspection, and a title search. The subject removal date was December 29, 2017.
While Zhong received mortgage approval from his bank to finance the purchase of the 174th Street property, it was conditional on him having funds for $735,000. This meant he needed to sell his original Poplar Drive property to get the money.
Zhong was unable to sell that home by the subject removal date and he contacted Hu to extend it but that was rejected and the first contract was not completed.
The property that Zhong wanted to purchase is located on 174th Street in Surrey (Google Maps)
Hu chose to pursue bridge financing to help him make another offer on the 174th Street property that was not subject to financing, states the court documents.
During this time Hu was on vacation in Las Vegas with his wife. They were accompanied by Hu’s friend Lingxia Tao and her husband Zhi Chen.
On January 1, 2018, Zhong made a second offer for $2,050,000 to the seller of the 174th Street home. This offer wasn’t subject to financing.
What happened in Vegas didn’t stay in Vegas
randy andy/Shutterstock
On the same day, Zhong presented the second offer, Hu was making some deals of his own.
According to the court document, Zhong was unaware that Hu referred his friend vacationing with him, Lingxia Tao, to another realtor named Iris Liu so she could bid on the 174th Street property.
Hu had emailed his second offer to the seller’s agent, and Liu also sent an offer on behalf of Tao, which contained a provision reserving the right of the buyer to assign the contract to a third party, notes the court document.
Tao’s offer was accepted for a purchase price of $2,098,000.
Hu also made some money from this deal, as Liu paid him a referral fee of $19,245.25.
On January 17, 2018, Tao assigned her offer to purchase the 174 Street property to Hu. This was not disclosed to Zhong, notes the decision.
In March, Hu and his wife closed on the purchase of the property and became the home’s legal title holders.
“Mr. Hu and Ms. Tao and their spouses signed an investor agreement that stipulated their equal ownership interest in the [170th Street] Property and other properties,” states the decision.
Hu and his wife sold the property for $3,350,000 in September 2021, profiting over $1.2 million from this sale.
Zhong learned that Hu purchased the home when he drove past it and saw the realtor out front in July 2020. His lawyer helped him access a copy of the title, which confirmed Hu purchased it back in March 2018. Zhong filed a notice of civil claim in January 2022.
Judge says Hu’s conduct was “deceptive”
In her decision, Justice Amy D. Francis ordered Hu to “disgorge” his profits from the sale of the 174th Street property.
“Mr. Hu’s conduct was deceptive and underhanded,” wrote Francis.
“His conduct represents a marked departure from ordinary standards of behaviour and is deserving of denunciation.”
Francis noted that there is “no allegation” that Hu’s friend, Tao, committed an unlawful act.
“While I find there was an agreement between Ms. Tao and Mr. Hu to invest together in the [174th Street property] Ms. Tao did not herself commit any unlawful act and she therefore cannot be found to be liable for conspiracy,” wrote the judge.
Hu will also have to pay back the referral fee. The profits that Hu owes were not determined in the proceedings as there is outstanding litigation between Hu and Tao about the amount owed under their investor agreement.