Winnipeg real estate agent suspended, ordered to pay $35K after hiding home’s defects

Posted on October 13, 2024 by Peggy

The Manitoba Securities Commission has barred a real estate agent from selling homes for two-and-a-half years and ordered him to pay nearly $35,000 after he concealed a Winnipeg home’s defects before it was sold and then lied to investigators about it.

Mahmood Peyawary covered up major foundation cracks during renovations of a Westdale neighbourhood home he bought in March 2019, according to a settlement agreement between Peyawary and the Manitoba Securities Commission filed with the Manitoba Financial Services Agency earlier this month.

Peyawary sold the home for just under $250,000 on June 20, 2019, without disclosing the foundation cracks to the buyers, according to the settlement agreement with the Manitoba government agency. Peyawary acted as both the seller and the listed agent in the transaction, the agreement says.

The new owners discovered the cracks after they moved in, and that the major ones had been “recently filled with spray foam,” the agreement says. Drywall and wooden studs were used to cover other cracks.

The owners also found electrical wiring that was improperly installed without a permit in the home, animal feces in the basement’s ceiling, an unpaid $1,400 water bill, issues in the kitchen and dining room floor tiling, as well as a leak in one of the bathrooms.

Peyawary, who was working as a real estate agent under the company Royal LePage when he bought and sold the home, misrepresented its condition in promotional listings of the property, the agreement says.

He lied during an interview with — and in writing to — commission investigators about his knowledge of the foundation cracks, except for one in the laundry room, according to the agreement. He said the basement was completely finished when he bought the home.

He also “intentionally withheld some relevant receipts” when investigators asked him to show what materials he used during renovations, according to the agreement. Investigators later determined that he bought the materials used to cover up the foundation cracks.

Investigators interviewed Kyle Scrimshaw, another real estate agent who worked with Royal LePage who was hired by Peyawary to do “basic labour work” during renovations of the home, according to the settlement agreement.

Scrimshaw initially told investigators that he was unaware of any renovations involving drywall in the basement, but later revealed that he saw Peyawary “gluing drywall directly” onto a wall of the foundation.

‘Necessary deterrent effect’

Peyawary now acknowledges that he discovered and concealed the foundation cracks, failed to disclose them to the buyers, misrepresented the home’s condition in promotional listings and lied to commission investigators, the agreement says.

He also acknowledges that he misled the purchasers and other members of the public by saying that there was no available property disclosure statement for the home, and that his actions were contrary to public interest.

He has been barred from registering under the Real Estate Services Act for 36 months, and must pay the home buyers $9,900, on top of $25,000 to the commission for costs. He will need to take an educational course if he re-registers and may be subject to a year of conditions.

Scrimshaw has also been barred from registering under the Real Estate Services Act for a year, and was ordered to pay the commission $500 in costs. He may also be subject to a year of conditions and will be required to take an educational course if he re-registers.

Scrimshaw acknowledges that he also lied to investigators and that his actions were contrary to public interest.

The commission panel says a central consideration of the settlement agreement was whether it would be in the public interest to approve it. They say the penalties handed down to Peyawary and Scrimshaw are appropriate and will “have the necessary deterrent effect for the industry.”

Those registered under the Real Estate Services Act are meant to help the public when they buy or sell their homes or condominium units, the panel said.

“When they also own the property they are selling, their responsibilities increase significantly,” the panel wrote.

“Actively concealing deficiencies in the property, and then lying to investigators afterwards, is a fundamental betrayal of the responsibilities of a registrant under the RESA.”

CBC has reached out to Royal LePage for comment.