This article is part of an ongoing series covering violations of real estate law. Here, the Department of Real Estate (DRE) revoked the California real estate license of a broker who failed to properly supervise his corporation’s activities.
In April 2022, the California Department of Real Estate (DRE) decided by default decision to revoke the license of John Thorfin Tait, a broker since 2005 operating out of Newport Beach, California. The decision became effective July 2022.
Thorfin Tait was the designated officer of Newport Capital Real Estate, Inc. (NCREI), a real estate corporation. As designated officer, Thorfin Tait was responsible for the supervision of all activities conducted by the corporation as well as the activities of its employees.
In July 2018, the California Secretary of State suspended NCREI’s corporation status. In December 2018, the California Franchise Tax Board also suspended NCREI’s powers, rights and privileges.
These suspensions constitute cause to suspend or revoke the corporation’s corporate real estate broker license. Despite the suspensions, NCREI wrongfully continued to operate.
In April 2019, Thorfin Tait’s son, John Robert Tait, who held a revoked real estate salesperson license, negotiated a residential real estate sale in Laguna Hills on behalf of NCREI. On transaction documents, Robert Tait used only NCREI’s license number.
During that residential sale, Robert Tait demanded a $13,500 advance fee from the buyer of the property. When the buyer paid the advance fee, they were also charged $30 to wire the funds to Robert Tait through a Nevada-based company, Sigma Spectrum, Inc., which Robert Tait owned.
The buyer, unable to complete the sale, asked Robert Tait for a refund of the $13,500 advance fees they paid to him. Robert Tait refused to return the advance fees, a violation of real estate law. [Calif. Business and Professions Code §§10085; 10085.5; 10085.6]
Related Video: Advance Fees are Trust Funds
Click here for more information on advance fees.
Ultimately, Newport Capital Real Estate, Inc. and John Robert Tait engaged in:
- unlicensed activities and unlawful compensation by assuming to act as a licensed real estate salesperson [Bus & P C §§10130 and 10137; DRE Regulations §2742(c)];
- collecting advance fees without a broker license [Bus & P C §§10085, 10085.5, 10085.6 and 10146; Regs §§2970 and 2972]; and
- misrepresentation, fraud or dishonest dealing. [Bus & P C §§10176(a) and 10177(j)]
Due to these acts, the DRE had grounds to revoke John Thorfin Tait’s license due to his failure to properly supervise the activities of his corporation and employees. [Bus & P C §§10159.2; 10177(h)]
Related article:
It all comes back to the broker, always
The employing broker’s responsibility to the public is significant under real estate law, including:
- on-the-job training for the agents in the broker’s employ in the procedures and practice of real estate; and
- continuous policing by the broker of the agent’s compliance with the duties owed to buyers and sellers, and other transaction participants.
The duties a broker owes to the various participants in a transaction which are imposed on the sales agent include:
- the utmost care, integrity, honesty and loyalty in dealings with a client; and
- the use of skill, care, honesty, fair dealing and good faith in dealings with all participants to a transaction in the disclosure of information which affects the value and desirability of the property involved. [Calif. Civil Code §2079.16]
The prior license discipline against John Robert Tait’s license, which he attempted to shield through misrepresenting his license number on documents, was the critical component of this case which most egregiously and nakedly demonstrates misrepresentation and dishonest dealing.
However, John Thorfin Tait was the employing broker, the one entrusted to review documents and oversee employee actions. Thus, the agent’s fraud creates a responsibility for the employing broker to uncover and report — not the client who was wronged, or the DRE through its investigation of the client’s complaint.
Also, as designated officer, John Thorfin Tait was entrusted with upholding standards of honesty and fairness for the entire corporation. That honesty was entirely disregarded when the business continued with its activities, despite suspensions from state regulatory agencies such as the Secretary of State. [Regs. §2742(c)]
For an employing broker to implement the need for supervision, they need a business model. With it, the broker establishes the means and manner by which listings are produced and serviced, and how purchase agreements, leases or mortgages are negotiated and dealt with by their agents. [See RPI e-book Office Management and Supervision, Chapter 2]
Related article:
Brokerage Reminder: The agent of the agent – reasonable supervision required
Real estate brokers are entrusted to abide by state laws and regulations, but they are also entrusted by members of the public. As the DRE safeguards the public’s interest in real estate matters, partly through its enforcement, it will not tolerate instances where that trust has been irreparably broken — along with the law.
Want to learn more about office management and supervision? Click the image below to download the RPI book cited in this article.
