Michael Ryan O’Connor, who previously ran into legal trouble as the owner of a chain of used car dealerships in Ontario and Quebec, is currently the founder and CEO of Unreserved, an online real estate auction platform that allows people to buy and sell houses like a big eBay. In a civil lawsuit filed in mid-July, O’Connor’s company alleges that the Ottawa Real Estate Board (OREB), the Ontario Real Estate Association (OREA) and the Canadian Real Estate Association (CREA) made defamatory statements about Unreserved in an attempt to scare consumers. from the outfit’s new approach to selling homes. It also alleges that the three organizations — which together represent and oversee every registered real estate agent and broker in the nation’s capital and operate the exclusive centralized real estate shopping network known as the Multiple Listing Service (MLS) — are unfairly pressuring regulators to shut down decades-old legal exception necessary for Unreserved’s operations. OREB, ​​OREA and CREA all said they believe Unreserved’s claim is without merit. None of the allegations have been proven in court. Real estate for sale signs are displayed in Oakville, Ont., in 2018. Together, CREA, OREA and OREB represent all real estate agents and brokers, operate the Multiple Listing Service (MLS), and maintain an effective monopoly in the real estate industry. (Richard Buchan/The Canadian Press) Meanwhile, the CBC has uncovered court documents dating back more than a decade detailing how the province once revoked O’Connor’s license as a car salesman after he pleaded guilty to two counts of fraud related to income inflation of buyers to help them qualify for used car loans they couldn’t afford. The RCMP raided one of O’Connor’s Find-A-Car dealerships and filed a case against him after hundreds of customers complained for unmanageable debt in 2007. “I paid the price. I lost everything,” said O’Connor, who did community service and served six months of house arrest as part of his suspended sentence. O’Connor said he believes it has since rebuilt its credibility — first by pivoting to an online dealer-to-dealer vehicle auction platform and now a similar model for real estate. As the new court battle looms, real estate law experts say the current case reveals several competing interests — consumers’ desire for more price transparency in an era of high home prices and blind bidding. the billions of dollars in commissions and fees at stake for real estate agents; and the limits of regulation in terms of consumer protection and the enforcement of an industry code of conduct. As a result, observers say the legal battle could be costly and protracted. Unreserved, an Ottawa-based tech startup, aspires to bring more transparency to homebuyers through transparent listings, but operates outside the laws and code of ethics that govern traditional realtors. (Alexander Behne/CBC)

Online real estate bidding is drawing industry ire

Founded in 2021, Unreserved is billed as a disruptor in the real estate industry. The tech startup has raised nearly $34 million in venture capital as of early 2022 and has reportedly auctioned more than 250 properties in Ottawa and a few other Ontario cities using an unusual method that has sparked backlash from the traditional real estate establishment.
On the company’s website, listings ranging from $250,000 condos to million-dollar single-family homes are bid on and bought at real-time auctions “at the click of a mouse,” O’Connor explained. Prospective buyers can place offers in increments of up to $2,500 after submitting a mortgage pre-approval from a bank. A house up for auction by Unreserved. The company says it has sold over 250 properties in Ottawa and other cities in Ontario in its first year of operation. (Alexander Behne/CBC) While traditional realtors are prohibited by law from sharing the content of competing offers on a home, Unreserved allows participants to view the entire offer history. The site is able to do this by taking advantage of an exemption to the Ontario Real Estate and Business Act (REBBA) that allows auctioneers to buy and sell real estate outside of standard broker regulations. The broad exemption dates back to the 1950s and was originally intended to be used to auction off family farms. OREA, one of Canada’s largest lobbying groups with more than 90,000 members across dozens of real estate boards, called the auctioneer exemption “a loophole with dire consequences for unsuspecting consumers trying to buy a home” on its website in June. OREA also commissioned a overviewciting “70 percent of Ontarians support regulating auctions that would sell homes in an open bidding process.” The association declined to be interviewed by CBC, but CEO Tim Hudak said in a statement that real estate auctions have “serious negative consequences” for consumers. “OREA will not be intimidated from standing up for Ontario home buyers and sellers,” the statement said. Tim Hudak, left, CEO of the Ontario Association of Realtors, appears at a televised press conference in 2018. Hudak wrote that a provincial exemption for real estate auctioneers has “terrifying consequences” for consumers. (CBC) The other two groups named in Unreserved’s lawsuit — OREB and CREA — have also warned consumers about using an online auction platform to buy and sell homes. “We feel it was a collective effort on all fronts to pressure the government to get rid [this exemption]said O’Connor. “They’re doing it all in the name of consumer protection … and when you peel back the layers, it’s just false.” In a video posted on Unreserved’s official social media accounts, O’Connor drives a farm tractor pulling a fertilizer spreader. The video intersperses clips of O’Connor accusing the Ottawa Real Estate Board (OREB) of “spreading propaganda” that has “a very bad smell” about Unreserved’s stance on consumer protection with a video of the OREB president Penny Toronto. (Instagram/Unreservedly) The civil claim alleges OREB, ​​OREA and CREA contacted the Real Estate Council of Ontario (RECO), the province’s real estate regulator, and later the minister of government and consumer services to lobby for Unreserved’s closure . OREB and CREA declined to be interviewed by CBC.

Billions of dollars are at stake

Mark Morris, a real estate lawyer and former instructor at the Ontario Real Estate College who is not involved in the case, said a court battle over the auction exemption is inevitable because “there’s money in it.” “If this starts to disrupt tens of billions of dollars of real estate,” Morris said, “people will try every avenue because the cost of doing so pales in comparison to the pot of gold at the end of the rainbow.” Property trainer Mark Morris says with billions in profits at stake, the legal battle over the right to buy and sell property can be protracted and expensive. (Submitted/Mark Morris) Morris added that real estate associations naturally protect their control of the industry like any other regulated profession, such as law and medicine. “That’s actually their job,” he said. “They represent a bunch of people who are reaping big benefits through exclusivity.”

The founder is accused of fraud

This latest lawsuit is not O’Connor’s first brush with consumer protection laws. In the early 2000s, he ran a small chain of used car dealerships under the name Find-A-Car Auto Sales & Brokering Inc. In 2007, the RCMP obtained a search warrant for Find-A-Car’s Kingston location and seized items from the premises. O’Connor was later charged with 11 counts of fraud over $5,000, forgery and global fraud over $5,000 after complaints from hundreds of customers who claimed they faced financial ruin after signing auto loans with Find-A-Car. With billions of dollars at stake, the battle over whether or not auction platforms like Unreserved will be allowed to challenge the traditional real estate institution will likely be long and expensive, according to a real estate law expert. (Graeme Roy/The Canadian Press) The charges stated that O’Connor’s business had “knowingly [obtained] credit for people who will not qualify or be able to repay their obligation by using false statements in writing to financial institutions.” In December 2009, O’Connor pleaded guilty to two counts of fraud over $5,000. He received a suspended sentence of two years less a day, the first six months of which he served under house arrest. Find-A-Car went out of business, and O’Connor testified that he liquidated his inventory to pay off bank loans related to the business. In 2011, the Ontario Motor Vehicle Industry Council (OMVIC), which regulates all motor vehicle sales in the province, revoked O’Connor’s registration, effectively stripping him of his right to sell cars. “His past conduct gives reasonable grounds to believe that he will not continue his business in accordance with the law and with integrity and honesty,” the court wrote in its decision. O’Connor now says he “took full ownership of everything that happened in this business.” “Twenty years ago I made some mistakes,” he said. “I surround myself with some of the wrong people.” In 2016, O’Connor founded EBlock, an online dealer-to-dealer vehicle auction platform, and has since re-registered to sell cars. “I was able to get a second chance and … turn to technology,” he said. Wholesale auctions are are exempt from the Motor Vehicle Dealers Act and you don’t need to register. The business experienced rapid growth and its parent company, E Automotive…