Unreserved, a real estate auction marketplace launched last year by E Inc founder Ryan O’Connor, has filed a lawsuit against a trio of Canadian real estate associations.
The lawsuit, filed earlier this month, includes $25 million in damages, related to interference in Unreserved’s economic interests and defamation against the startup.
Unreserved is suing the Canadian Real Estate Association, the Ontario Real Estate Association, the Ottawa Real Estate Board, and Penny Torontow, president of the Ottawa Real Estate Board. The startup is contending that the organizations as well as Torontow and Tim Hudak, CEO of the Ontario Real Estate Association, defamed the company through statements published on YouTube and in the Ottawa Citizen, respectively. These allegations have not been proven in a court of law.
“All we’re being is advocates for transparency, [and] there’s nothing transparent about traditional real estate, nothing.”
The lawsuit seeks to prevent the associations from repeating the statements, as well as damages for their economic impact on Unreserved.
Founded in spring 2021, Unreserved offers a platform that allows buyers to bid on homes online, in real-time. In January, the startup announced it has raised $33.85 million CAD in initial funding, which included investments from E Inc and real estate professionals, including former Brookfield Real Estate Services President Simon Dean.
In an interview with BetaKit at the time, O’Connor called the traditional model of buying and selling houses broken, adding that Unreserved is meant to bring more transparency to the process for buyers and sellers alike. The startup claims it is able to remove blind-bidding and bully offers from the purchasing of homes. Unreserved also supplements its digital auction offering by providing staging, marketing, and promotion services to sellers.
In its lawsuit, Unreserved is alleging that the real estate associations are attempting to mislead Unreserved customers and making it difficult for the company to operate. Specifically, Unreserved is arguing that the groups are attempting to make it appear that the buying or selling of properties on auction platforms is dangerous and not transparent for consumers.
In a press release, the company also claims damages to Unreserved’s relationship with the brokerage firm through which the company posted properties on the regional Multiple Listing System (MLS) database. “By demanding all Unreserved listings include phrases like “for sale by an unregulated auction” and “subject to terms and conditions”, the Ottawa Real Estate Board (which operates the MLS) is allegedly trying to “scare and prevent” home buyers interested in the company’s offerings,” Unreserved stated.
The CEO was unreserved in his comments to BetaKit about the lawsuit, claiming that the real estate organizations are “trying to make auctions a bad guy.”
“All we’re being is advocates for transparency, [and] there’s nothing transparent about traditional real estate, nothing,” O’Conner said. “With us, we’re moving towards where you can literally buy houses by a click of a mouse, and they’re being like, ‘you know what, this needs to stop.'”
With a focus on the Ottawa real estate market currently, O’Connor noted that Unreserved has auctioned more than 250 homes in the area and is gaining market share. He argues that is why the real estate organizations have taken issue with the company. “Obviously this isn’t something that we wanted,” O’Connor said. “But … when we launched we knew something was gonna happen because we were gaining so much market share.”
In a comment to the Ottawa Citizen, Ontario Real Estate Association CEO Hudak noted that his organization’s goal is to protect Ontario home buyers and sellers. He referenced a 1950s exemption supporting the sale of farm properties by auction – which allows for a real estate auction platform like Unreserved’s to operate – noting that “normal provincial rules aimed at protecting consumers do not apply to real estate auctioneers.”
In a statement to BetaKit, Hudak noted that home builders, realtors, mortgage brokers, insurance brokers, and lawyers are all regulated by the province, while auction trading in real estate is exempt. “This has serious negative consequences,” he said. “These include consumers who have very little protection or recourse against serious risks like phantom or fake bidding on a property, misuse of buyer deposits or whether an auctioneer has a personal interest in the property it is selling.”
Hudak claimed that Ontario and Manitoba are the only provinces in Canada that do not regulate real estate auctioneers, and argued that if the exemption is removed, real estate transactions would be permitted by auction but would be required to follow provincial real estate rules.
The Citizen reported that the association is actively lobbying the Government of Ontario to close the auctioneer exemption, and in a July 6 letter to Ontario Premier Doug Ford, Hudak asked for the exemption to be scrapped and for real estate auction company owners to be required to formally register with the Real Estate Council of Ontario.
“If they’re successful in removing the auction exemption, it’s gonna be pretty easy to quantify the damages,” said O’Connor.
The CEO has written to the federal competition bureau to complain about the actions of the real estate, and told BetaKit that Unreserved is willing to work with organizations and lawmakers to create rules and laws related to home buying. “They need to reflect today’s modern times, they need to get with the times,” he said.
“Traditional real estate would not be what we would brainstorm and come up with together – it would be something transparent,” O’Connor argued. “And that’s all we’re fighting for.”
For the Ontario Real Estate Association’s part, Hudak stated, “OREA won’t be intimidated from standing up to protect Ontario home buyers and sellers. We look forward to reviewing the filing from Unreserved and responding in due course.”
BetaKit has reached out to the Canadian Real Estate Association, the Ottawa Real Estate Board, and Penny Torontow for comment.
This article has been updated with commentary from the Ontario Real Estate Association.
