What is the duty of a real estate agent to verify the
information provided by the vendor of the property to prospective
In this space I frequently moan about the danger of mediation
stemming the flow of judicial precedent, but here is a nice legal
question answered by the Court of Appeal for Ontario this
The property was a residential home with significant structural
and plumbing problems.
The agent, who acted for both the purchaser and the vendor,
became the meat in the sandwich.
The purchaser sued the agent for failing to advise the purchaser
to obtain professional advice about the possible structural
problems, and for failing to warn about the risks of making an
offer that was not conditional on inspection.
The vendors sued the agent on the ground that she failed to
advise them of their duties with respect to providing information
to prospective purchasers about the house.
The trial judge dismissed both claims against the agent. He
found the agent had no reason to question the vendors'
representations about the condition of the house. He also found the
purchaser understood the value of an inspection before closing, but
made her own decision to remove the condition on inspection to make
her offer more attractive.
The Court of Appeal reversed this conclusion. It ruled that the
agent had plenty of reasons to question the veracity of the
vendors' statements. The house was underpriced because of
settlement problems, her visual inspection prompted her to ask
questions about settlement problems, and as she testified, she was
"no home inspector" herself. On this evidence the trial
judge was "clearly wrong" to conclude that the agent had
no reason to doubt the vendors' representations.
The appeal court held the agent's failure to verify these
pertinent facts herself, or recommend in the strongest terms that
the purchaser either obtain an inspection or make the offer
conditional on an inspection, was " an egregious
It further held the agent's failure to clarify to the
vendors their obligations in providing information to the
purchaser, was also egregious.
The appeal court disagreed with the trial judge's decision
not to admit expert evidence on the standard of care of an agent in
these particular circumstances. He did not refer to the Code of
Ethics which governs real estate agents. He simply concluded that
there was no obligation on the agent in this case to enquire
further as to the representations made by the vendors.
Although there was a dearth of evidence in the trial record
bearing on the standard of care owed by the agent, the Court of
Appeal found the Code of Ethics provided sufficient grounds to
determine that the agent had not met the appropriate standard. In
particular the court referred to provisions in the Code that
require agents to encourage clients to seek the assistance of
professional advice where appropriate, and another provision that
requires agents to verify pertinent facts respecting a property.
The court also cited judicial precedent to the effect that an agent
owes this duty, even when not put on enquiry.
The vendor and the agent made claims against each other for
contribution and indemnity which the trial judge dismissed. The
appeal court agreed, on the ground that a party must be wholly free
from fault to be entitled to indemnification from the other. It
apportioned liability to the purchaser as between the agent and the
vendors at 50/50%.
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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