In my last e-mail I wrote about an Ontario Court of Appeal decision that came down hard on a realtor with regard to a Property Disclosure Statement. In the same case, the realtor, who acted as a dual agent, was found to be liable to the Buyer for about $110,000.00, approximately the
cost of repairs.

The realtor had prepared an Offer for the Buyer with two conditions, financing and a satisfactory home inspection.

There was apparently some interest in the house and the realtor discussed enhancing the Offer by making it unconditional. The Trial Judge accepted the realtor’s evidence that she had initially wished to have the home inspection clause left in but then the Buyer instructed her to remove it
to make it a clean offer. The Trial Judge held that the Buyer understood the value of having a home inspection, and that she made her own decision to submit the “clean Offer”. Therefore, the Trial Judge found that the realtor had not breached her duty of care to the Buyer and dismissed the Buyer’s claim against the realtor and the real estate company.

The Court of Appeal disagreed with the Trial Judge and held the realtor liable. Here the Buyer had relied on representations made by the Seller in the Property Disclosure Statement. The Court of Appeal found that the realtor “had reason to doubt the veracity of the [Seller’s] representations
about the house…” and given that settling problems with the house were obvious, the Court stated that the realtor had to “either further verify the assurances herself or recommend, in the strongest terms, that [the Buyer] get an independent inspection either before submitting an Offer or making the Offer conditional on a satisfactory inspection. The failure to do either was an egregious lapse.”

So What’s a realtor to do? Never turn a blind eye to evident problems in the house and do not rely on a seller’s explanation that they had fixed the problems. Recommend a home inspection in the strongest terms and confirm it with your client. If your client has an email, send an e-mail
confirming your recommendation to get a property inspection, or otherwise confirm in writing your recommendation with the buyer. Getting a property inspection protects the buyer and it also protects you as the buyers’ realtor. Failing to recommend one to your buyer may in some circumstance make you as the buyers” realtor ultimately responsible for the costs of repair, as was the case here.

-Bill Fric

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