The Ontario Court of Appeal has recently made a decision that comes down hard on realtors in several ways. One way was with respect to property disclosure statements.

In that case the Buyer had paid $101,000.00 for a property. Shortly after moving in she discovered serious structural and plumbing problems. The repair costs were about $110,000.00 and this is what she sued for, and won.

As far as the contract itself, the Court found that “buyer beware” governed in this case.

But the Seller had given the buyer a Disclosure Statement. The Court ruled that the Seller was negligent in the way he completed the Disclosure Statement, and found that the Buyer would not have made her offer had she received more accurate disclosure. Therefore, the Court ruled that the Seller was responsible for negligently misrepresenting the information on the Disclosure Statement.

Even though it was the Seller who filled out the Disclosure Statement in a less than fully accurate way, the Court went on to hold that the realtor was liable to the Seller because a realtor must exercise reasonable care and skill in ensuring that the Disclosure Statement is accurate.

The Court stated that a real estate agent has a duty to provide a “certain level of guidance” when a client is filling out or receiving a property disclosure statement. Also, it found that “an agent has a duty to provide specific warnings about the implications of completing a [property
disclosure statement]

So what is a realtor to do? If you are representing sellers, make it clear to the sellers that they have no obligation to provide a Property Disclosure Statement and if they do so, they will be held liable for statements made therein. Furthermore, the statement must be completed in a way that
is both accurate and complete. If a realtor represents buyers, getting a disclosure statement from the seller is a useful thing. The Buyer would have lost this case without it.

The Court of Appeal in this case also found the realtor, a dual agent on the transaction, to be liable to the Buyer for the loss. I will talk about why in my next post.

-Bill Fric

Leave a Reply

Your email address will not be published. Required fields are marked *