In our recent post Vendor Disclosure for House Sales, we discussed the role and duty of a vendor with respect to representations made in the course of selling a home. In the case Krawchuk v. Scherbak, 2011 ONCA 352 (CanLII), the Ontario Court of Appeal decided that the vendor owed a duty to the purchasers and must pay damages for incomplete and wrong information they provided on a Seller Property Information Sheet (“SPIS”) with respect to structural issues and plumbing problems for the property for sale. However, what about the duty of the real estate agent, Wendy Weddell, who acted for both the purchaser and the vendors regarding the SPIS? It is noteworthy that, in this case, the real estate agent assisted the vendor in completing the SPIS.
The court found that the real estate agent knew that the house had a history of settlement problems and accordingly was underpriced. As well, her visual inspection of the property disclosed settlement problems. Therefore, the court decided that she should have either verified the vendors’ assurances herself, or recommended in the strongest terms that the purchaser get an independent inspection before submitting an offer or make the offer conditional on a satisfactory inspection. The court found that in failing to do any of these steps, she was negligent.
In essence, the court decided that both the vendors and the real estate agent were negligent in their dealings with the purchaser and contributed to her loss. Furthermore, a real estate agent has a duty to verify information provided by the vendor about the property that is the subject of the transaction.
Interestingly, it was found that the agent not only owed a duty to the purchaser but also to the vendors. Specifically, she had a duty to counsel the vendors with respect to the implications of the representations they made in the SPIS. Her failure to do so amounted to negligence in her representation of the vendors. That did not entitle the vendors to indemnification because they were also negligent. However, it had to be taken into account in the overall apportionment of fault. While the vendors did not owe the agent a free-standing duty of care, their lack of disclosure and its contribution to the agent’s liability for the purchaser’s losses also had to be taken into account in the overall apportionment of fault. In the circumstances, the court concluded that it was appropriate to apportion fault at 50 per cent to the vendors and 50 per cent to the agent and her brokerage.
If you have concerns about the conduct of a real estate agent in the course of a transaction, please contact Andrea Kelly.
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Andrea Kelly, Lawyer, has extensive experience in wills, trusts, powers of attorney and estate administration matters. She provides clients with a high standard of timely professionalism and expertise, incorporating a very thorough fact finding process. This is quite often enlightening for her clients and facilitates individually tailored services. If you would like to know more, feel free to use the easy contact form or read Andrea’s bio.