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Protecting Yourself From Law Suits
The sub-title to this post should be "because clients will sue you". When things go badly, you are a convenient target with an insurance policy!
Disputes and court cases from other provinces can help us here in Alberta. There are realtors and mortgage brokers in every Canadian province and territory. Even though there is province/territory-specific regulation, there are general legal principles that apply across Canada.
Here is an example from a recent BC case that will be helpful for any Alberta Realtor (or other Canadian Realtor) facing similar accusations.
On June 21, 2023, the British Columbia Supreme Court dismissed a claim against Realtors accused of not disclosing land use restrictions. The plaintiffs, Reginald Davis and Sofia Kripotos, claimed that the Realtors misrepresented the property’s potential uses when they bought a 20-acre portion of a 40-acre parcel within the Agricultural Land Reserve in Sechelt for $1.1 million in 2016.
Justice Wendy Baker ruled that the plaintiffs failed to prove the Realtors had made any untrue, inaccurate, or misleading representations about the property’s allowable uses. The plaintiffs had argued that they were induced to purchase based on claims that the property could support a principal residence, rental suite, bed-and-breakfast, and ten campground units. However, the Agricultural Land Commission (ALC) had previously found the campground non-compliant with regulations, allowing only seasonal use and prohibiting permanent tenants.
The Court found that the plaintiffs had not established that the Realtors' representations about income potential or compliance with the ALC were false. Additionally, the judge determined that the plaintiffs’ assumptions about the property's residential status were unfounded and not based on any misrepresentation by the realtors.
Justice Baker also rejected the plaintiffs' expert opinion that zoning bylaws and land-use limitations were latent defects requiring disclosure. The judge emphasized that such information is publicly accessible and that buyers have a duty to confirm their plans with public authorities.
Ultimately, the plaintiffs’ claims of negligence, breach of contract, fiduciary duty, and fraudulent misrepresentation were dismissed. The ruling underscores the significant responsibility buyers have to investigate and ensure the suitability of a property for their intended use.
Lessons Learned
- As much as possible, check any information you provide.
- Don't guarantee anything about information you provide.
- Confirm (in writing) your client's own responsibility to conduct sufficient diligence to enable them to make a buying decision.
Protect yourself.
Cheers,
Barry
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