Agent’s Liability for Statements

Question:

Let’s say someone has been out-showing homes without a Buyer Representation Agreement (BRA) and that “consumer” then goes and buys a house you showed them with another agent but later complains and says they relied on your advice while under implied agency.

Is there no limitation/end to implied agency/representation when someone signs with another agent?

Answer:

The chances are relatively slim, however, it is in fact possible.

Think of a situation where a medical doctor at a party is approached by a person who shows a mark on their arm. The doctor says: “that’s fine, there’s no problem there”, and then the individual suffers a very unfortunate result.

What the doctor should have said: “it’s always best to have these things checked out by a doctor”. In that way, any real answer is diverted and no liability issues arise.

The same situation should apply to a real estate agent. Offer factual statements, avoid any comments which might later be interpreted as advice.

There is a limitation to the lawsuit. It would be two years after the individual suffers the damage and realizes the connection to the inappropriate statements.

Here’s the actual legislation:

Basic limitation period

4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. 

Discovery

5 (1) A claim is discovered on the earlier of,

(a)  the day on which the person with the claim first knew,

(i)  that the injury, loss or damage had occurred,

(ii)  that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii)  that the act or omission was that of the person against whom the claim is made, and

(iv)  that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b)  the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).”

In addition, there is another year to serve the statement of claim after it has been issued.

If a statement was made on 24 June 2023, the purchase took place on  24 April 2024, and then the problem was discovered on 24 November 2026, the Buyer would have two years to sue, that’s 24 November 2028 and another one year to serve the statement of claim, that’s 24 November 2029. So the Agent in this situation should preserve their records and not throw them out.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com