These are the basic topics under consideration:
- Disclosure
- Agency
- Liability
The Court
The Supreme Court of Canada in Ottawa is the final court of appeal for all cases, from all provinces.
There are nine (9) Judges who comprise the Court. They are all pre-eminent legal scholars and jurists.
Virtually all the decisions made are precedent setting. Only matters which involve a new and novel legal principle will reach this Court. Even to have a case reach this Court, a litigant must petition the Supreme Court of Canada for leave to appeal. If the law appears to be clear, then the Court might reject the application, and determine that the case has been properly considered by the Court of Appeal. Once decided, all courts will be obligated to follow decisions made by the Supreme Court of Canada.
You will appreciate, precedent setting cases on particular subject matters only reach this Court occasionally, and once decided, often decades will pass before the same matter will be considered again.
The Law
The law which applies to real estate agents and real estate transactions is varied, but generally falls into three basic bodies of law:
- Real property law,
- Contract law, and
- Tort law.
There are two other bodies of law which play a somewhat smaller role, namely restitution and criminal law.
The educational system throughout North America for real estate agents, focusses on the history and origins of real property law, and places a strong emphasis on contract law. Tort law as a discipline is largely ignored.
Real Property Law
Real property law has its origins in England around the year 800. We were still dealing with the feudal system, inheritance to the first born legitimate son, and dower rights. Often real estate transactions took several years to close, so there was a good long time to complete one’s due diligence. Consequently, the doctrine of merger was developed and it made sense. Once you bought the farm, you bought the farm; that’s it, it’s yours.
Contract Law
Contract law has its origins in Mesopotamia (now Iraq) about 4,000 years ago. Some basic principles in contract law and agency law were documented in Hammurabi’s Code (1795 BCE).
The basic obligations of an agent were well known at the time: disclosure, obedience, competence, confidentiality, accounting and loyalty.
Tort Law
Tort law is modern, its history really starts about 150 years ago. A tort is a civil wrong. Usually, there is no contractual relationship between the parties. Examples include car accidents, trips and falls, environmental contamination, medical malpractice, professional malpractice, assaults, libel, and a broad (and open) list of offences that cause another personal injury or financial loss.
In large measure, this field of professional liability for real estate agents will fall under the law of torts. That’s why it is so disappointing to find that this body of law is not covered as a topic in the pre-registration real estate courses.
This particular body of law is the “loose canon” in the field of liability. While it is treated on a par with contract law in law schools, there is no course dedicated to covering the subject matter for real estate agents. Lacking the right tools to properly assess the risks of liability, and relying upon contract law and real property law alone to guide their judgment, real estate agents often become disillusioned with the law, believe that there is a tricky lawyer out there who has something up his sleeve, and a legal system where at times “anything goes”. In fact, armed with some knowledge of the law of torts, agents will be easily equipped to meet some of the important challenges in liability.
The Cases
Fraser Reid ~ Seller’s Disclosure
BG Checo ~ Litigation System
Hodgkinson and Simms~ Agency
Queen and Cognos ~ Misrepresentations
Krawchuk and Scherbak ~ Liability and Negligence
Brian Madigan LL.B., Broker