So, here’s a problem. You are a real estate agent and you act for a buyer. You recommend a home inspection. Everything goes well and the deal closes. Then, a month or so later, the basement leaks. What do you do?
The buyer needs to find some answers. What happened and what went wrong? Was it avoidable or preventable in some way? How does the problem get fixed and who is going to pay for it.
I get this phone call regularly. Leaky basements are frequent. There is an issue with after-closing service and a professional referral.
Obviously, you need to handle both. First, you should be aware of the fact that you may be at risk:
- for not noticing the problem,
- recommending an incompetent inspector, or
- failing to read the report with diligence.
Also, you may not have put proper inquiries to the listing agent or properly completed your own investigations. So, you need to massage that issue. Be there, be present and be involved. It’s far more likely that you will be blamed if you don’t get involved in some way. At this point, you really don’t want a botched up repair. This is just going to add to the problems.
The client will have suffered some damage. The next issue is recovery. Perhaps Tarion, perhaps title insurance, perhaps Court or arbitration? Yes, the client should have a lawyer involved, but not likely the real estate practitioner. What’s needed here is a lawyer who handles commercial litigation. It’s very rare to find a real estate lawyer who does both. Usually, it’s one or the other. If you are actually helping out, you’ll be less likely to be sued.
My involvement in these types of cases, is as an expert witness. Half the consumers don’t have lawyers, and the other half of the time, it’s the lawyers who have contacted me directly.
The issue from my perspective is negligence on the part of the listing agent, listing brokerage, buyer’s agent and buyer’s brokerage, or a breach of a contractual obligation under the arrangements (express or implied) under the BRA or Customer Service contract. Naturally, at issue, is the seller’s liability and that of the inspector. There are apportionment provisions under the Negligence Act. In my experience, the buyers’ agents who assist, monitor, and continue to be involved will be far less likely to be sued than those who simply say “call a lawyer”.
Brian Madigan LL.B., Broker