What should happen in a situation where a defect occurs a couple days prior to closing and:
1. The seller’s agent promises to fix the defect.
2. The deal closes, with reliance by the buyer, on the promise by the seller’s agent to repair the defect.
3. The seller’s agent subsequently fails to correct the defect.
4. The seller’s agent makes the situation worse by causing additional defects (should just stick to working with a pen rather than a hammer).
Can the seller’s agent be held independently liable for negligent workmanship or is the seller’s agent protected as merely an ‘agent’ of the seller?
The first issue is whether the Real Estate Sales Representative was the “agent of the Seller for the purposes here.
In respect to items 1, 2 and 3, in most situations, the Sales Representative would have ostensible authority, and the laws of agency would insulate him against liability. Only the Seller would be liable.
In respect to #4, as a Sales Representative actually undertaking the repair would be outside of their ordinary agency role. Who would ever expect that they would take on painting or laying a hardwood floor. This doesn’t fall within “trading in real estate” which, of course, is the mandate. In this situation, the Sales Representative would be directly liable to the Buyer, as any contractor would.
If the Seller disclaims this activity (#4), then the Sales Representative is “on their own”.
However, if the Seller adopts these activities, either through “ratification” or estoppel, then the Seller would be liable too.
Both of these doctrines could apply and change the result in 1, 2 and 3 if it would generally appear to most, that there would be no such ostensible authority in the first place.
If any of these were in fact to occur, the safest course from the perspective of the Buyer would be to sue both the Seller AND the Agent, in the alternative and let them point fingers at one another in the lawsuit.
Brian Madigan LL.B., Broker