Real Estate Agents’ Liability in Negligence: Various Grounds

It’s entirely possible for real estate agents to make some mistakes, just like everyone else. But, when they do something in their professional practices that causes someone some financial loss, then there’s likely to be a lawsuit.

What can go wrong?

Generally, it’s bad advice, or no advice whatsoever when a “professional” would have given advice.

  • Sometimes, it’s bad behavior.
  • Sometimes, it’s the failure to make an observation.
  • Sometimes, it’s breaking the law, and
  • Sometimes, it’s not knowing what the law is.

Foundation of Negligence in Law against Real Estate Agents

There are a number of different sources:

  1. Breach of contract at Common law,
  2. Breach of Fiduciary duties under the Common law,
  3. Breach Real Estate and Business Brokers Act, 2002,
  4. Breach of Code of Ethics under REBBA 2002,
  5. Breach of various Regulations under REBBA, 2002,
  6. Breach of CREA Code of Ethics,
  7. Breach of Third Party Contracts (ie. MLS Rules)
  8. Breach of the Criminal Code,
  9. Breach of Copyright Act,
  10. Breach of Consumer Protection Act,
  11. Breach of the Planning Act,
  12. Breach of the Family Law Act,
  13. Breach of the Surveys Act,
  14. Breach of other statutory obligations,
  15. Etc.

As you will appreciate, this is by no means an exhaustive list. For a professional real estate agent practicing in Ontario, there are duties and obligations imposed under a number of Statutes, Regulations and the common law.

Transgressions may be based in a number of different areas. Civil liability, that is, the obligation of the real estate agent to pay some form of compensation to someone who is aggrieved by reason of their actions, conduct or omissions in a “professional capacity” may be founded in contract law, tort law, trust law or the law of restitution.

In order to be successful, the plaintiff must prove that the conduct fell below the applicable standard of professional conduct.

Question: So, how do you prove that?

Answer: You call an Expert Witness!

Testimony at Trial

The Expert Witness in this case will be a real estate professional:

  1. Currently practicing the profession,
  2. Registered with the Real Estate Council of Ontario, and
  3. Qualified as an “expert” by reason of:
  1. Education,
    1. Experience, or
    1. Both.

The Expert Witness Report

The particular transgression or series of them will be identified in the Report. The Expert will “express an opinion”, that the conduct falls below the “professional standard”.

The issue of negligence is left for the Trial Judge. It does not go into the report. Negligence is a conclusion of law. The Judge will “put 2 and 2 together”. Any Expert Witness Report which expresses such an “opinion” could be struck out as being unfair, inappropriate or adversarial.

Brian Madigan LL.B., Broker

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