What Every Realtor Should Learn from Slatkovsky v. Machado
A recent Ontario Superior Court decision released 15 June 2026 should serve as required reading for every real estate professional in Ontario.
The case involved a renovated century home, an undisclosed lack of building permits, structural deficiencies, a dual-agency arrangement, and ultimately a judgment against both the Sellers and the real estate agent.
The decision is a reminder that registrants have a duty not only to disclose material facts they know, but also to make reasonable efforts to discover material facts they ought to know.
The consequences of failing to do so can be significant.
The Facts
In 2013, purchasers Karen Slatkovsky and Adrian Levytsky bought a beautifully renovated century farmhouse in Puslinch for $800,000.
The property had undergone extensive renovations approximately ten years earlier. Marketing materials prepared by the listing agent described the work as an extensive restoration and highlighted structural and mechanical improvements.
The listing salesperson, Gerry Lall, represented both the Sellers and the Buyers.
After closing, the purchasers learned that the extensive renovations had been completed without a building permit.
- No municipal inspections had ever occurred.
- No occupancy permit had been issued.
When an engineer was retained to investigate further, several structural deficiencies were discovered, including improperly installed load-bearing supports that violated the Ontario Building Code.
The purchasers eventually sold the property at a substantial loss and commenced legal proceedings.
The Real Estate Agent’s Error
The Court found that the real estate agent knew substantial structural renovations had occurred. However, he never asked some very basic questions:
- Was a building permit obtained?
- Were inspections completed?
- Was an occupancy permit issued?
- Can any of this information be verified?
The Court found that none of these inquiries were made.
Even more damaging was the agent’s admission that he did not know whether a building permit would have been required for the renovations.
The Judge described this as a serious professional failure.
Why the Court Focused on REBBA Code of Ethics
A central issue in the case was section 21 of the REBBA Code of Ethics.
That section requires registrants to:
- Take reasonable steps to determine material facts relating to a transaction and disclose those facts at the earliest practicable opportunity.
The Court concluded that the existence, or absence of a building permit for major structural renovations is unquestionably a material fact.
The Court also noted that standard OREA forms available at the time specifically asked questions about:
- Renovations
- Building permits
- Final inspections
- Occupancy permits
Those questions were never asked.
The Court ultimately held that the agent breached both his professional duty of care and his fiduciary obligations to the purchasers.
“I Didn’t Know” Is Not a Defence
One of the most important lessons from this case is that ignorance is not necessarily a defence.
The Court made it clear that a registrant cannot simply avoid liability by claiming not to know something if reasonable inquiries would have uncovered the information. A registrant who fails to ask the question may be held responsible for not knowing the answer. The obligation under the Code of Ethics is not merely to disclose what is already known.
It is to take reasonable steps to determine material facts.
Multiple Representation Increased the Risk
This case also illustrates the risks associated with multiple representation.
When the same registrant represents both Buyer and Seller, the duty to remain neutral can sometimes create tension with the obligation to investigate and disclose material facts.
The Court found that the agent’s failure to investigate and disclose information about the renovations ultimately harmed the purchasers while benefiting the sellers.
That finding contributed to the Court’s conclusion that the agent breached his fiduciary obligations.
Practical Lessons for Registrants
Whenever you encounter a property that has undergone significant renovations, additions, basement finishing, structural alterations, or major improvements, consider asking:
Permit Questions
- Were building permits obtained?
- Are copies available?
- Were inspections completed?
- Was final approval granted?
Municipal Verification
- Should municipal records be checked?
- Is there uncertainty that requires further investigation?
Documentation
- Is there a Seller Property Information Statement?
- Has Form 820 or another information-gathering document been completed?
Disclosure
- Have all material facts been disclosed?
- Is there information that a reasonable buyer would want to know before making a decision?
The Result
The Court awarded the purchasers more than $150,000 in damages. A substantial portion of that award was assessed directly against the agent.
The Court found that had the purchasers known the renovations were completed without permits or inspections, they would never have purchased the property.
Considerations
This decision reinforces a principle that has appeared repeatedly in Ontario real estate cases:
Registrants are not expected to be engineers, contractors, or municipal inspectors. However, they are expected to ask reasonable questions, investigate material facts, and disclose what they learn.
When a property has undergone significant renovations, questions about permits and inspections should be among the first questions asked not the last.
As this case demonstrates, failing to do so can become a very expensive lesson many years after the transaction has closed.
Brian Madigan LL.B., Broker