I am trying to determine whether the failure to conduct a title search amounts to negligence on the part of an agent.
The law is always changing, and I know that my answer in 2027, will be “yes”. However, I am unsure whether that is the case in 2024.
Negligence is the failure to meet the standard expected of a “reasonable” agent in the circumstances, not the best or the worst.
The difficulty is that no one has effectively mandated this step for real estate agents, not RECO, Humber or OREA. Although it’s a good idea, where would someone get the experience and be expected to undertake the search?
Back in the day, this could have taken several days in the Registry Office by an experienced title searcher, but today, it’s just a few minutes of time spent on GeoWarehouse.
So, I would appreciate your view about the following situation. Bob is a surgeon and wants a swimming pool, because he needs to be able to get to the hospital in 10 minutes from his house. A cottage won’t work. The agent finds a ravine lot, with a large backyard which is perfect. There’s no pool now but there is plenty of space. There is a restrictive covenant on title which effectively says “no pools”. The agent doesn’t spend the $30.00 to search and leaves this issue to the lawyer. The lawyer doesn’t know anything about the interest in the pool, and gets Title Insurance. Bob moves in with his family and finds out about the no pool restrictive covenant. Title Insurance is of no help. He cannot sue his lawyer, who didn’t know about this issue until it was too late.
Can Bob sue his real estate agent? The only thing that the agent missed was the title search and the correct answer would have been evident in the restrictive covenant.
There are no RECO Bulletins on point. No training of any kind is available. However, the “best” agents would have caught this. Without the title search, the answer will not be discovered until Bob moves in.
RECO’s insurer will argue that the agent met the expected standard of care, and while the agent might not have been the best agent out there, their conduct still met the standard of a reasonable agent in the circumstances.
If you are an experienced real estate agent what do you think the answer should be in 2024?
Brian Madigan LL.B., Broker
Comments 2
My opinion is that once the buyer and the agent sign a Buyer Represention Agreement, which implicates promoting and protecting best interests of the client, the fact that a restrictive covenant exists on title preventing the creation of pool which the buyer specifically wants a forms a disclosure requirement it the pool requirement is documented in the BRA.
Author
Under TRESA, there is now an obligation upon the Buyer’s agent to “document” the list of material facts. It could be in the BRA, but it does have to be there.