Painchaud v. Krimker, 2026 ONCA 494
The Ontario Court of Appeal has released an important decision for every real estate professional in the province. In Painchaud v. Krimker, the Court reaffirmed that a registrant’s responsibilities extend well beyond simply preparing paperwork and obtaining signatures.
Where a client misunderstands the legal consequences of an Agreement of Purchase and Sale, a real estate professional may have a duty to recognize that misunderstanding and correct it.
Although the Court did not ultimately determine whether the agent was negligent, it concluded that the Trial Judge failed to consider the full scope of the agent’s professional obligations. As a result, the Court ordered an entirely new trial.
The Facts
The purchasers entered into an unconditional Agreement of Purchase and Sale to buy a luxury home in Toronto’s Bridle Path neighbourhood. The agreement required a $350,000 deposit.
After signing the agreement, the purchasers decided they no longer wished to proceed. They believed they could simply refuse to deliver the deposit and then negotiate a mutual release with the Sellers. According to the purchasers, their real estate agent had referred to the mutual release clause as an “escape hatch.”
The purchasers failed to pay the deposit, the transaction collapsed, and the Sellers commenced an action for breach of contract. The purchasers eventually settled that lawsuit and then sued their own real estate agent and brokerage, alleging professional negligence and breach of fiduciary duty.
The Trial Decision
The Trial Judge dismissed the purchasers’ claim.
The judge accepted that the real estate agent owed fiduciary duties to the purchasers but concluded there was insufficient evidence that the agent had actually told them they could walk away from the transaction without consequences.
The Trial Judge also relied heavily upon the fact that the purchasers had signed and initialled the Agreement of Purchase and Sale, concluding that the agreement had been reviewed with them.
At the same time, however, the Judge criticized the agent for several aspects of his professional conduct. He found that the agent had:
- failed to maintain proper contemporaneous notes,
- failed to keep adequate records, and
- had even misled the sellers and their representative by falsely stating that the transaction was proceeding.
Those findings ultimately affected the costs award but not liability.
The Court of Appeal’s Decision
The Court of Appeal unanimously allowed the appeal.
The Court concluded that the Trial Judge focused too narrowly on whether the agent had actively misled the purchasers.
That was only one aspect of the negligence claim.
The more important question was whether the agent failed to meet the professional standard of care by not properly advising his clients about the legal consequences of signing an unconditional Agreement of Purchase and Sale.
The Court held that the Trial Judge failed to determine whether the agent should have:
- explained the legal consequences of signing an unconditional offer;
- warned the purchasers that failing to deliver the deposit would place them in breach of contract;
- advised them of their potential liability for damages;
- corrected any misunderstanding regarding the mutual release clause; and
- properly kept his clients informed after communicating with the sellers.
Those issues formed a central part of the negligence claim but were never fully addressed.
The Professional Standard of Care
One of the most significant aspects of the decision is the Court’s discussion of the standard of care expected of Ontario real estate professionals.
Both the purchasers’ expert witness and the agent himself agreed that a competent real estate professional should advise clients regarding:
- the important terms of an Agreement of Purchase and Sale;
- the legal consequences of signing the agreement; and
- the potential risks and liabilities arising from the transaction.
The agent acknowledged during his evidence that the mutual release clause inserted by his brokerage was essentially meaningless in the context of an unconditional offer. He also admitted that he could not specifically recall explaining that clause or warning the purchasers about the consequences of breaching the agreement.
The Court held that these issues required careful factual findings which the trial judge failed to make.
Signatures Alone Are Not Enough
Perhaps the most important lesson from this case is the Court’s rejection of the notion that signed and initialled documents automatically establish that the parties understood what they were signing.
The Court observed that signatures do not answer several critical questions:
- Did the purchasers misunderstand the legal consequences of the agreement?
- Was that misunderstanding reasonable?
- Did the agent know, or ought to have known, about the misunderstanding?
- Did the agent have a professional obligation to correct it?
Those questions remained unanswered, making a new trial necessary.
Practical Lessons for Ontario Real Estate Professionals
This decision serves as an important reminder that registrants cannot assume clients fully appreciate the legal consequences of an Agreement of Purchase and Sale simply because they have signed it.
Particular care should be taken whenever a purchaser submits an unconditional offer. Clients should clearly understand that:
- an accepted Agreement of Purchase and Sale is a legally binding contract;
- failure to deliver the deposit is itself a breach of the agreement;
- refusing to complete the transaction may expose the purchaser to significant damages; and
- a mutual release requires the consent of both parties. It is not an automatic right to terminate the contract.
Equally important is maintaining detailed contemporaneous notes documenting the advice provided to clients. Good file documentation often becomes critical evidence if the transaction later results in litigation.
Considerations
Although the Court of Appeal stopped short of finding the agent negligent, the decision sends a clear message about the role of Ontario real estate professionals.
The duty owed to clients is not merely administrative. It includes helping clients understand the legal significance of the agreements they sign and correcting misunderstandings where they become apparent.
For registrants, this reinforces an important principle: obtaining signatures is only part of the job. Ensuring that clients appreciate the consequences of their decisions may be equally important.
As this case proceeds to a new trial, it will likely become one of the leading Ontario authorities on the professional standard of care expected of real estate registrants advising purchasers in residential transactions.
Brian Madigan LL.B., Broker