September 22nd - 2015

Legal Beat: When you don’t have a crystal ball

The seller took legal action against her REALTOR®, claiming she was misled by flawed advice to sell her property at a price below market value.

Legal Beat

The seller took legal action against her REALTOR®, claiming she was misled by flawed advice to sell her property at a price below market value.

Legal Beat

by Merv Burgard, Q.C

In this case, the seller took legal action against her REALTOR®, claiming that the latter provided advice that led her to sell her property at a price below market value.

Prior to this, the buyers of the same Toronto property sued this seller and her REALTORS® for failure to disclose the fact that the property contained knob and tube wiring, an outdated system of electrical wiring that is no longer considered safe.

That action about the wiring was settled but the seller, Cameron, a sophisticated and knowledgeable property owner, then claimed against the REALTOR® and her brokerage, based on that alleged misrepresentation and for insisting that she sell at a below market value during the 2009 market.

Around the same time, this seller was simultaneously involved in selling homes in British Columbia, Toronto and Barrie. The judge carefully assessed the evidence of the seller, Cameron, and the REALTOR®, Roman. In the end, the judge found that the seller was not credible and preferred the evidence of the REALTOR®.

Conflicting evidence was introduced in the case as to the state of U.S. and Canadian markets at that time. As well, there was disagreement over the obligations that a REALTOR® owes regarding advice on future market conditions, especially during turbulent markets.

The judge concluded that, “On the facts as I have found them, I hold that [the REALTOR®] did not breach any duty to [the seller] to act in her best interests. She did not misstate information about the state of the market or the relevant sales data. It should have been obvious to Cameron that Roman did not have a crystal ball and could not predict the future.”

“I have held that the statements Roman made were not misrepresentations. Cameron decided to list and then sell all three properties she was concurrently selling.  The sold price for each property was lower than the initial listing price. [This REALTOR®] was not her agent on the other two properties. I find Cameron was not relying on Roman to predict the future course of the Toronto real estate market, and Roman was not purporting to be able to do so.  Roman's statement did not amount to contractual warranties.”  The seller lost this case.

Battersby v. Roman 2015 ONSC 1083 (CanLII)

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Mervin Burgard Q.C.

The evidence presented by the REALTOR® was understandable and backed up by timely documentation. She provided written market information during three listings and numerous showings of this home and kept notes and copies of conversations and mails.

Even if the REALTOR® had done so, giving forecasts of the future may not amount to a representation. The seller had three different homes on the market at the same time in B.C. and Ontario, and also sought advice from other REALTORS® and friends. After she was sued by these buyers, she foolishly decided to blame her REALTOR® and put her through the expense and emotional impact of litigation. At first, she acknowledged it was not Roman's fault: "I had control… I don’t blame you, Gina, I blame myself.” As the judge noted, “I find that at some time after [the seller] agreed to sell the property, she started to suffer from seller's remorse."

Mervin Burgard, Q.C.

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