Each new listing brings its own unique issues and at times problems for a real estate professional.

There may be times when you will enter into a specialized area that you are not completely familiar with, but which you must enter to properly represent your client’s interest. The goal is to serve the client and avoid errors and omissions claims against you (lawyers, real estate brokers/agents, insurance brokers/agents, engineers, architects and others). Remember that the specialist that you choose must have the knowledge and training in the challenging area requiring services.

First, you must choose carefully and second, you must recognize the specific area of specialism in order to avoid an errors and omissions claim. Working in conjunction with the specialist (whether in your own field or in a related area, such as legal, environmental, health, boundaries) can involve problems of co-operation. If a case is brought, exactly who is responsible? You will be responsible if you do not recognize the need for the specialist and if the specialist you choose is not knowledgeable in the area demanding attention.

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Arbitration: Has the realty profession and its governing organizations, directors, officers and other real estate promoters ever considered inserting a clause in an Agreement of Purchase and Sale (standard form) that any civil disagreement or action against any and all real estate professionals involved in the transaction shall be resolved by arbitration only and not by a civil litigation proceeding?

Whether a court would uphold such a clause is food for thought. It certainly might be a better procedure than the open court system. It would be a private proceeding, fast and allow the parties to choose the arbitrators and get on with their business.

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Causation: Often a claimant can prove that the professional owed him/her a duty of care when they sue for alleged negligence. Even if it is found that the professional is negligent, the claimant must prove “causation”. Put simply, the negligence or failure to act in accordance with the reasonable standard of care must cause damage to the plaintiff who is suing the professional.

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Clauses in an agreement – interpretation: In a recent case, the vendor sold its property for $1.6 million. The vendor took back from the purchaser a mortgage for $800,000. The mortgage agreement indicated that if the purchaser did not obtain zoning approval, the vendor would have an option to repurchase the property for $1.2 million free of liens and encumbrances, except for the $800,000 vendor take-back mortgage.

The agreement in handwriting stated “for greater certainty” if the vendor exercised the option to purchase he would pay $1.2 million to the purchaser and the vendor take-back mortgage would be deemed to have been satisfied in full. As the purchaser did not obtain the zoning,  the vendor exercised the option. Both the vendor and the purchaser in the action looked for an interpretation of the agreement wording.

The judge found that if there was any ambiguity, it was completely removed by the sentence that said “for greater clarity (certainty)”. On appeal the Ontario Court of Appeal agreed with the application judge’s interpretation. The words used by the parties themselves, especially the handwritten “for greater certainty”, led to the court’s conclusion. (457351 Ontario Inc. v. GolfNorth Properties Inc., 2013 ONSC 5298)

Donald Lapowich, Q.C. is a partner at the law firm of Koskie, Minsky in Toronto, where he practices civil litigation, with a particular emphasis on real estate litigation and mediation, acting for builders, real estate agents and lawyers.