Too many court cases involving agents are a result of one common denominator – not doing due diligence.
Based on cases that I have dealt with over the years, here are some recommendations on how not to get sued by doing a proper job when buying or listing.
One that I believe should be primary: Always go into MLS, search the address of the property you are going to list or sell and go back to see all listings as far back as your system permits. Look for the major criteria – lot size is a big one – easements if noted, broker’s comments. Maybe it had UFFI, a marijuana grow-op, non-zoning compliance and more that your seller today is not disclosing.
If you are in litigation and there were conflicting previous listings, then why did you not check? If someone can find the former listings to hold against you, then you should have found them as well.
Flood plains are a major issue and have resulted in too many cases where agents have been sued for not disclosing. Depending on where you are in Canada, did you go into the website for the local conservation authority or did you look at flood plain maps? I currently have three cases where the agents did not verify these facts and told the buyers that they could build. One involves a multi-million-dollar commercial complex that can never go forward.
Termites are a big deal in some cities. You should know the termite areas. Toronto is one of the most infested of Canadian cities but there are termites in Southern Alberta and on the West Coast as well.
In Toronto, a prudent agent calls the leading termite pest control firms to see if they have a record of treating the house. Recently when I checked on a new listing of mine, I was informed that the attached house next door was treated. That led to a termite inspection of my listing and now, treatment. When acting as the buying agent in a known termite area, a simple clause that the seller to the best of their knowledge did not know about termites nor have treatments is mandatory. In two cases, the agents never inserted such a clause and guess what was found after closing? Yes, termites.
Zoning: If your client tells you it is a legal duplex or whatever, do you just take their word? No, you go physically to the municipality, you log the time you arrived, who you spoke to and what they reported to you. I can attest to this. You can phone in to some municipalities but I have found too many wrong answers from city clerks who just want to shrug us off. Take the time and physically go. In older sections of larger cities, I do not trust my clients when they say they have onsite parking. I always go to city hall to verify and while there, I ask about building permits.
The law is clear, if the information is in the public domain and anyone could have easily accessed it, then why didn’t you?
Always Google, then Bing, then Yahoo (yes, all three) every civic address that you are working on – always! Surprises do pop up, especially if that property was a crime scene or had a fire or other damage.
There are many more acts of a lack of diligence but these are the dominant cases of late. Too many of the cases that I write expert reports about would never have happened if the agents had exercised diligence, checked facts and asked the right questions. You cannot take a seller’s word for anything. Court cases (Krawchuk v Sherbak) have determined that in Canada.
Be careful, be cautious, be diligent and never be sued!
Barry Lebow, FRI, Master-ASA, ABR, SRES, is one of Canada’s most recognized real estate authorities. Now in his 54th year of professional real estate, Barry has been honoured by many real estate associations for his work in the profession. He has testified in more than 500 trials across North America. He is the founder of the Accredited Senior Agent designation program. A teacher, trainer and educator, he is an active broker at Re/Max Ultimate Realty in Toronto. Visit barrylebow.com to contact Barry.
