Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

September 9th - 2005

Merv’s column: Illegal suite breaks deal

The buyers were interested in purchasing a home and enlisted the services of a real estate agent.

The buyers were interested in purchasing a home and enlisted the services of a real estate agent. The buyers allege their agent failed to protect their interests and in particular, failed to advise them with respect to a critical municipal by-law prohibiting a basement bedroom.

The buyers had emphasized the requirement of four bedrooms or space that could be converted to a bedroom. They eventually were shown a bungalow home and made an offer that was accepted. When they later discovered that the fourth bedroom was illegal they decided not to close the transaction. That cost them over $60,000 and they sued their agent for their losses.

The judge said; "I find as a fact that (the agent) owed the (buyers) a duty of care, which included the disclosure of material facts about the property to his principals. I further find that it was a material fact, known to (the agent), that the basement "fourth bedroom" was not compliant (or potentially not compliant) with the city's by-law." ... "(the agent) knew, or ought to have known, that the (buyers) considered this basement room to be a bedroom. Although the listing said otherwise, and counted this room as den, he knew that the (buyers) thought of it as a bedroom, and he did not correct their impression." ... "In my view, (the agent) owed both an equitable duty and a legal duty to tell the (buyers) of the fact that he believed the basement bedroom might not be in compliance with the municipal by-law. In my view, the duty of care of an agent and his fiduciary duty are intermingled in the case at bar to the degree that the breach of fiduciary amounts to a breach of the duty of care."

Malpass v Morrison 2004 ONSC 12542

MERV'S COMMENTS
In my seminars I often use an ad by a careful Brampton REALTOR that said “illegal in-law suite.” When in doubt, tell the whole truth – and warn them of the risks.

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