January 1st - 2009

LEGAL BEAT: Check ownership thoroughly

The buyer signed an offer to buy a house in her own name but when the bank needed someone else on title, her mother was added to the Deed. Three years later she decided to sell the house and listed it with the same REALTOR® that helped in her purchase.

The buyer signed an offer to buy a house in her own name but when the bank needed someone else on title, her mother was added to the Deed. Three years later she decided to sell the house and listed it with the same REALTOR® that helped in her purchase.

She was the only person signing the listing which had the usual clause: "6. Warranty: I represent and warrant that I have the exclusive authority and power to execute this Authority to offer the Property for sale or lease and that I have informed you of any third party interests or claims on the property which may affect the sale or lease of the Property".

The house did not sell and was relisted at $299,900. The buyers made an offer for $300,000 which she accepted. A few days later she changed her mind and told the REALTOR® that she was not going to close the deal because she was not happy with the price. She then saw a lawyer who told her that there was no deal because her mother had not signed the listing or the offer.

The buyers sued for specific performance and the court allowed that action. The evidence was that the mother was fully aware of the listing and the offer. She did not fully defend the proceedings. The court decided that the facts of this case clearly showed that the seller had her mother's authority to sign the listing and offer. On the facts the property is unique and the agreement can be specifically enforced.

McLeod v Schmidt 2007 CanLII 31753

MERV'S COMMENTS
Of course, there is more to the story. The seller is also suing her REALTOR®. She claims that he knew that her mother was a co-owner and that it was his job to add her as a seller on the listing and obtain her signature on the APS. He says he did not know that and was never told of the co-ownership.

This case shows why it is important to check ownership at the time of a listing. Ways to verify this include calling the sellers' lawyer, checking with MPAC, using GeoWarehouse or Teranet or looking at a tax bill. If you are the buyers' REALTOR® and want to protect them from unnecessary lawsuits, don’t rely on the listing - do some of these checks.

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