Real Estate Agent (Standard of Care)

Lippa v Colletta, 2017 ONSC 1122 (CanLII)

[30] The general standard of care applicable to real estate agents is a legal question. It does not vary from case to case. Simply put, a real estate agent must exercise the standard of care that would be expected of a reasonable and prudent agent in the same circumstances. As the Court of Appeal has held, however, the translation of that general standard to a particular factual matrix is a question of fact: Krawchuk v. Scherbak, 2011 ONCA 352 at para 125.

[31] The question for determination in this case is whether a reasonable and prudent real estate agent in Mr. Latimer’s position would have advised Ms. Lippa of the possible existence of Tarion warranty coverage.

[32] There is scant evidence in the record upon which the court could make the determination. Evidence will often be presented of trade custom or practice. Sometimes there is a statutory standard that must be met. The Court of Appeal has directed, however, that, in general, it is inappropriate for a trial judge to determine the standard of care in the context of an allegation of professional negligence in the absence of expert evidence: Krawchuk, as above, at para. 130. There are two identified exceptions to this general requirement:

(a) Where the standard of care may reliably be determined in the absence of expert evidence, such as where the case is about non-technical matters that an ordinary person may be expected to have knowledge about; and,

(b) Where the conduct of the defendant is so egregious that it obviously falls below the standard of care.

See Krawchuk, as above, at paras. 132-135.

Wong v. 407527 Ontario Ltd., 1999 CanLII 3788 (ON CA)

[25] Peter Wong, Jenny Wang and Peter Chan did have considerable business experience in Hong Kong and in Canada, which included using corporations, presumably to limit their personal liability. Wong even admitted that he understood the warranty was only as good as the vendor’s assets. But contracting with a numbered company poses a special risk that should have been obvious to any competent agent. Liang should have recognized this risk, explained the danger of accepting an unsecured warranty from the vendor and sought instructions from the respondents to try to obtain security. He acted for the respondents when, realistically, he could have protected their interests: before the agreement of purchase and sale was signed. In Ontario, the real estate agent is often the only professional advisor on the terms of an agreement of purchase and sale. Typically lawyers are not retained until, as in this case, the agreement has been signed by both sides. Because agents take on this advisory role, they must be held accountable for failing to protect their clients against the special risks of a transaction. I would uphold the trial judge’s finding that Liang was negligent for failing to protect the respondents’ interests by trying to obtain security for the vendor’s warranty.