2021 – the year in claims
A busy year in real estate sales resulted in increased claims reported to E&O in 2021. This year we expect to have approximately 300 claims reported, compared to 252 in 2020, an increase of 19% (see graph).
We expect three to four claims for every 1,000 residential real estate transactions. As there is generally a delay between the event giving rise to the claim (the alleged “error”) and the claim being advanced by the consumer and reported to E&O, even if transactions slow down in 2022, we anticipate the number of claims reported next year will continue to reflect 2021’s active market.
E&O currently has 463 open claim files, with 72% in litigation. The bulk of litigation files are in Supreme Court (82%) with the remainder in Small Claims Court or the Civil Resolution Tribunal. E&O’s four staff lawyers are currently handling 43% of litigation claims in-house. The claims surveys completed by our insureds when a file is closed show the high regard for our staff lawyers, with an average approval rating of 99.42 (out of 100) for files closed in 2021.
More than half of claims are for misrepresentations. These claims are easily avoided by basic due diligence. We remind you to always use reliable sources for information and to verify information, whenever possible. It’s also a good idea to cite the source of your information when making a representation. If you’re asked for information and don’t know the answer – say so! Guessing is a sure way to become a client of E&O.
2021’s five most expensive claims
- Negligence – A limited dual agent was alleged to have been negligent in dealing with a person who did not have authority to sell the property. Total cost, including legal fees – $667,000.
- Negligence – A buyer’s agent was alleged to have been negligent for failing to discover that there was no occupancy permit for the home. Total cost, including legal fees – $385,000.
- Misrepresentation – A seller’s agent was alleged to have misrepresented that in-suite laundry could be installed in a strata unit. Total cost, including legal fees – $335,000.
- Negligent drafting – A seller’s agent was alleged to have been negligent in failing to draft the contract to include a restrictive covenant as a permitted encumbrance. Total cost, including legal fees – $325,000.
- Negligent advice – A buyer’s agent was alleged to have been negligent in advising a buyer that if they defaulted on the contract, they would only lose their deposit. Total cost, including legal fees – $219,000.
