Disclaimers – why you need them in your marketing materials

Understanding disclaimers and best practices for using them to minimize risk of liability for inaccuracies in marketing materials

By Savannah Hamilton, Whitelaw Twining

Drafting marketing materials is an integral part of your job – potential purchasers want to know what they’re buying, including the size of their potential dream home or lot. However, most licensees aren’t professionally trained to take measurements, or confirm the boundary lines of a property. While some licensees take their own measurements, others rely on third-party sources for their estimates of these figures.

These measurements are then included in MLS listings and marketing materials that are distributed to numerous prospective buyers. In general, you should assume that all statements in a listing advertisement will be taken at face value. To minimize risk of liability for mistakes or inaccuracies contained in marketing materials, listing agents should, and often do, insert disclaimers into these materials stating that the information contained therein is not being guaranteed.

As professional liability lawyers, we often get asked the question: do these disclaimers actually work to avoid liability? While every case ultimately turns on its specific facts, depending on the circumstances of that case and the wording of the disclaimer at issue, disclaimers can serve as an effective means of defending yourself against lawsuits arising from inaccuracies in marketing materials.

This article aims to provide a discussion of the effectiveness of disclaimers in the context of size inaccuracies and negligence claims, as well as the limitations of these clauses.

Claims against licensees for inaccuracies in marketing materials 

Claims brought against licensees for size or acreage inaccuracies are most often framed according to the law of negligent misrepresentation, claiming the licensee negligently misrepresented the size of the property.

For a successful claim of negligent misrepresentation, the buyer must establish all of the following:

1. There was a duty of care between the listing agent and buyer.
2. The representation regarding size was untrue, inaccurate, or misleading.
3. The agent acted negligently in making the misrepresentation.
4. The purchaser relied, in a reasonable manner, on the misrepresentation.
5. The reliance resulted in a loss to the purchaser.

The issue of disclaimers is particularly relevant to the fourth prong of the test, which asks whether, in the face of a disclaimer providing that the information contained in the document is not being guaranteed, is it reasonable for a buyer to rely on the information?

Reasonableness of a buyer’s reliance – importance of using strong wording in your disclaimers

There is a line of cases in British Columbia that suggests that it is not reasonable for buyers to rely on representations of size contained in listing materials where those materials contain a disclaimer warning against relying on that information.

Whether the disclaimer is effective in successfully defending a negligent misrepresentation claim depends, among other things, on the strength of the disclaimer’s wording. The more specific the wording, the more likely that the disclaimer will shield a licensee against liability.

An example of a strongly worded disclaimer is found in the case of Saberi v. Angell Hasman & Associates, 2008 BCSC 680, where the MLS listing at issue contained the following disclaimer:

ALL MEASUREMENTS ARE APPROXIMATE. The above information is provided by members of the …. Board and is from sources believed reliable but should not be relied upon without verification. The …Board assume no responsibility for its accuracy. …

Another example of a strongly worded disclaimer is found in Tabakis v. Villarosa, [1986] B.C.J. No. 2456. In that case, the disclaimer contained in the listing information was worded as follows:

ABOVE INFORMATION IS FROM SOURCES BELIEVED TO BE RELIABLE, BUT SHOULD NOT BE RELIED UPON WITHOUT VERIFICATION … ASSUMES NO RESPONSIBILITY FOR ITS ACCURACY.

Similarly, in Meagher et al v. Telep et al, 2005 BCSC 1932, the disclaimer clause in the listing information provided:

The above information is provided by members of the … Board and is from sources believed reliable, but should not be relied upon without verification.

In all three cases, the court found that the disclaimer clauses operated as clear warnings to the buyers not to rely upon the information.

It’s important to note that the disclaimers in those cases clearly stated that the information contained in the listings should not be relied on without verification. Some MLS listings and marketing materials contain disclaimers that are much less specific. These clauses often provide more general language, along the lines of “The information contained herein, while deemed to be correct, is not guaranteed.”

For instance, in an unreported case of the B.C. Provincial Court, the disclaimer in the MLS listing provided that “The enclosed information while deemed to be correct is not guaranteed.” After reviewing the relevant cases on this topic, the court found this disclaimer was ineffective as it was not sufficiently specific. In particular, the court noted the disclaimer did not include language that the information should not be relied upon without requiring verification.

A more strongly worded disclaimer in marketing materials might emphasise that the seller does not represent or warrant that the size of the property as stated is accurate, and that all measurements contained therein should not be relied upon without independent verification.

Even if your disclaimer does not contain such strong language, that doesn’t necessarily mean that it will be found to be ineffective by a court. Again, the circumstances of the case are important. In the recent unreported case of the B.C. Provincial Court, Harwood v. Campbell (November 20, 2020), the court considered the disclaimers contained in the licensee’s MLS listing and marketing materials when determining whether the buyer’s reliance on the agent’s statements regarding size was unreasonable. In that case, the buyer claimed that the actual acreage of the property she purchased was less than that represented in the MLS listing and marketing brochure.

The disclaimers in Harwood were not as strongly worded as those in the three cases discussed above. For instance, the disclaimer in the MLS listing provided that “Information herein deemed reliable but not guaranteed.” Further, the disclaimer contained in a plot map attached to the marketing brochure provided in part that it was “for informational purposes and may not have been prepared for or be suitable for legal, engineering, or surveying purposes.”

The circumstances of the Harwood case were unique in that the buyer admitted in cross-examination that she understood lot size was not being guaranteed and that she would need to do her own due diligence to confirm it. The buyer was aware of the disclaimers and, in the totality of the circumstances, the court dismissed her claim, finding her reliance on the agent’s representations was unreasonable.

Buyers may deny having read or understood the disclaimer. While this is not necessarily an excuse nullifying the enforceability of a strongly worded disclaimer (Saberi), it’s good practice as a seller’s agent to recommend that your client include a provision in the contract of purchase and sale that the information regarding size and measurements is not being warranted or represented to be accurate by the seller and should be independently verified by the buyer before being relied upon. This will alert the buyer and the buyer’s agent to the fact that further due diligence will need to be conducted in order to verify the statements contained in the listing and marketing materials, should size be a significant factor in the buyer’s purchasing decision.

A disclaimer is not an absolute shield against liability 

It’s important to note that, no matter how your disclaimer is worded, it will not shield you against liability if you know that the document containing the disclaimer is inaccurate. In other words, the disclaimer will not protect you if you are aware the information is false, or if you were reckless as to the accuracy of the information. The court will not condone misleading conduct.

As a listing agent, you must take reasonable care to ensure that what you are representing in listing and marketing materials is true and not misleading. As noted above, in general, agents should assume that all statements in a listing advertisement will be taken at face value. The Real Estate Council of BC (RECBC) makes clear that listing agents are expected to act with reasonable care and skill and to use professional judgement to ensure that the listing information is as accurate and complete as possible. Listing agents are responsible for the accuracy of any representations they make. In this regard, you must base your size representations on reliable sources. This information should never be adopted from earlier listings by other licensees.

If listing agents are taking their own measurements of the property, they should refer to RECBC’s Knowledge Base, which provides specific guidance on how to calculate measurements with respect to square area of single family homes, strata lots and commercial properties. It’s also important for you to retain a good record of how you arrived at your measurements, in case an issue arises later with respect to your calculations.

Importantly, if the information regarding property size is easily verifiable, you should ensure that you take steps to verify it. Failing to do so could lead to a court finding that you were negligent, despite the existence of even the most strongly drafted disclaimer.

A disclaimer is not the be-all, end-all in the analysis

As noted above, in order to establish a claim against a licensee in negligent misrepresentation, the buyer needs to establish actual reliance on the represented size when deciding to purchase the property (regardless of whether there is a disclaimer).

There is a line of cases in British Columbia that provide that a buyer will not be found to have relied upon the stated size of a property where they viewed the property and determined that it was acceptable for their intended use. For instance, where a buyer views a property and makes no mention as to a size requirement upon which a specific reliance could be based, a court may be hesitant to find that reasonable reliance has been established. On the other hand, where a buyer is looking for a property of a specific size and would not have bought the property having been apprised of the actual size, reasonable reliance is more likely to be established (for example, Taggart v. No. 236 Seabright Holdings Ltd., 2008 BCSC 1412).

Usually, while not always, buyers who bring these types of misrepresentation claims assert that they would not have bought the property knowing its true size, regardless of whether this is simply an after-the-fact assertion. An effective disclaimer, while not the only factor to be considered, is an important tool that you can use to defend yourself against professional negligence claims based on inaccuracies in listing and marketing materials.

Takeaways

Disclaimers can serve as an effective means of protecting you from potential liability exposure related to inaccuracies in listing and marketing materials. However, their effectiveness is not absolute. You need to take care in the drafting and wording of your disclaimers to ensure that they are strongly worded.

As always, the best protection is to avoid a claim in the first place by taking all reasonable steps to ensure that all representations, whether verbal or in writing, are accurate.