Keep up to speed
March 2020
It’s annoying when slow drivers use the fast lane. They shouldn’t be there.
By the same token, licensees who are not familiar with special facts or issues pertaining to the property or area they are working in should not be doing the deal. Claims are made against licensees who act outside their area of expertise. This could be in dealing with specialized properties like waterfront, farms, commercial, strata or manufactured homes, or it could be knowing special facts about the geographic areas you work in.
Court cases
Courts have made clear that licensees are expected to know special facts about the areas they are working in. For example, in the case of Jung et al v Ip et al (1988), 47 R.P.R. 133 (Ont DC), problems with termites were well-known in the area of the subject property at the time of the transaction. The Court found that the seller’s agent ought to have known about the problem as part of his general competencies as a listing agent selling properties in the area. He was found to have been negligent. The case is old, but the principles still apply.
In the case of Stoberg v Solutions Realty Inc., 2014 BCPC 611, a licensee selling a manufactured home was found liable for not being aware of the requirement for a CSA label. Here’s what the judge had to say about the licensee’s conduct:
“In my view, based on the above authorities, (the licensee) ought to have known of the existence of Electrical Safety Regulation 100/2004 as it applied to manufactured homes. At the time of this transaction, (the licensee) had been a realtor for approximately 12 years and was a broker for 10 years. In addition, at the time of this transaction, approximately 15% of (the licensee’s) business involved the sale of manufactured homes. As an experienced realtor in the purchase and sale of residential properties, including manufactured homes, (the licensee) owed a duty to Mr. S to advise him of the requirement of a CSA label. This legislation had been in effect for over two years at the time the Contract of Purchase and Sale was entered into.”
E&O Claims
There are numerous examples of claims made against licensees who were not familiar with important facts about the property they were selling, including:
A buyer’s agent misrepresented to the buyer that the property being purchased fell outside of the area in which foreign buyer’s tax applied. That was incorrect. Licensees doing business in areas impacted by taxes such as the foreign buyer’s tax, speculation and vacancy tax or empty homes tax should know this.
A licensee selling a pre-sale commercial strata unit incorrectly told their buyer that a seven-day rescission period applied, and they could change their mind about buying within this seven-day window. The licensee, who specialized in residential properties, wasn’t aware that the seven-day rescission period did not apply to this commercial unit.
A licensee assisting a 50-year-old buyer in purchasing a strata unit was not aware of an age restriction in the building precluding anyone under the age of 55 from living in it. It would have been wise to make sure the client was aware of the bylaw before committing to the deal (this is one time when it’s not rude to ask a person’s age!).
A licensee was not aware of a bylaw in a municipality that allowed only one secondary suite in a residential home, making the second suite illegal unless the owner lived in it.
In the news
Licensees should be aware of special issues affecting the properties they are selling.
A good example is an issue currently in the headlines about the problems some strata corporations are having with increases in insurance premiums or the inability to get insurance for the building. Licensees assisting clients who are buying or selling strata units must be aware of the issues so that they can properly advise their clients of the risks and implications and recommend steps to protect them.
BCREA has published extensive information and guidance for licensees on this issue. See The strata insurance clause, and other ways to help with strata transactions and the podcast The changing landscape of strata insurance in BC.
Three tips to avoid claims
Education: If you’re thinking of working in a new area or with new types of properties, make sure that you learn about them. Look for a mentor or specialist who will help teach you the ropes. There may also be courses available to help you get started. For example, BCREA offers many courses on specialized properties including Strata Fundamentals, Foreclosures and Court-Ordered Sales, Selling Tenant-Occupied Properties, and Manufactured Homes: What Realtors Need to Know.
Referrals: Consider referring your client to another licensee who is more familiar with the type of transaction or property concerned.
Investigate: Use other information resources to investigate the transactions or properties you are dealing with, such as municipal records, online resources or the BCFSA’s Knowledge Base.
