Have you every wondered what legal duties real estate agents owe? The Honourable Madam JusticeM.H. Hollins looked at this issue in Rath v 4th Street Holdings Ltd, 2020 ABQB 447. In that case the court indicated realtors have both contractual and fiduciary duties.
Contractual Duties
In this specific case (and many such contracts have similar clauses) the court looked at the realtor's contractual duties. These duties may depend on the specific language in each individual contract. The court said at paragraph 6:
[6]The Exclusive Buyer Agreement obligated Re/Max and Mr. Wood to, inter alia, “take reasonable steps to find and give you [the client] information about properties and transactions you are interested in”. There was also a Consumer Relationships Guide which set out the responsibilities of the agent and the client, including the agent’s obligation to “tell you everything they know that might affect your relationship or influence your decision in a transaction, even if they don’t think its important.”
Fiduciary Duties
In addition to contractual duties, there are Fiduciary Duties. This case has a good discussion of what these are starting at paragraph 12:
[12] It was agreed, consistent with the applicable jurisprudence, that the Defendant realtors owed fiduciary duties to the Plaintiffs as their clients; S. Maclise Enterprises Inc. v Grover, 2014 ABQB 591 at para.85.
[13] The content of that duty was reviewed by Browne, J of this Court in Polaris Realty (1995) Ltd. v Minchau, 2010 ABQB 116 at para.31:
It is useful to summarize the law respecting fiduciary duties of real estate agents involved in the purchase and sale of land. We can begin with the case of D'Atri v. Chilcott (1975), 1975 CanLII 596 (ON SC), 7 O.R. (2d) 249, 55 D.L.R. (3d) 30 (Ont. H.C.) (approved by Moir J.A. in Palinko v. Bower, 1976 ALTASCAD 86 (CanLII), [1976] 4 W.W.R. 118 (Alta. C.A.)) which summarizes the following principles relating to fiduciary duty as follows (at para. 32):
I think therefore that it is clear from the authorities that the following principles are applicable to this case:
1. that the relationship between a real estate agent and the person who has retained him to sell his property is a fiduciary and confidential one;
2. That there is a duty upon such an agent to make full disclosure of all facts within the knowledge of the agent which might affect the value of the property;
3. that not only must the price paid be adequate but the transaction must be a righteous one and the price obtained must be as advantageous to the principal as any other price that the agent could, by the exercise of diligence on his principal's behalf, have obtained from a third person, and
4. that the onus is upon the agent to prove that those duties have been fully complied with.
[14] The legal expectations of the real estate agent are quite high. In Ocean City Realty v A&M Holdings Ltd, (1987) Carswell BC 616, the British Columbia Court of Appeal found a realtor to have breached her fiduciary duties by failing to advise her purchaser client that she was kicking back a portion of her commission to the vendor in order to secure the sale. Even though she obtained no benefit, this was said to be information about her relationship with the other party that her purchaser client ought to have known.
[15] The test for what an agent must disclose is an objective test, determined by "what a reasonable man in the position of the agent would consider, in the circumstances, would be likely to influence the conduct of his principal"; Ocean City Realty at para.22.
[16] The information not disclosed must be material and the determination of what is reasonably material is objective; Sharbern Holdings Inc v Vancouver Airport Centre Ltd, 2009 BCCA 224 at paras. 98-99. Some cases have said that the non-disclosure must go to the fundamental nature of the transaction; Polaris Realty at para.53.
[17] In conclusion, with respect to the both the Defendants’ contractual and fiduciary duties, I would describe their disclosure obligations as broad but still requiring an objective materiality....
If you believe your realtor has breached a duty of care, or if you are a realtor wanting more elaboration in this area, please feel free to contact us.
The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.
