When you buy or sell real estate, you can’t let anything go wrong, but if you have the advice and services of a Toronto real estate lawyer from the beginning of the process, that lawyer will work to ensure that the transaction goes smoothly and that your best interests are protected.

If it’s necessary, can you take legal action against a real estate agent in the Toronto area? The answer is yes. The lawsuits that are filed against real estate agents in Ontario usually allege a conflict of interest, kickbacks, or negligence.

When does a real estate agent have liability? What steps are required to sue a real estate agent, and what will an Ontario real estate lawyer do on your behalf? Keep reading this brief discussion of real estate and the law in Ontario, and you will find the answers to these questions.

When Does a Real Estate Agent Have Liability?

A real estate agent usually owes fiduciary and contractual duties to his or her clients. If an agent breaches those duties, the agent may have liability. In some cases, a real estate agent may additionally be liable to the other party in a real estate transaction.

However, in any particular real estate transaction, the presumption that a real estate agent is a fiduciary is rebuttable, and the court may have to scrutinize the agent-client relationship to determine if the real estate agent in fact has fiduciary duties that have been breached.

Whether or not there is a fiduciary relationship depends on the “confidential and trust-like nature” of the relationship. When an agent is given confidential information (such as the amount a client is prepared to pay or receive in a transaction), the fiduciary relationship is established.

What Constitutes a Conflict of Interest?

A real estate agent must avoid conflicts of interest and must take the actions that are in a client’s best interests. A fiduciary who uses the position for his or her personal gain may be held liable if a client brings a conflict of interest claim.

An agent’s interests may not be in conflict with a client’s own interests unless that client provides informed consent. Here are some examples of how a real estate agent may have – and may avoid – a conflict of interest:

  1. Buying a client’s property: Agents who want to purchase a client’s property are required to give written notice – with full disclosure of whatever the agent knows that affects or will affect the value of the property – and to provide that notice to all parties involved.
  2. Buying a property that a client is interested in: An agent who buys a property that a client is interested in must prove that his or her client had complete knowledge of that agent’s actions and of the agent’s potential to benefit from the transaction.
  3. Dual agency: If an agent or broker represents both sides in a real estate deal, the court will presume a conflict of interest exists. Agents must disclose whenever they represent both parties in a transaction, and they must have the consent of both parties.

What Else Must Real Estate Agents Avoid?

In his or her fiduciary role, a real estate agent may not be compensated by anyone except the client and may not receive “secret” profits without a client’s consent. Agents may not receive commissions or consideration from both sides unless a client consents after full disclosure.

An agent also may not obtain a “kickback” from any third party that provides services such as an appraiser, mortgage lender, home inspector, moving company, contractor, or home decorator.

However, some lawsuits filed against real estate agents in Ontario involve no conflict of interest, no secret profits, and no kickbacks. Instead, real estate agents are sometimes sued because a client alleges that the agent was simply negligent.

What Constitutes Negligence by a Real Estate Agent?

Real estate agents owe clients a duty to fulfill the professional “standard of care” established for their industry. When an agent does not handle a transaction with professional skills, expertise, and care, the agent may be held liable for damages caused by his or her negligence.

When a court determines if an agent has met the professional standard of care, the agent’s acts are compared against the actions of a reasonably careful agent in comparable circumstances. The court may consider industry practices and customs as well as regulatory and statutory standards.

Agents are obligated to verify independently the information that clients depend on when clients decide to purchase real estate. Agents may be liable for giving inaccurate advice or for failing to investigate, research, or share pertinent information with clients.

How Can a Real Estate Lawyer Help You?

Everyone involved in a Toronto-area real estate transaction needs to proceed cautiously and carefully. Negligence or a conflict of interest can do serious harm to a buyer, seller, agent, or broker – and to anyone else involved in the transaction.

But if it’s done right, selling and buying real estate in the Toronto area does not have to create problems. With a Toronto real estate lawyer at your side, you can be certain that every element of your real estate transaction is compliant with both the law and your best long-term interests.

Unlike brokers and agents, an Ontario real estate lawyer is not paid with a commission. This means that your lawyer can be objective and entirely dedicated to you and your best interests throughout a transaction and a closing.

When Should You Contact a Real Estate Lawyer?

If you believe that your real estate agent has a conflict of interest or has acted negligently in a way that has harmed you, a Toronto-area real estate lawyer will review your claim and determine if you have grounds to file a lawsuit.

If you sue, your lawyer will handle the case and fight aggressively on your behalf. However, if you have the advice of an astute real estate lawyer from the start of the transaction process, you will reduce or entirely avoid most of the risks and difficulties that a real estate transaction entails.

Your real estate lawyer will carefully scrutinize every document that’s part of a real estate transaction and will ensure the transaction is fully compliant with the law. Additionally, your lawyer will advise against taking any steps that run counter to your long-term best interests.

Don’t wait for the closing. Even if you are only thinking about buying or selling real estate in or near the Toronto area, schedule a consultation now with a Toronto-area real estate lawyer who can provide you with the legal advice and insights that you will certainly need.