Grow-op possibility and actions against property manager and dual agents #386

By Gerry Neely
B.A. LL.B.

A rumour and other indirect evidence that a home had been used to grow marijuana resulted in separate actions being combined in a single provincial court trial because of their common facts.

One action was brought by the buyer of the house against the former owners and the dual agents who acted for the buyer and sellers for damages suffered due to their failure to disclose the possibility of a grow-op.

The other action was brought by the former owners of the home against the property management company that rented it to the alleged grow operator, for failing to exercise care in the selection of the tenant and a lack of proper inspections. They wanted reimbursement for the cost of repairs and the return of fees paid to the company. Their written contract didn't refer directly to inspections. Instead, in very general terms, the company was required to act reasonably in performing every act usually performed by a manager of similar premises.

The company only performed interior inspections if it had a specific concern, upon request, if there was a need for repairs or maintenance and for incoming and outgoing inspection. The property manager likely would have avoided litigation if this wording had been in the contract, because the owners assumed the management company would inspect the exterior monthly and the interior periodically.

Damages to the house were discovered after an exterior inspection revealed the furniture had been removed. The tenant left the house when notice was given of the intention to do an interior inspection. No direct evidence of a grow-op was left, but the type of damages pointed to a grow-op as their source. The lack of direct evidence led the former owners to decide it was unnecessary to disclose to their representative or in the Property Disclosure Statement the possibility that there had been a grow-op in the home.

The dual agents first learned of the possible grow-op from another representative in their brokerage firm who had been told this by a client. The dual agents decided they had an obligation to make their principals aware of this possibility, and proceeded to do so. The buyer denied having been given this information.

The judge accepted the evidence of the dual agents, concluding the information had been given to the buyer. Therefore, and in the absence of any actual knowledge by the dual agents of the potential defect, there was no breach of their respective duties to the former owners or the buyer.

The former owners fared no better with their claim against the property manager. The management company's check of the tenant's employment record and history with prior landlords didn't reveal anything that would concern a reasonable landlord. Their credibility suffered because they differed as to the inspections that had been agreed upon in the discussions leading to the contract with the property management company. The judge dismissed their claim, concluding the contract didn't impose an obligation for regular interior inspections and the company had acted reasonably in carrying out exterior inspections. 1

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