Limited Dual Agency and Independent Advice #459

Jan 01, 2013

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Brian Taylor
Bull Housser LLP

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Judicial consideration of the practice of limited dual agency continues to evolve. A recent court decision1 considered whether a REALTOR® had a duty to refer their client for independent legal advice before the client entered into a Limited Dual Agency Agreement (LDAA).

The plaintiff was a retired labourer with an elementary school education who, together with his wife, sought to relocate to the Okanagan. He became interested in a property and viewed it with the listing REALTOR®. He decided upon the amount he was prepared to offer for the property and the REALTOR® assisted him in the preparation of a formal offer.

The REALTOR® also had the plaintiff enter into a LDAA. The offer and the LDAA were then delivered to the seller. The offer was accepted and the transaction was completed. Sometime after completion the plaintiff became dissatisfied with a number of things about the property and sued the seller for misrepresentation and the REALTOR® for both misrepresentation and breach of fiduciary duty. The plaintiff was partially successful against the seller with respect to the claims of misrepresentation but unsuccessful against the REALTOR®.

The plaintiff first claimed that the REALTOR® was negligent in not confirming certain representations made by the seller. The court concluded that the duty of the REALTOR® was to check the completeness and accuracy of information which is usual and customary for REALTORS® to verify and all other information of which the REALTOR® is in doubt. The plaintiff did not adduce any expert evidence as to what information was usual or customary for a REALTOR® to verify. Absent any expert evidence the court was not prepared to conclude that it was customary or usual for a REALTOR® to inquire into or check the electrical system in a house or outbuilding nor was it customary or usual to examine the surrounding property.

With respect to the claim that the REALTOR® breached the fiduciary duties owed to the buyer the plaintiff claimed that, because the buyer may not have understood the nature of the LDAA, the REALTOR® was obliged to afford the plaintiff the opportunity of getting independent legal advice before entering into it, that the REALTOR® failed to meet the obligations under the CREA REALTOR® Code and finally that the REALTOR® preferred the interests of the seller over the buyer. The court dismissed each claim.

The plaintiff argued that the requirement in the REALTOR® Code for a REALTOR® to "encourage parties to seek the advice of outside professionals where such advice is beyond the expertise of the [REALTOR®]" obligated the REALTOR® to refer the plaintiff for independent legal advice before the plaintiff entered into the LDAA. The court did not agree. While concluding that there may be circumstances where such a referral was warranted, this was not one of them.

Having found that the REALTOR® had explained the document to the plaintiff, that the plaintiff had bought other houses before and had sold their previous property through limited dual agency and that there was no evidence to suggest that the plaintiff was incapable of understanding the document, the court concluded that the REALTOR® did not have an obligation to refer his client for independent legal advice. The plaintiff also tried to argue, with no success, that the fiduciary duties of the REALTOR® were not affected by the terms of the LDAA.

Once again a BC court has recognized that "limited dual agency agreements are not uncommon in this province." In this case the court confirmed that, except in extraordinary circumstances, a REALTOR® is not obligated to refer his client (even a client with limited education) for independent legal advice before entering into a LDAA where the document has been explained to the client and there is no evidence to suggest that the client was incapable of understanding it.

  1. Paniccia v. Eckert, 2012 BCSC 1428.

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