Representations Regarding Property Boundaries #428
By Edward L. Wilson
Lawson Lundell LLP
A REALTOR® should always take care when making any representation about the boundaries of a parcel of land. The location of buildings, fencing, landscaping, sidewalks and roads are often misleading indicators of a property’s true boundaries.
In a recent decision,1 the court considered a case where the buyers, in the presence of both the sellers’ agent and their own agent, had toured a home located on a large lot. Representation was made by one of the agents that the property in question stretched between the road located to the east and the road to the west and thus allowed access to the property from both roads. In fact, there was a strip of land owned by the municipality and located to the east of the property that prevented direct access to the eastern road.
The sellers’ agent had been warned about this issue by a neighbouring property owner and had made some inquiries with the municipality, but had not sufficiently clarified the issue and failed to identify the presence of the municipality-owned property. The sellers’ agent represented through words or conduct that the property extended to the fence located on the property but, in fact, the fence was located on the municipality-owned property. The ability to access the eastern road was important to the buyers as they wanted to reorient the house to the eastern road as part of an expansion of the home.
After closing, the buyers discovered the parcel did not extend to the eastern road and they could not construct direct access to the eastern road without first buying additional property from the municipality. The buyers sued the sellers and the sellers’ agent for the tort of negligent misrepresentation.
The court considered the sellers’ agent’s liability based in the tort of negligent misrepresentation by applying the five-part test in the Queen v. Cognos:2
- There must be a duty of care based on a special relationship between the representor and representee;
- the representation must be untrue, inaccurate or misleading;
- the representor must have acted negligently in making said misrepresentation;
- the representee must have relied, in a reasonable manner, on the negligent misrepresentation; and
- the reliance must have been detrimental to the representee in the sense they suffered resulting damage.
The court found the first four tests were met: there was a special relationship between a sellers’ agent and the buyers; the representation that the property went to the fence was untrue; the agent was negligent in making the representation; and the buyers relied on the representation.
After considering the different ways of measuring damages in a breach of contract case and in a negligent misrepresentation tort case the court found, after a five-day trial, the buyers had suffered no damages and dismissed the case.3 The court found the value of the property was equal to the price paid, and thus the buyers suffered no consequential damages and failed to satisfy the fifth criteria in Cognos. While ultimately not having to pay damages, the agent had to go through the costs and stresses of a five-day trial and now an appeal.
REALTORS® should exercise caution when making representations, or passing on a seller’s representations, as to the boundaries of property. Where any uncertainty exists, it’s always advisable to put a term into the contract that there are no representations as to the area of the property or its boundaries and that the buyer should obtain a survey from a land surveyor to determine the area and boundaries of the property.
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