Licensee's Duty to Know Effect of Municipal or Other Governmental Land Use Laws #380
By Gerry Neely
The decision in Legally Speaking 379, that the representative had a duty to know the relationship between the building code and municipal bylaws concerning inspections and permits, is one of several decisions examining circumstances where the representative had a duty to know municipal bylaws. Here are three more examples.
A representative advertised that buyers could build their dream home on a lot with the best view in town. Neither the seller nor the representative were aware that the municipal bylaws only allowed construction on lots connected to a sewer, or with an area of at least two acres. Neither condition applied, and the representative was sued successfully for negligent misrepresentation. The BC Court of Appeal held the representative had a duty to know the basic requirements of municipal land use bylaws; in this case, whether the advertised lot was in fact a building lot.1
A couple bought a corner grocery store business with residential premises upstairs. They understood from their representative that they could carry on this business or raze the building and build a larger structure. The representative was aware that this property was the basis for their future financial security. She also knew that, while the property was zoned commercial, its future use on the official community plan was for a park. The couple wouldn't have bought the property had they known this, and ended up selling it to the municipality at a loss. The representative was held liable for this loss, because of her failure to tell the couple of a material fact that would have altered their decision to buy the property.2
In an Ontario case, a woman with a serious medical problem, made worse by smog, wanted badly to move to a place where there was fresh air. She and her husband retained an agent and agreed to buy property when he said, "if you are looking for healthy property, that's it." They then discovered the property directly across the road was a potential land fill site and refused to close. The sellers sued successfully for damages, which they in turn collected from the agent, who had said in his defence that he hadn't thought it necessary to advise them about a potential site. The judge said the agent's statement of the healthiness of the property was a negligent representation.3
These decisions may seem extreme, but they are reminders of the importance of carefully assessing the extent of the information a client needs to make an informed decision before buying or selling.
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