Understanding the Various Legal Duties and Obligations Owed By Realty Agents to Clients, Among Other Persons Involved

Lawsuit Document When a realty agent assists a realty transaction, the realty agent holds many legal obligations to the client of the realty agent as well as some obligations to other persons involved in the realty transaction; however, without directly expressed promises to neighbours, among others, the realty agent is without obligations to persons uninvolved in the real estate transaction.

The Law
General Duty of Care Concern

A realty agent holds a broad duty of care to the client of the realty agent as well as a limited duty of care to others involved in a realty transaction; however, a realty agent is without a duty of care owed to the neighbours of the property for which the realty agent is involved in a sale transaction.  The duty of care required of a realty agent when acting as a representative within a realty transaction was specifically addressed within the case of Qu v. Xu, 2021 ONSC 4198 wherein it was said:

[27]  The realty defendants’ first point is that they owed no duty of care to an individual who is neither a client nor a party to the transaction.

[28]  The existence of a duty of care in tort is a two-part test: (a) whether a prima facie duty of care is owed; and (b) whether that duty, if it exists, is negatived or limited by policy considerations: Kamloops (City of) v. Nielsen, 1984 CanLII 21 (SCC), [1984] 2 S.C.R. 2, at pp. 10 -11. In Hercules Managements Ltd. v. Ernst & Young, 1997 CanLII 345 (SCC), [1997] 2 S.C.R. 165 the Supreme Court of Canada explained the concept of “relationship of proximity” at para. 22:

The first branch of the Anns/Kamloops test demands an inquiry into whether there is a sufficiently close relationship between the plaintiff and the defendant that in the reasonable contemplation of the latter, carelessness on its part may cause damage to the former.

[29]  The Court further stated, at para. 28:

As I have already tried to explain, determining whether “proximity” exists on a given set of facts consists in an attempt to discern whether, as a matter of simple justice, the defendant may be said to have had an obligation to be mindful of the plaintiff’s interests in going about his or her business.

[30]  In Lavender v. Miller Bernstein LLP, 2018 ONCA 729, the Court of Appeal explained, at para. 30:

The proximity analysis determines whether the parties are sufficiently “close and direct” that it would be “just and fair having regard to their relationship to impose a duty of care”: Livent, at para. 25, citing Cooper, at paras. 32 and 34. As most recently reaffirmed by the Supreme Court in Rankin (Rankin’s Garage & Sales) v. J.J., 2018 SCC 19, at para. 23, that close and direct relationship must be such that “the defendant is under an obligation to be mindful of the plaintiff’s interests.

[31]  Case law confirms that a real estate agent owes a duty of care to his or her client (the principal): Wypych v. McDowell, 1990 CarswellOnt 530; Malpass v. Morrison, 2004 CanLII 36076 (ON SC), at paras. 18-19.

[32]  Real estate agents also owe a more limited duty to other parties to the transaction who are not their client but who may rely on their skills or representations in entering into the transaction: Krawchuk v. Scherbak, 2011 ONCA 352: Bowman v. Martineau, 2020 ONCA 330; Olsen v. Poirier et al., 1980 CanLII 1847 (ON CA); Hasham v. Kingston, 1991 CanLII 7236 (Div. Ct.).

[33]  There is no authority, however, for the proposition that a real estate agent owes a duty of care to a neighboring resident. The plaintiff has not identified any case in which a duty of care has been recognized between a real estate agent and a stranger to the transaction. This relationship does not fit within any previously established category of proximity.

[34]  This is true whether the real estate agent acts for the landlord or the tenant; neither the landlord’s agent nor the tenant’s agent owes a duty of care to a resident of a neighboring property. There is simply no relationship between the agent and the neighboring resident that could give rise to a duty of care.

[35]  There was, for example, no representation made by the agent to the neighbor, and no reliance by the neighbor on the agent.

[36]  The plaintiff’s vague reference to the realtor’s “due diligence” does not assist his claim, because the realtor’s diligence is due to his or her client or, in certain circumstances, the other party to the transaction. Moreover, there is no suggestion in the Statement of Claim that the realty defendants knew or ought to have known that the proposed tenants were likely to engage in the alleged criminal activities, or how, through whatever diligence was due, such illegal conduct might have been anticipated or predicted.

[37]  In my view, on the facts pleaded in the Amended Statement of Claim, it is plain and obvious that there is simply not sufficient proximity between the plaintiff and the realty defendants to give rise to any duty of care on the part of the latter, and the claim against the realty defendants has no real prospect of success.

Ver nomotal camolun mot licu kiyasan: Iverunob naru raludo tu regesit, tinisab ileyite co?  Bug aco mene onanar nareno, ucaleno ne disa lutakat.


"We do not allow printed forms to be made a trap for the unwary."
~ Lord Denning

Summary Comment

Ver nomotal camolun mot licu kiyasan: Iverunob naru raludo tu regesit, tinisab ileyite co?  Bug aco mene onanar nareno, ucaleno ne disa lutakat. Reko ditarus eri epi eme ledebub. Ma nadur riwenoc saneton sop atale: Yekas pet tonu.

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