Brian Madigan LL.B., Broker
BRMadigan@iSourceRealEstate.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300
Toll Free: 1-888-507-0817

 

Search Blog

Search in:  
    
    
       

Sort by:

Buyer Represenation Agreement Explained (Ontario) Part 9 INDEMNIFICATION

April 13, 2015 - Updated: April 13, 2015

 

Buyer Representation Agreement Explained (Ontario) Part 9 INDEMNIFICATION

 

Here is the portion of the paragraph dealing with Indemnification.

 

5. INDEMNIFICATION: The Brokerage and representatives of the Brokerage are trained in dealing in real estate but are not qualified in determining the physical condition of the land or any improvements thereon. The Buyer agrees that the Brokerage and representatives of the Brokerage will not be liable for any defects, whether latent or patent, to the land or improvements thereon. All information supplied by the seller or landlord or the listing brokerage may not have been verified and is not warranted by the Brokerage as being accurate and will be relied on by the Buyer at the Buyer's own risk. The Buyer acknowledges having been advised to make their own enquiries to confirm the condition of the property.

 

Part 9 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

5. INDEMNIFICATION:

 

The Brokerage and representatives of the Brokerage

 

This is a little broader than what you might imagine. The Brokerage is the agent in law for the buyer. The Brokerage acts through its sales staff, who are also “registrants” under the Real Estate and Business Brokers Act, 2002. There are two categories for sales staff: sales representatives and brokers. In fact, sales representatives can also be broken down into two divisions, being those with a provisional registration and those with a permanent registration.

 

In any event, the use of the term “representatives” probably extends the definition here somewhat to include other staff, as well. There could be office staff, receptionists, advertising assistants, bookkeepers, accountants, town planners, engineers, lawyers, office managers, property managers all working with or employed in various capacities with the Brokerage. The intention in this reference would be that they would be included as well.

 

are trained in dealing in real estate

 

That naturally would be in respect to their own particular activities.

 

but are not qualified in determining the physical condition of the land

 

So, they are not land surveyors, soil technicians, environmental contamination engineers etc. That seems straightforward.

 

or any improvements thereon.

 

This is the extension to any building or improvements. This is quite reasonable too. We know that they are not builders, contractors, electricians, plumbers, carpenters, engineers or architects etc.

 

The Buyer agrees that the Brokerage and representatives of the Brokerage will not be liable

 

This is the limitation affecting both the Brokerage itself and its extended definition of representatives. 

 

for any defects, whether latent or patent, to the land or improvements thereon.

 

This is a rather interesting approach in this case. Sellers are obligated to disclose certain latent defects (not all). Sellers are also obligated to disclose certain patent defects (if they are concealed).

 

The test of disclosure when it comes to real estate registrants is “material facts”. This is likely a much higher and broader test than the common law rules which apply to sellers.

 

All information supplied by the seller or landlord or the listing brokerage

 

We are talking about two sources of information: seller (or the landlord) and the listing brokerage.

 

may not have been verified and

 

I suppose it might not have been verified. But, if the information constitutes a material fact, then it should have been.

 

One further step, registrants are under a duty to investigate, determine and verify the material facts. So, that matter may very well, fall under the duties of this Buyer’s Brokerage.

 

is not warranted by the Brokerage as being accurate and

 

So, here we mean the Buyer’s Brokerage. It is quite fair that the information is not being WARRANTED. Who would have thought that? But, if it’s a material fact, the expectation is that the buyer’s representative will have a role here.

 

will be relied on by the Buyer at the Buyer's own risk.

 

This seems obvious. The buyer is “on his own”. However, assuming that there is a listing brokerage and we now have the buyer’s brokerage, both are expected to fulfill their statutory duties and responsibilities, rather than just shift matters over to the buyer.

 

The Buyer acknowledges having been advised to make their own enquiries to confirm the condition of the property.

 

Should this not say “the buyer shall make enquiries to confirm the condition of the property? Then, the next step would be to acknowledge having received that advice.

 

General

 

You will appreciate here that the title is “Indemnification”, but this really is not an indemnification paragraph. It never, ever said “indemnification” nor did it include the magic indemnification words, namely “the Buyer agrees to save and hold harmless the Buyer’s Brokerage etc.”.

 

This provision is a Disclaimer, not an Indemnification.

 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com


Tagged with: buyer representation agreement bra agency ontario law indemnification disclaimer
| | Share

Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

Powered by Lone Wolf Real Estate Technologies (CMS6)