Who is Responsible for the Stolen Air Conditioner?
Sorry about that. There was no central air-conditioning in the first place. It was simply a mistake. It appeared in the Listing, it was referenced in a Brochure and it was identified in the Agreement of Purchase and Sale.
After closing the Buyer asked: “where’s my central air?”
Actually, there never was any “central air”, ever!
So, we have something of a problem here. The question is who is to bear responsibility for this?
The Listing Agent
In two cases, Buyers made complaints to RECO about the Listing Agent. There are two RECO disciplinary decisions on point. One carried a $4,000.00 fine and the other a $5,000.00 against the Listing Agent. Both cases turned upon the duty to discover material facts.
Here is a copy of the most recent case, and you will find a link to the other case in that:
The Buyer’s Agent
Interestingly enough, no complaint had been filed in either case against the Buyer’s Agent. Why? They were probably a friend or a relative of the Buyer. The Listing Agent was a complete stranger. That doesn’t get them “off the hook”, it simply means that no complaint happened to be filed. So, there was no disposition of the matter, in their cases. It doesn’t mean that they wouldn’t be disciplined if there was a complaint and it doesn’t mean that the only person liable in the event of a civil lawsuit would be the Listing Agent.
If we were to look at a case just involving the Buyer’s Agent alone, we are likely to find a similar result. That agent failed to discover the material facts. There was a positive duty to do so, and the Buyer’s Agent failed in that regard.
Real Estate Council of Ontario (RECO) Disciplinary Role
RECO just deals with registrants. It does not deal with cases between the parties to an Agreement. It simply assesses and imposes fines, obligations, suspensions or cancellation upon its members. The fine goes to RECO. The fine is not awarded in favour of the injured party. So, if the Buyer complains, the Buyer is still “out their air conditioner”.
Civil Liability, Ontario Courts of Justice (Small Claims Court)
This matter would fall within the jurisdiction of the Small Claims Court since there is under $25,000.00 in dispute.
Assuming that the Buyer sues in Small Claims Court for recovery of his loss, ultimately, there are four logical parties before the Court, the Seller, the Listing Agent, the Buyer’s Agent and the Buyer. Depending upon the pleadings, the arguments made on behalf of each of the parties, and the myriad of possible facts, there are scenarios which would lead to the conclusion that the Seller was 100% liable, that the Listing Agent was 100% liable, that the Buyer’s Agent was 100% liable and the Buyer himself was 100% liable.
Is there anything that the Seller did or said that might make the Seller responsible in whole or in part?
There are five items which come to mind:
- The Seller signed an MLS Data sheet as part of the listing which stated clearly that there was central air conditioning,
- The Listing Agent sent over a copy of the public MLS Listing as it appeared on the public system for the Seller’s records,
- The Listing Agent prepared a coloured printed Brochure, 4 pages in length, listing central air as one of the features of the home, these Brochures sat on the Seller’s kitchen counter for roughly 90 days,
- A similar online Brochure was forwarded to the Seller, again noting the central air,
- On the Agreement of Purchase and Sale, it was specifically listed as a chattel that was included.
As a result, there were five (5) occasions which presented themselves for the Seller to stand up and say: “hey, there’s no air here.”
Are there any set of circumstances in which full and complete responsibility might be assessed against the Seller?
Let’s assume the Seller is in the heating and air-conditioning business. He says, “I’ll put one in for the Buyer”. The property is up north, I will install it one of these weekends, but before the deal closes.”
In this case, everyone was simply expecting the Seller to honour his commitment. The Judge would easily decide to enforce the contract and there would be no contribution or set-off by reason of the actions of any other party.
Most of the time, the Listing Agent is at risk here. How might there be 100% liability upon the Listing Agent and no one else. You could have circumstances where the Seller is an elderly person, poor eyesight, poor hearing, and a limited ability to read in the English language.
That would get us by any Seller related issues. Now, to the Buyer’s side.
The Buyer’s Agent says, we didn’t come across an air conditioning unit when we went through. The Listing Agent says, “there is one there, let me double check the file”. The Listing Agent calls back ten minutes later and says again: “there is central air, I just checked”. Then, it’s written up in the Agreement of Purchase and Sale.
The Buyer’s Agent is usually at risk here too. But, look at the scenario above, the Buyer’s Agent pursues this and is told “no”.
Same conversation as above, except this time the Listing agent says: “the property is up north, I’ve never been there. Double check when you do your home inspection”. Of course, there wasn’t one. When submitting the Offer, states to the Listing Agent: “I must have been mistaken”, and very cleverly leaves the central air in the Agreement.
Usually, the Buyer is totally innocent and should receive some form of compensation for the error. But, this time this Buyer seeks to take advantage of the elderly lady. He goes on the first showing, notices that there is no air conditioning and says “put it in the Agreement anyways…. she may as well pay for it.” What’s more, this particular Buyer is in the heating and air-conditioning business, so he clearly knows right at the outset, that there is no unit. So, he is not really ever deceived or misled.
In accordance with the Negligence Act in Ontario, a Court may apportion liability among several tortfeasors in accordance with their respective contributions to the loss. This may include the Plaintiff, in our case, the Buyer.
In some jurisdictions, contributory negligence is a complete bar to recovery. In Ontario, it simply results in apportionment.
Knowing the facts
In every case, the facts matter. Discover some new facts and a case, which otherwise seemed clear, may become a little “murky”. Add a few more facts, and all of a sudden the case is going the other way.
The difficulty in most situations, is that we operate with a shortage of facts. Maybe just a few bare bone facts…… then, the opinion. In reality, there may be 40 or 50 relevant facts, perhaps 100, all of which would shed light upon the issue. Once, a Judge knows them, then a well-reasoned decision can be reached.
When questions remain hypothetical only, it is very easy to reach the incorrect conclusion.
Brian Madigan LL.B., Broker