Honesty key when defending negligent misrepresentation claim

Although a recent case shows that any breakdown in the test required to establish negligent misrepresentation in a real estate transaction will result in a failed claim, honesty is still the best policy when it comes to defending this type of accusation, Toronto real estate lawyer Lisa Laredo tells Law Times.

As the article notes, in Drolet v. ReMax Riverview Realty, plaintiff Jean-Sebastien Drolet sought compensation from a real estate agent for money spent preparing a piece of property for the development of a home. After the sale closed, Drolet discovered that he was prohibited from building anything due to the land’s proximity to a former landfill.

However, the plaintiff’s claim was unsuccessful because he was unable to establish two of the required elements in the five-way test — that there was any evidence that the agent acted negligently in making the representation and that the client relied upon the misrepresentation, says Law Times.

Three of the elements were proven, the article notes: that the client is automatically owed a duty of care in a relationship with an agent; the representation the agent made turned out to be inaccurate; and the plaintiff suffered damages.

As Laredo, principal of Laredo Law, says in the article, it is key that the vendor be honest.

“From a legal point of view, it is better that a vendor say nothing rather than a half-truth. If you say something, you need to be forthright and honest.

“There is nothing in law that requires the vendor to say anything as to the condition of the property,” she adds.