CASE: Issa v. Jarrah, 2019 ONSC 6744
Summary: Buyer sues for a declaration that the agreement of purchase and sale is null and void and seeks rescission and sues for the return of the $50,000 deposit plus interest.
Keller Williams Agency acted for both the Seller(s) and Buyer(s) in this transaction.
During the viewing of the property, the buyer asked the seller (who was present) and the Realtor® about the square footage. The Relator® indicated that the property was approximately 2,100 Square Feet.
The Listing also showed the square footage being between 2000-2500 SqFt.
Offer was accepted at $730,000.
On appraisal, the square footage was disclosed as being 1,450 Square Feet with a value of $730,000.
It was confirmed and agreed for the purposes of the litigation that:
(a) the true square footage was 1450 square feet;
(b) the market value of the property as at May 26, 2017 was $730,000;
(c) The listing Registrant was negligent in failing to measure or verify the square footage of the property.
Law Cited:(i)rescission may be obtained on the basis of a non-fraudulent misrepresentation where the defendant has made a false statement that was material and induced the plaintiff to enter into the contract;
(ii) the effect of a material misrepresentation is to make an executory contract voidable, not void. On acquiring knowledge of the misrepresentation, the deceived party has the right to elect to affirm or rescind the contract within a reasonable time after the misrepresentation is discovered;
(iii) equity allows rescission of transactions which have been procured by innocent or negligent misrepresentation;
(iv) an “entire agreement clause” or a general exclusion clause will not override a specific representation on a point of substance which was intended to induce the making of the agreement;
(v) an owner is vicariously liable for the negligent misrepresentations made by its agent;
(vi) the relationship between a real estate agent and his client is a fiduciary relationship. As a result, an agent for a purchaser has a duty to act with utmost good faith in relation to the affairs of the purchaser. The agent must also be reasonably competent and must act with reasonable diligence and integrity in relation to the material aspects of the transaction.
(vii) A purchaser’s inspection of a property can determine their expectations.
Based on the facts, the Buyers inspection of the property did not determine his expectations. He was given representations from both the seller and the listing representative as well as the MLS listing. And his inspections did not override his expectations of the size.
“I accept that there are cases in which the court has declined to order rescission where there have been size discrepancies. I decline to follow those cases. As set out above, the cases are fact specific.”
Buyer was a young first time home buyer and nbegligence was admitted as buyer was given representations as to size from both the Representative and Seller.
Rescission granted. And deposit plus any accrued interest to be paid to Buyer along with costs of the action.
Ricky Rathore., BComm., LL.B (Hons.), ABR®, SRS, FRI, Broker of Record – RE/MAX EMPIRE REALTY, BROKERAGE is a licensed Barrister and Solicitor.
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