Carelessness is Costly Image

Carelessness is Costly


While “due diligence” isn’t defined in the Real Estate Act or the Rules, it has a broad meaning that can apply in a number of situations. Merriam Weber’s Dictionary defines it as “care that a reasonable person exercises to avoid harm to other persons or their property.” The duty of care – or due diligence – that is owed to clients applies to everything that is done and that ought to be done for a client.

Unfortunately, there have been a number of $1,500 Administrative Penalties issued recently that include breaches which amount to little more than carelessness, lack of effort and perhaps, a bit of laziness.

These Administrative Penalties have included:

  • A buyer’s representative not reviewing title prior to the buyer removing conditions; it resulted in a patent defect in the form of a caveat on title, which now requires the buyer to undertake major renovations to the property.
  • A seller’s representative did not verify the property’s condominium fees. Even when the seller gave inconsistent information about the current condominium fees, the seller’s representative did not attempt to verify that information.
  • In an attempt to include sales data in a listing database, a real estate professional knowingly uploaded properties to the system for which he did not have an agency agreement to represent the sellers. The information placed on the system had the potential to mislead the public into believing he had sole representation of the sellers.

As a real estate professional, due diligence is crucial. Whether working on behalf of a buyer or seller, a real estate professional must exercise reasonable care and skill in performing all assigned duties. A brokerage and the industry professionals registered with that brokerage must ensure the completeness and accuracy of all the information that has been provided. Industry professionals are always expected to meet the standard of care that any reasonable and competent industry professional would exercise in a similar situation.

In the examples above, the due diligence required would not have taken a significant amount of time. All industry professionals are expected to pull title, verify information (i.e. condominium fees) and provide accurate information to third-parties, including listing databases.

A wise man once said, if you don’t have time to do it right, when will you have time to do it over?

What steps do you take to ensure that you have exercised a reasonable amount of care and skill on behalf of your client?