Real estate agents beware: More is better

October 2017

Real estate agents beware: More is better

Aubie J. Herscovitch
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With its 50 million documents and 175 years of history, the Québec Land Register is a useful tool that all real estate agents should imperatively consult, and so, more than once during the course of a transaction. This is what the Court of Québec advocated when it recently condemned a real estate agent Bruno Pelletier to compensate the buyer Martin Geoffroy due to legal hypothecs published against the property purchased from the builder Riodel Inc. In this case, the Court concluded that the real estate agent was guilty of professional misconduct by failing to conduct repeated searches in the land register thus depriving the buyer of a clear and current picture of the financial state of his future property.

As stated in the judgment, the unfortunate trio met in March 2013, when Mr. Geoffroy acquired, through Mr. Pelletier, a condominium being built by Riodel Inc. Seven months later, Mr. Geoffroy took possession of his new property and discovered that the building housing his condominium was burdened with several legal hypothecs as a result of unpaid sums by the builder, whom he consequently decided to sue. When the builder, who was condemned to pay damages to the purchaser, was declared insolvent, Mr. Geoffroy then turned to the real estate agent to claim the amount owed, arguing that Mr. Pelletier should have informed him of the situation.

Mr. Pelletier defended himself, stating that he was not responsible to conduct any type of research on the land register, although he admits having checked for the existence of a legal hypothec on the property at the beginning of his mandate. Despite Mr. Pelletier’s claims, the Court maintained that every real estate agent has a duty to verify the register, and so, more than once. If Mr. Pelletier had carried out subsequent searches, he would have found out that, since his initial search, several legal hypothecs were encumbering the property being purchased by Mr. Geoffroy. According to the Court, this obligation of recurrent searches is all the more important in the case of a site under construction, where the possibility of registering additional legal hypothecs is increased.

It was therefore concluded that, although the damage suffered by Mr. Geoffroy was a direct result of the builder’s insolvency, it could have been avoided if Mr. Pelletier had disclosed the information contained in the land register.

According to the Court, a prudent and diligent broker would have updated his searches and informed the buyer of the existence of legal hypothecs registered against the property, thus avoiding the possibility to be held liable for the situation. Mr. Pelletier unfortunately failed to do so.

To consult the Québec Land Register, please click here.
To read the judgment “Geoffroy v. Pelletier”, please click here.

 

This bulletin provides general comments on recent developments in the law. It does not constitute and should not be viewed as legal advice. No legal action should be taken on the basis of the information contained herein.

 

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