By Ross Kay

Licensed to Trade Practitioners (LTTP) have operated their real estate practices with more regard to provincial trading legislation or adherence to rules and regulations attached to memberships in organized real estate, than to contract law.

The consumer, not knowing how the co-operative listing service infrastructure was designed and operates, has been at the mercy of the industry.  When provincial regulators state that unless the placement of a For Sale sign is specifically addressed and required in writing as part of a listing agreement, that in fact there is no regulatory compliance required on this most basic of listing agreement services, the consumer really has been left on their own.

The Bhasin v. Hrynew decision by the Supreme Court of Canada has changed forever how real estate service contracts will be reviewed by the courts. Certainly when a Code of Ethics, like the one required to access the trademarks licensed by CREA, contains requirements that prevent good faith and honest interactions between both parties to the contract, as now required through the ruling in Bhasin v. Hrynew, real estate sales as you know has changed forever.

While the Supreme Court left the regulation of fiduciary duties to the provincial regulator, the duties of good faith and honesty have now been added to every Listing and Buyer Representation Agreement, as well removing “remaining silent” as being a proactive solution to mislead the consumer.



For decades LTTPs have obtained a license and, without ever selling a home, have been able to hold themselves out as offering services similar to the most professional and experienced LTTPs in their communities.  LTTPs who lack any formal education, training or expertise in services such as real estate marketing, advertising, online SEO, negotiation or even appraisal have been allowed to mislead the consumer by remaining silent on what services they will provide and if they are even qualified to provide them.

Bhasin v. Hrynew changes all that at the moment a contract is entered into where services are to be provided. Those services must be rendered in good faith and in an honest manner. Clearly if you lack the competence in delivering those services you are now in a heap of trouble.

This brings us back to that simple For Sale sign and minimum requirements expected in the performance of real estate services. While provincial trading legislation may divorce itself from protecting the consumer, many of the common practices of the industry and the infrastructure that supports it probably open up LTTPs to risk exposure through this new interpretation of contract law.  Finally the educated consumer has rights, rights that most LTTPs should take seriously.

At the very least, as consumers become more engaged and educated about what is and is not allowed during service agreement negotiations or during those contracts’ fulfillment, brokerages assume a higher degree of risk exposure. They assume those services are being completed in a manner representative of the terms implied at the time the contracts were signed. Clearly when damages can be independently determined by a court and not as a result of a regulatory fine, changes to errors and omissions insurance policies and coverage is in order.

17 COMMENTS

  1. The “Ground breaking Supreme Court decision affects all real estate contracts”……..it makes me wonder, why such an obvious obligation( to act in honest and good faith) all parties have to a contract, would have to be decided at the Supreme Court level.
    Sincerely,
    Rita Giglione, Broker
    Royal LePage Exceptional Real Estate Ser.
    http://www.ritagiglione.com

  2. Me thinks Mr. Kay just likes to pontificate on any subject ! All this decision does is re-enforce what any Realtor, that abides by the various codes of ethics, provincial regulation and listing contracts already say.

  3. Alan M., I agree that this decision is “not going to put our world on fire”. As Mr Rumack
    implied in his article the decision was overdue and is a step in the right direction. As I understand it, the Bhasin v. Hrynew decision by the Supreme Court of Canada
    recognizes the obligations of good faith and contractual performance, and a duty to act honestly in the performance of contractual obligations.

    From my perspective as a real estate broker, I really cannot see how this will in any way impact our business. As far as I’m concerned the CREA Code of Ethics already addresses this in Article #3 Primary Duty to Client: “A realtor shall protect and promote the interests of his or her Client. This primary obligation does not relieve the realtor of the responsibility of dealing fairly with all parties to the transaction”. Interpretation 3.9 clarifies what dealing fairly means.
    As for more competent representation, again this is already addressed in Article 12, a realtor’s duty to provide skilled and conscientious service. What a novel ideal, if only all those agents that don’t know their a** from their elbow, took this to heart. I agree that as consumers become more informed and engaged, their expectation on the level of service from their realtor is also increased. In my opinion this is a very good thing!

  4. The Supreme Court of Canada made exactly the kind of decision that we would expect, of our top court. The fact that we may have been predisposed towards not thinking about “contract law” and “common law” has never had any bearing how the courts would ultimately apply the law. The clarification given by the Supreme Court should not come as a surprise to anyone living in the lucid world.

    In Martin Rumack’s current article elsewhere on REM he states the following: “As just one real-estate-based example of the many “evils” that the Supreme Court of Canada decision was intended to address, the decision in 888394 Ontario Inc. v. Cornwall Centre Road Properties Inc. is illustrative.” The aforesaid illustrative example, has more to do with the seller than it does with whatever industry representation the seller may have received. Mr. Rumack also states: “It is not an understatement to say that the decision affects all Canadian contracts everywhere….” – meaning that this isn’t just a real estate industry matter.

    Ross Kay is correct in favoring more competent representation, however, I don’t think this decision is going to put our world on fire – even though a good blaze might be just what we need. I also don’t think that Ross Kay merited special billing here, as opposed to just responding to Mr. Rumack’s article, elsewhere on REM.

  5. One doesn’t have to read the article to realize the author is attempting to make a point that clearly misses the point. He attempts to equate (in)competence with acting in bad faith which even a non-lawyer like myself can say is not a valid argument. Sure the outcome can be the same with damages awarded to the injured party but I would be interested to know if the author is able to cite a case where marketing or advertising incompetence by a Realtor has resulted in successful litigation and an award of damages. BTW @Jim Adair – I read the article and the actual Bhasin Supreme Court decision. Both decisions are based more on clarifying a party’s obligation to the other during the performance of a contract rather than representations made during contract negotiations which the author is attempting link to all this. The non-lawyer in me says the fiduciary duty we owe to our clients makes this argument moot but I’ll leave that to the experts…

  6. Where to begin? My criticisms of this poorly thought out article:

    Licensed to Trade Practitioners

    This is not an industry recognized term. It is something the author made up. Let’s not confuse the reader with needless jargon.

    “The Bhasin v. Hrynew decision by the Supreme Court of Canada has changed forever how real estate service contracts will be reviewed by the courts. Certainly when a Code of Ethics, like the one required to access the trademarks licensed by CREA, contains requirements that prevent good faith and honest interactions between both parties to the contract, as now required through the ruling in Bhasin v. Hrynew, real estate sales as you know has changed forever.”

    Actually, all that this decision stands for is the proposition that parties to a contract must carry out their contractual duties honestly (the duty of “honest performance”). There is no generalized duty to act in good faith. The Court, in its reasons, even expressly rejected that notion.

    “While the Supreme Court left the regulation of fiduciary duties to the provincial regulator, the duties of good faith and honesty have now been added to every Listing and Buyer Representation Agreement, as well removing “remaining silent” as being a proactive solution to mislead the consumer.”

    Completely false, completely wrong. Fiduciary duty is a common law concept that exists separate and apart from the statutory duties that are enforced by provincial regulators. An agent acting dishonestly and not in the best interests of the client can get nailed both for statutory breach and for breach of fiduciary duty.

    “Bhasin v. Hrynew changes all that at the moment a contract is entered into where services are to be provided. Those services must be rendered in good faith and in an honest manner. Clearly if you lack the competence in delivering those services you are now in a heap of trouble.”
    Again, this case only stands for the proposition that contractual parties must carry out their contractual duties honestly. Honesty and competency are not synonymous terms. One can honestly carry out ones contractual duties and not do a very good job and he or she will not face liability because of this Supreme Court of Canada decision.
    The last two paragraphs of the article simply don’t make sense. Why does errors and omissions insurance need to change? Does the author even know what this insurance is and how it works?
    REM Editors……… what’s going on?

  7. “While provincial trading legislation may divorce itself from protecting the consumer . . . ” Will the author tell us exactly what provincial trading legislation does such a thing? Perhaps quote the offending Act, Sections, etc.

  8. REM does not know how to fill up the paper. That is why Editors are there to make sure the story is well written and conveys the argument clearly. Clarity is missing from this story.

    • Yes Deedar, we should have made it clear that this story is a comment about the main story above, “Ground-breaking Supreme Court decision affects all real estate contracts.” It appears that most of the commenters have not read that story.

  9. Ross: what do you see as risks for a new agent who is obtaining his/her first few listings and clearly lacks experience?

    • I would say that the main risk is that they might do a better job than some of the celebrity “top producers” that make me wretch, whenever I’ve come in behind them!

  10. What is his point here?… did he forget several paragraphs perhaps when he cut and pasted his article? I have no clue what the article is about really. A waste of time

  11. The article appears to be stressing that you should have a for sale sign installed or the supreme court will be on you. The point of the article appears to wrestle with It’s self. Poor delivery of information that perhaps might be valuable.

  12. What is this article about? It goes around in circles without touching on anything specific. What was the court case about and what was the decision. Badly written and pointless

Leave a Reply