Great Article, as a realtor I value information like this (especially on Misrepresentation)

Puffery or misrepresentation?

By Oana Hyatt, Staff Lawyer

How far can a licensee go in describing the features of a property when marketing it for sale? Do phrases such as “well-designed,” “ready to build,” “state-of-the-art,” “great water supply,” “spectacular,” “well-built,” “newer,” “updated,” “gorgeous,” “high-quality” or “in perfect condition” constitute mere puffery, or do they amount to actionable representations? If the latter, will the inclusion of the general disclaimer commonly found at the bottom of MLS listings relieve licensees from liability?

It depends, but caution is advisable. Section 4-7 of the Real Estate Council Rules requires a licensee not to publish any advertising which the licensee knows to contain a false statement or misrepresentation concerning the property. No disclaimer will relieve a licensee from liability if that licensee knows the statement they are making about the property is false.

The phrases quoted above form a spectrum ranging from:

• statements or opinions as to quality which are mere puffery (such as “gorgeous,” “spectacular”) to;
• statements as to quality intertwined with statements of fact, or statements including quantitative details (such as “ready to build,” “great water supply,” “in perfect condition”), which may be found to be representations.

Liability for negligent or even fraudulent misrepresentation may well result if the court finds there were red flags such that the licensee had reason to doubt the statement made, and to make further inquiries, but he or she did not do so.

In a 1998 case, a judge of the Supreme Court of BC found that the sellers fraudulently misrepresented the condition of the property by saying in the MLS listing that it was in “perfect condition,” and that this description was not mere puffery. The sellers’ failure to disclose known issues with water/sewage ingress and rot in the basement walls, which constituted a material latent defect, resulted in a finding of liability against the sellers. Interestingly, the judge did not find the listing agent liable as the agent did not have a duty to inspect nor any reason to disbelieve the sellers.

Statements as to quality can also be made by buyers’ agents and can also result in liability. In a more recent Small Claims Court case, the buyers’ agent’s statements to the buyers were found to be more than mere puffery, constituting representations upon which the buyers relied, to their detriment. 

The buyers alleged that they had been misled as to the safety of the septic system (which diverted the grey water discharge away from the septic tank/field and into the garden) based on their discovery, some two years later, that the Regional District considered such method of grey water discharge a health hazard which could not continue.

The judge found that the buyers’ agent had told the buyers that grey water discharge into the garden was common in the area and was nothing to worry about, despite there being visible spaghetti noodles on the ground; and that the septic inspection company they had hired was notorious for inspecting and quickly failing septic systems. The judge accepted that the licensee was being honest in making representations and found that the buyers ultimately relied on septic experts.

However, the judge did note that she was troubled by the licensee’s “easy representation” in the circumstances but dismissed the claim against him on the basis that the buyers had not established that the licensee had fallen below the standard of care applicable in the circumstances.

While marketing language often includes superlative terms about the quality or features of a property, licensees must be careful not to make statements of fact without a reasonable basis to believe such statements are true and not misleading.

 

Case references:

Betker v. Williams (1991), 63 B.C.L.R. (2d) 14 (C.A.)
Edwards v. Crocker, 1998 CanLII 6309 (B.C.S.C.)
Pacific Playground Holdings Ltd. v. Endeavour Developments Ltd., 2002 BCSC 126
Wagner v. Maloney, 2018 BCPC 107