A Real Estate Agent’s Standard of Care: What is Expected?
What is the standard of care that is expected of a real estate agent? What constitutes a breach of such a duty? The Ontario Court of Appeal addresses these questions in Painchaud v Krimker, a case involving a failed Agreement of Purchase and Sale for a residential property.
Facts
The parties in this case include the Plaintiffs, Heidi and Guy Painchaud (“the Painchauds”), and the Defendants, Joseph and Kathleen Krimker (“the Krimkers”).[i] The Painchauds were the sellers of the residential property that the Krimkers sought to purchase through their sales representative Joshua Chisvin (“Chisvin”) and the PSR Brokerage, who are named third parties in the action.[ii]
The signed Agreement of Purchase and Sale (“APS”) for the residential property was unconditional and provided that the Krimkers would pay a $350,000 deposit within 24 hours of acceptance, but the deposit was never paid.[iii] A partial resolution to this issue took place in the form of a Settlement Agreement where the Krimkers pay $22,500 monthly for 10 months.[iv]
The position of the Krimkers was that Chisvin advised them that the purchase agreement was conditional on the deposit being paid and that they would have the final say in deciding whether or not to proceed.[v] The Krimkers submitted that Chisvin owed them a fiduciary duty and that Chisvin “actively misled” them.[vi] Chisvin denied telling the Krimkers that they were entitled to a mutual release if they chose not to pay the deposit.[vii]
Trial
At trial, the Superior Court heard from an expert witness to define the standard of care of a real estate agent. The standard of care required a real estate agent to be honest with clients, ensure that clients understand what they are committing to, and have a valid factual basis for any opinion expressed.[viii]
While the trial judge found that Chisvin was at fault for failing to keep contemporaneous notes or other records documenting his explanations of the APS and its consequences, the trial judge accepted Chisvin’s evidence that he did not tell the Krimkers that failing to pay the deposit would allow them to rely on the Mutual Release Clause to avoid liability.[ix] The trial judge found that Chisvin had reviewed the APS with the Krimkers, as evidenced by their signatures and initials.[x] Therefore, the third-party claim against Chisvin and PSR Brokerage was dismissed.[xi]
On Appeal
The Krimkers appealed, arguing that the trial judge had applied the wrong approach to determining whether Chisvin had met his responsibilities as their real estate agent.[xii] The Krimkers argued that the issue was not simply whether Chisvin had actively misled them. They said he was also negligent because he failed to correct their belief that they could walk away from the transaction without consequences if the deposit was not paid.[xiii] By contrast, the Respondents argue that the trial judge properly addressed the issue of whether or not Chisvin had actively misled the Krimkers. Their position, therefore, is that the trial judge did not make a reversible error.[xiv]
The Court of Appeal agreed with the Krimkers and held that the question of negligence that was before the trial judge involved more than just whether Chisvin had “actively misled” the Krimkers.[xv] Such additional examples of negligence include Chisvin’s failure to advise the Appellants of their potential liability for breaching the agreement at all stages of the purchase negotiation; and his active lying to and misleading of the vendors and their agent about the status of the purchase, and his failure to keep the Appellants apprised of his communications with the vendors and their agent.[xvi]
The Court of Appeal concluded that it was an error for the trial judge to rely mainly on the Appellants’ signatures as evidence that Chisvin had reviewed and explained the APS to the Krimkers. The Court also emphasized that the fact that because the APS contained clear language, the signatures did not resolve whether they reasonably misunderstood its meaning or whether Chisvin contributed to that misunderstanding. The trial judge had to determine whether Chisvin failed to correct any such misunderstanding and, in doing so, fell below the applicable standard of care.[xvii]
The Court of Appeal therefore did not determine that Chisvin had breached the standard of care. Making that determination would have required the Court to make numerous findings of fact and credibility. Instead, the Court of Appeal ordered a new trial before a different judge.[xviii]
Key Takeaways
The Court of Appeal’s decision in Painchaud v Krimker provides important reminders for buyers and sellers of real property, but particularly for real estate agents. Key takeaways include:
- Real estate agents must explain key contractual terms, including the consequences of signing an agreement and potential risks and liabilities.
- An agent may be negligent even without actively misleading a client if their conduct falls below the applicable standard of care.
- A client’s signature does not necessarily establish understanding, particularly where the agent may have contributed to a misunderstanding of the agreement.
- Agents should document important client discussions to demonstrate that key terms and consequences were properly explained.
How Our Team Can Assist You
Walker Law can assist you with a variety of legal matters, including disputes involving Appeals, Civil Litigation Law, Contract Disputes, Negligence Liability and Regulation, and Residential Real Estate Disputes.
[i] Painchaud v Krimker, 2025 ONSC 1669 [hereinafter Painchaud (ONSC)] at para 2.
[ii] Painchaud (ONSC) at para 3.
[iii] Painchaud (ONSC) at para 4.
[iv] Painchaud (ONSC) at para 5.
[v] Painchaud (ONSC) at para 6.
[vi] Painchaud (ONSC) at paras 39 and 41.
[vii] Painchaud (ONSC) at para 6.
[viii] Painchaud (ONSC) at para 37.
[ix] Painchaud (ONSC) at paras 44-45.
[x] Painchaud (ONSC) at para 46.
[xi] Painchaud (ONSC) at para 52.
[xii] Painchaud (ONCA) at para 6.
[xiii] Ibid.
[xiv] Painchaud (ONSC) at para 7.
[xv] Painchaud (ONCA) at para 9.
[xvi] Ibid.
[xvii] Painchaud (ONCA) at para 14.
[xviii] Painchaud (ONCA) at para 15.