When Silence Speaks: How Silence Can Amount to Misrepresentation
In real estate transactions, parties often assume that legal risk arises only from what is explicitly said (such as promises made, projections shared, or assurances given, by either side). Silence, by contrast, is frequently seen as neutral. That assumption is not always true. Courts have consistently held that silence can amount to a misrepresentation where silence misleads someone into believe something that is untrue.
As the Ontario Court of Appeal confirmed in Wiebe v. Smith,[i] participants in real estate transactions can be liable not only for what they say but also for what they deliberately leave unsaid.
In this post, the real estate litigation lawyers at Walker Law explore how silence in real estate negotiations can constitute a misrepresentation.
Misrepresentation in Real Estate: The Legal Framework
A misrepresentation is a false statement of fact that induces another party to enter into a contract.
In real estate, misrepresentations often have to do with property condition, habitability, and anything that may impact the title of the property. However, courts have long recognized that silence or omissions may amount to misrepresentations when they create a misleading impression or if they make an earlier statement untrue.
A person may be liable for misrepresentation if they stay silent while others rely on statements they know are misleading.
When Silence Becomes a Representation
In Canadian National Railway v. The Township of Ramara, Justice H. Wilton-Siegel observed, “It is well established in the case law that silence by a contracting party can give rise to a misrepresentation upon the entering into of a contract”.[ii] Further, the Ontario Court of Appeal has held that, drawing on Professor Fridman’s ‘The Law of Contract in Canada’, a failure to disclose something, that then renders an existing statement misleading, constitutes a misrepresentation.[iii]
In Wiebe v. Smith, the Court of Appeal upheld a trial judge’s finding that the defendant’s silence amounted to adoptive admission of her partner’s statements. She attended investor meetings, participated in discussions, and failed to correct misleading claims about a real estate project’s profitability. The court upheld the trial judge’s holding that “(i) silence can constitute a misrepresentation and (ii) silence can constitute adoptive admission of representations made by another party”.[iv] Agreeing by silence, in that context, was equivalent to making the representation herself.
There is a distinction between true silence in the absence of any duty to disclose, and silence that distorts or validates statements already made. The latter kind of silence is what courts have held constitutes misrepresentation. So, what is the duty to disclose/speak?
The Duty to Speak in Real Estate Investment Contexts
Aa duty to speak arises when circumstances make silence misleading. This is a purposely broad statement that even captures relationships where neither party owes a protective responsibility, which is called fiduciary duty to the other.
In Wiebe, the duty arose because the defendant was a seasoned businessperson, a corporate officer, and a joint venture partner with a direct financial stake in the project. She had personally guaranteed the building mortgage and funded expenses through her own credit. Her silence during discussions with investors implied that she agreed with statements she knew (or ought to have known) were inaccurate. The court found that her silence was a deliberate omission that induced investment and amounted to fraud.
Practical Takeaways for Real Estate Investors and Professionals
The following practical considerations can help real estate buyers, sellers, and agents reduce legal risk in real estate transactions. These considerations are merely things to keep in mind and do not constitute legal advice:
- Where statements are made that could reasonably be relied on, misleading impressions should be corrected quickly and clearly;
- Material risks, assumptions, and disclosures should be clearly communicated and properly documented;
- Parties should not assume that allowing others to “do the talking” will protect them from responsibility; and
- Communication and transaction records should be preserved.
Legal Guidance on Real Estate Disputes from Walker Law
In real estate transactions, silence is not always neutral. Courts will assess conduct, knowledge, and context to determine what effect silence may have had on a transaction. Where a duty to speak exists, remaining silent can be as misleading as actively making a false statement.
The real estate litigation lawyers at Walker Law are experienced in resolving complex real estate and contractual disputes. If you are uncertain about your disclosure obligations or potential liability in a property or investment transaction, contact Walker Law for practical legal guidance.
[i] Wiebe v. Smith, 2025 ONCA 794 [Wiebe].
[ii] Canadian National Railway v. The Township of Ramara, 2015 ONSC 1433 at para 24.
[iii] Shoppers Drug Mart Inc. v. 6470360 Canada Inc. (Energyshop Consulting Inc./Powerhouse Energy Management Inc.), 2014 ONCA 85 at para 57.
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Tags: Residential Real Estate Disputes, Commercial Real Estate Disputes, Contract Disputes