Real estate agents may also be tasked with finding tenants for their clients, in addition to handling purchases and sales. This service can involve listing rental properties and screening potential tenants.
In a case like Carola v. VIP Realty Inc, the Ontario Superior Court of Justice raised the question of whether an agent could be held liable if a tenant found through the listing process causes damage to the client’s property.
The listing process and alleged negligence
The plaintiff in this case owned a property in Cumberland, Ont. The defendants, an agent and a brokerage, assisted in listing the property for rent.
The agent did not personally meet with prospective tenants or accompany them for property showings. Instead, she provided the plaintiff with a family photo and some bank statements of the tenants, assuring that all necessary background checks had been done. The agent did not share the tenants’ rental application or identification copies and allegedly mentioned that the plaintiff would be “lucky” to have them as tenants.
Tenant issues and property damage
Shortly after the property was rented out in August 2020, problems arose. The tenants caused damage to the property by breaking a lock and cutting security system wires. This led to police involvement. Subsequently, in November 2020, the plaintiff initiated eviction proceedings with the Landlord and Tenant Board (LTB).
The plaintiff later discovered that the tenants had provided fraudulent identification during the lease agreement. One of the tenants had a criminal record, including charges for growing marijuana in rental properties. By March 2021, the tenants were arrested for fraud and forgery.
In July 2021, the tenants vacated the property, revealing extensive damage that made the residence uninhabitable and required major repairs.
Legal action against the agent and brokerage
In June 2023, the plaintiff sued the agent and brokerage for damages amounting to $199,902.
The defendants attempted to dismiss the case, citing that the matter fell under the jurisdiction of the LTB, lacked a reasonable cause of action, and exceeded the statute of limitations under the Ontario Limitations Act.
Jurisdictional arguments rejected
The court rejected the argument that the LTB had exclusive jurisdiction over the claim. The claim was not about the lease terms but rather alleged negligence on the part of the agent in vetting the tenants.
Furthermore, the damages claimed exceeded the LTB’s jurisdiction limit, allowing the plaintiff to pursue the case in the Superior Court.
Duty of care and standard of care arguments
The defendants contended that the claim did not adequately establish negligence on their part. However, the court found that the claim did allege a breach of duty in failing to properly vet the tenants.
Was the claim statute-barred?
The defendants also claimed that the lawsuit was time-barred, but the plaintiff argued that she only discovered the full extent of the damages after the tenants vacated in July 2021.
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