Real Estate Fall 2014 - Rosenblatt (Short Summary)

7/24/2019 Real Estate Fall 2014 - Rosenblatt (Short Summary)

http://slidepdf.com/reader/full/real-estate-fall-2014-rosenblatt-short-summary 1/18

P a g e | 1

TOC

Purchaser as Agent...........................................................................................................................2

Listing Agreement and Conditions..................................................................................................3

Deposits...........................................................................................................................................4

Conditional Agreements..................................................................................................................4

SIMPLE C!DI"I!S................................................................................................................3#.........................................................................................................................................................$

Matters %elating "o la&'ers............................................................................................................$

Planning Act Principles ( "itle Insurance......................................................................................)

*ligation to Satis+' Conditions.....................................................................................................)

Discretionar' Conditions Precedent ,incl implied dut' o+ -/.......................................................0

Acting on 1oth Sides.......................................................................................................................

ing Lear.........................................................................................................................................#

Page $...........................................................................................................................................5

Ca6eat Emptor Doctrine ,A*sence o+ 7arrant'/ ( *ligation to Disclose..................................5

•.......%is8 o+ 9ualit' o+ condition lies upon P: a*sent +raud or mista8e. ; has no dut' to disclose

patent ,percei6a*le/ de+ects readil' apparent upon inspection......................................................5

%epresentations< 7arranties ( E=culpator' Conditions...............................................................55

%ecti+ication Principle...................................................................................................................54

SC 1LI-A"I!S ,PA-E )4 >%ule 2 /.....................................................................................5$

?La& is clear. L is not a client@s insurer. ust something goes &rong doesnBt mean itBs our +ault.

,-unra/..........................................................................................................................................5$

Real Estate Agents: Standards of ConductFull Disclosure Principle - Agent must make full and fair disclosureto the principal of all material circumstances likely to inuence theconduct of the principal, conicts of interest, or information aectingthe value of the sale property, otherwise disentitled tocommission(Selkirk) TEST: hat a reasona!le agent would consider as likely to inuence theconduct of the principal in similar circumstances (Raso)

Duty to Explain BRA PU’s agent is not entitled to commission if efails to explain te nature of te BRA! gi"es rise to anunconsciona#le transact $R if duration of BRA is too long% i&e& oneyear Century 21 Real Realty Inc. v. Campbell, (2012) – BRA

SA does not o'e FD to ( unless tere are *)direct dealings suctat esta#lis +) ( reposed trust and con,dence in selling agent%"#T SA cannot decei"e-.islead% or 'itold .aterial info a#out o/ersu#.itted& (Knoch Etate)



P a g e | 2

FD PR01C0P2ES 3odg4inson " Si..s)

FD Test: Onus on party seeking to rely on existence of a FD to establishreliance in fact determined !y the su#stance of te relationsip !t$w partyalleged to owe %& and the party claiming !ene't of that relationship( Phillips vRD Realty Lt

) %& *ule The presence of loyalty trust and con'dence distinguishes %*

from merely a tortious lia!ility( A %+ carries with it elements of trust,loyalty and con'dentiality

! hether to award damages : Egregious, intentional, outrageous,deceptive warrants an award of punitive damages( A 'duciary is lia!lefor !reach of duty where he consciously and$or deli!erately does notact in the !est interests of his principal ("car)

) RU2E 5 DA6A7ES : The proper approach to determining damages for!reach of %& is restitutionary in order to restore the victim to theposition he would have !een in had the loss not occurred

restitutionary damages

) D0S7$R7E6E18 RE6ED9- PU1080(E DA6A7ES measure ofdamages are disgorgement of pro'ts due to !reach of %&. /aw of %&has always carried with an element of deterrence, awarded wherenecessary to deter conduct(

)

Purcaser as Agent

s& + Real Estate and Business Bro4ers Act% +;;+ 5 regulations'ere RE is a purcaser

• s&+& 012 without providing appropriate notice, no real estate agent

shall directly or indirectlya2 purchase, lease, e3change or otherwise ac4uire for himself, herself, or

itself, any interest in real estate, or make an (#av$e – %ave not$ce o&$ntent to purchae)

!2 oer to do so. orc2 divest himself, herself, or itself of any interest in real estate, or make

an oer to do so(

• S ++) Contents of 1otice && in su!section 012 shall !e in writing

and shall include,d2 a statement that the registrant is a !rokerage, !roker or salesperson,

as the case may !e.e2 full disclosure of all facts within the registrant5s knowledge that aect

or will aect the value of the real estate

Consider Re.edies:



P a g e | 3

Disgorge.ent of Pro,ts !ogkinson"#alanra"$ut%an)%uleF nus on +iduciar' to esta*lish +ull and +ran8 disclosure &hen in dual agenc' i+ client

commences CA G price paid +or sale ppt' must *e as righteous as i+ paid to "P

%uleF %eection o+ a a P:@s o++er does not terminate the +iduciar' relationship *H& P: agent and

P: (Calandra – A failed to disclose – disgorged profits + costs )

Co.pensatory Da.ages 5 disentitle.ent to co..ission(#entury &' Realty) Re.edial C8 for UR for #reac of FD or F un<ustly enriced ifper.itted to 4eep property% Soulos"Lee)%%uleF Agent cannot misuse con+idential in+ormation to reap personal *ene+itG li8e using limited

assets compan' to purchase in name o+ spouse (Raso;Lee)

Puniti"e Da.ages Oscar" for #reac of FD% freestanding C$A)%uleF Egregious< intentional< outrageous< decepti6e &arrants an a&ard o+ puniti6e damages. A

+iduciar' is lia*le +or *reach o+ dut' where he consciously and/or deliberately does not act in

the *est interests o+ his principal (Oscar)

2isting Agree.ent and ConditionsPrinciple s& + Real Estate and Business Bro4ers Act% +;;+

only allo's RE agents .ay sue or #ring an action to reco"erco..ission

Principle to deter.ine 'eter fee in =uestion is co..ission> (oore) A functional approach used to assess whether a contractual

term re4uiring a party to pay a fee constitutes a commission payment!ased on all surrounding circumstances( 6f it is considered ascommission, ser"ice pro"ider is not entitled to tis pay.entunless a RE agent includes 6Bs)

Post 3P Pay.ent of Co..ission

) (etropolitan" on *oult) An agent is not entitled to commission if the A7S is signed after the holdover period, U12ESS agent candemonstrate he is the causa causans 0last link in the chain of a saletransaction2 which !ecomes 8eective5 during the 97(



P a g e | 4

Strict 0nterpretation of ?S 5 Preconditions to Co..issionEntitle.ent

) %irst ity *ealty /td( v( 9ermans 0;<<=2) 6f an agent seeks to pursue a commission on a listing agreement, te

agree.ent #e construed strictly. > not entitled to comm pptyfailed to satisfy cond of presenting > with all list of prospective 7#Sduring listing period

)7ood fait Duty of ( to 2A Principle

) Co..ission is paya#le even where *ET not concluded if > acts in!ad faith and agent acts in >5s interests to his detriment 0TL +illaert 2

( .ust pay co..ission to 2A a#sent #reac of FD<

• ($ia) ?egligence of another 'duciary does not disentitle agent to

commission where > attempts to escape o!ligation to pay commission !y

using negligence as a defence to duty



P a g e | 5

DepositsA.ount of deposit (Porto) Deposits can "ary% @*; of saleprice depending on te ti.e #et'een te purcase closedate

s& *** Crt of ustice Act: Crt as rigt to grant relief againstpenalties forfeitures&

) Principle 0deposits in re to condos are often e3ceptional to this rule2

> is entitled to keep deposit, 6% a 7# !reaches A7S, unless, 0;2 7# can

show, on a "+7, that 0@2it e=uity inter"enes to prevent an inustice if it 'ould #e unconsciona#le to allo' ( to 4eep adisproportionately large su. (#u%berlan)

• 6% a deposit is a partial payment, 012> must prove damages that

e3ceed value of 77 upon !reach 0;2in order to retain some or all of the!alance paid

, Partial Pay.ent or Deposit Standard: use of term deposit ispresumptively valid (-ver) the court will e3amine all factualcircumstances such as: ho was the7#B ompany with limited assetsor shell companyB %inancial via!ility of purchaserB hat is >5se3posure to damagesB hen will the transaction closeB 06f longerperiod, deposit can !e larger2hat percentage of sale price the depositrepresentsB (DePal%a)

8e proper a'ard for fraudulent .isrepresentation re deposit) (*$ Preeco) is the amount re4uired to put the innocent party in the

position they would have !een in had there !een no fraud

Conditional Agree.ents

8CP Principle ?either party to C can waive T7 o!ligation dependentupon a future uncertain D e3ternal event depends upon the e3istence of a T7(.(Turney)

Exception 5 U12ESS

clai.ant esta#lis co.pelling reason (O.Reilly), unless a purchaser inserts a agreement a right of waiverF in the

agreement . 0diss /askin G, 7# should have implied right of waiver onconds inserted for his !ene't2 (*arnett)



P a g e | 6

S06P2E C$1D080$1SBeauca.p " Beauca.p condition specifying 'nancing is an e3ception to Turney so long asvendor paid in full 3eld: > re4uired to close( ond of 'nancing not

T7, loosely interpreted, true interest of > was , !e paid in full

6atters Relating 8o la'yers

806E 0S $F 83E ESSE1CE 5 A0(ERF S is lia!le for negligence if heviolates time is of the essence while carrying out instruction of client( 6f aparty wishes to !ene't from a right of waiver under condition, he iscontractually o!liged to communicate waiver to other party within thattime($ay/oo0!all 2

DU89 8$ 8R9 A1D ESCAPE 8RA1SAC80$1 $1 01S8RUC80$1: 6%S is instructed that client wishes to avoid C o!ligation if legally possi!le, /5sduty is triggered to look for such technicalities that entitle client to do so, like

verifying duplicate docs against original 0here fa3 in this cas, photocopy ofreHoning approval against original (c-lroy)#O12T3R Ss don5t have an o!ligation to operate on assumption fraud is!eing perpetrated 0!ut current commercial reality raises S+B2

Duty to ad"ise re fraudulent tactics, Iaiden name or shell company may !e used to purchase a property

unless course of conduct is done for the purposes of misrepresentation(Fanscali"Raso"Donigi)

Principal is #ound #y ,duciary’s representations in RE8

) / cannot !ind principal without instructions to act. !ut if they areslipshod with words, reliance may !ind principal (2ovatec)

Duty to a"oid a.#iguity in drafting of conditions - Strictinterpretation of ?sIn an APS< 7ai6er conds are strictl' interpreted. I+ a &ai6er cond is am*iguous< it &ill *e 6oid+or &ant o+ certaint'< the court &ill not en+orce it (Demeri;McKee;Hermans)

Duty to ful,ll procedural steps according to ? %ailure to deliver condition waiver in accordance with notice re4uirements ofC, personal deli"ery, resulting in agreement !eing null and void pursuant

to C (McKee)

udicial 0nterpretation : The court must conte3tually interpret the noticeof waiver of the due diligence condition !y e3amining the language of theagreement as a whole and what it contemplates, surrounding provision,industry standards



P a g e | 7

Planning Act Principles 8itle 0nsurance

• s ;: ?o interest in land unless s J< of the 7lanning Acts is complied with. no

person shall transfer land or mortgage enter into an agreement with respect to landthat involves an interest that goes for +* years or .ore unless person does noto'n any a#utting land

• s +*: 0f you #reac any of te pro"s of Act% you do not ac=uire anyinterests in land( 6% you give a deed or transfer in !reach of Act, 7# and lender!arred from title ac4uisition or charge$lean on land respectively

• An o'ner of a#utting parcel of land or on a reference plan and

re.ains an o'ner of a#utting land) cannot su!divide, convey orsell parcel w$o ommittee of Adustments approval . su!division aregistered plan is re4uired, incls services, may take up to @ years

• 8itle insurance - is a / to indemnify a purchaser, owner or lender for

actual losses incurred up to the limits of the policy policy issued tat titleas no defects !for certain stated ris4s! - no title, no marketa!ility, noright to use the ppty as a single fam residence, ppty access, noencum!rances, fraud

$#ligation to Satisfy Conditions) A7S typically on cond of approval or compliance with the 7lanning

Act, cannot #e 'ai"ed

Principle 5 implied C o!ligation that party responsi!le for satisfyingcondition precedent is under an o!ligation to do all that is necessary tosatisfy the condition and complete the sale ! 6f good faith duty!reached, inunction may !e imposed on party in !reach to ful'll K%duty $R damages(4lercrest"Dyna%ic Transport)

6easure of Da.ages (3ast/alsh"*3 3nterprise)

) here a party is in !reach and other is entitled to damages, 6f 7 cannotprove loss of a de'nite !ene't !ut only the loss of the LchanceL ofreceiving a !ene't, the court will estimate the value of the lost chanceand award damages proportionately



P a g e | 8

Scope of 7ood Fait Duty (Dyna%ic Transport) ) 6% party$vendor succeeds in satisfying the condition the property must

!e conveyed.) 6% party acts in good faith and is unsuccessful, then the C is

terminated.) 6% party does nothing, lia!le for damages or inunction of performance

RP standard of conduct 5 deter.ination of 'eter partydiscarged 7F duty

) #a%peau The standard of conduct re4uired of a party under itsimplied o!ligations is o!ective, !ased on the party w impliedo!ligation in like circumstances, having regard to entire situation Dparties themselves

)> 7F Duty Financing E"ans)hat is re4uired to discharge this

duty2A reasona!le 7# .a4es 'nancing application to satisfy good faith duty to

satisfy a 'nancing cond +* does not decide to 'itdra' fro. APSunilaterally( T+ research prospective 'nancing terms without more isinsuMcient to discharge duty( This does not mean 7# is !ound to 'nancingapp he could not aord

oning Application Appro"als @ 7F Duty (3ssex)6f a party has on good authority that a cond will not !e satis'ed, then duty of good faith is ful'lled, and party can e3ercise discretion not to make anapplication

Discretionary Conditions Precedent incl i.plied duty of7F)Sole discretion clause refers to provisions in agreements that make theperformance of the agreement conditional or su!ect to the Lsatisfaction, thediscretion or the opinion of a party to the agreement or of a third party

8ES8 5 eter party acted in 7F in relying on clause The sole discretion clause can only !e relied upon*) !y a party acting honestly and in good faith&+) The extent to 'ic te proper exercise of a sole discretionclause is .easured !y o!ective or !y su!ective interests of a party

depends on C interpretation.) 6f party relies on e3perts, need not prove that e3perts are right, ust thathe acted reasona!ly in relying on 4uali'ed e3pert



P a g e | 9

Acting on Bot SidesFull Disclosure Principle: +!ligation to fully disclose to clients whenacting on !oth sides of a transaction, onus on / to discharge !urden of proof

that o!ligation was ful'lled, and 'en not acting in capacity as 2 in a <oint transaction 'it client(5or6)RE agent: 6f conict of interest, agent cannot act on !oth sides2a'yer: can act for !oth sides, for the reality of the !usiness world andoften economics dictate this course of conduct su#<ect to co.pliance 'it2SUC

• Consent in 'riting and notify parties

• Ele.ent of disclosure if / has a history or special relationship with

the other client (Levan)

• 1on@con,dentiality *)if retained% +)duty to disclose all material

facts. duty not to keep anything con'dential from one side to the other!) if future conict of interest arises, / may not !e a!le to continueacting for either(S%it)

> Dual Agency 6ortgages 012 full duty of disclosure a!ove. 0;2 ensurecorrect parties are e3ecuting legal docs, or / may !e lia!le fornegligence (7a%aa"Pre%ier Trust)



P a g e | 10

Principle of 02A Re=uire.ent in Dual Agency (Davey 8 +oolley)

2a'yer .ust re=uire tat a party o#tain 02A 'en acting on #ot sides iftere is an i.proper conGict of interest tat exists or su#se=uently arises&

6/A from your 'rm or a partner there &+ES ?+T 4ualify (*ertolo)

012 0a2 6f /5s duties to another client, a former client, or a T7 0!2create asu#stantial of .aterial and ad"erse e/ect on te representation of a client

0;2 *isk of / using con'dential information o!tained from client to herdetriment$disadvantage

) 0@2 6f / an improper !ene't or advantage as a result of S relationship) 0=2 &uty to refuse to act a!sent %& where transaction is

unconsciona!le ('acayBertolo)

Scope of 02A Duty(+ebb) 062 e3plain legal conse4uences, 0662 risks of notfollowing legal instructions. 0@2 &etailed Iemos 0=2 aiver forms. 0J2 ensureinfor.ation is accessi#le for client disa!ility issues, otherwise could !elia!le for T7 indemni'cation (*eaton)

1egligence Clai. > onus on to provide that he has acted in !est interestsand has discharged duties as dual agent(. otherwise lia!le(Davey"Turi"Panko)

Circu.stances 'ere 02A is re=uired S.it% iger onus forunsopisticated parties )(1) *n&a$r a+vanta%e (5or6)(2) tranact clearly a+vere to borroer (5or6)(-) un+ue $nuence (Panko" *ertolo" Thibeault"ackay)(/) $%norance o& c$rcumtance – disclose other party has criminal record ($olfarb)() comple$ty o& tranact (Davey)

1on Est Factu. (arvco) re4uires that the contractor or testator whonow seeks to set aside the document esta!lish A22 of the following :012he had intended to sign a document of a fundamentally dierent nature(

0;2 over cases of undue inuence , 0a2 relationship of con'dence and0!2pressures contractor or testator to act in a certain manner (Thibeault 9%other lacke capacity)0@2Exception: ?E% defence does not apply if the donorNs lack of knowledgea!out the circumstances arises fro. laHiness or carelessness as!etween two innocent parties who suer from the fraud of a third !ut one ofthe innocent parties is negligent(0*ulut" arvco")



P a g e | 11

?ing 2ear

P$A 5 Financial or 3ealt

) IcIullen v( IcIullen O;<<PQ "((G(inancial PA is onl' engaged i+ contractor is incapa*le o+ managing his o&n a++airs

Con"eyance of Property #y 7ift 5 "alid gifts are irre"oca#le(#repeau"Danicki)

) 8ES8 of "alid gift: 012 donative intention, 0;2 delivery of gift, 0@2presumed acceptance. 0=2 irrevoca!le unless duress or undue inuenceapplies

(Stanciu) 8ere is no presu.ption of creation of a life interest 'eretere is a "alid transfer of gift :

) where there is a valid transfer of fee simple from mother to adult son( This re4uires e3press language in instrument of transfer(

) Kift of an Asset that Title 9older has in trust not transfera!le to a T7) A ppty within which there is an e3isting trust - mother as a trustee and

son as !ene'ciary, cannot !e advanced as a gift to another. 9eld:onveyance to daughter of no legal eect(

(Danicki) 8e la' 'ill not inter"ene to old parties lia#le for .oraltransgressions

) 0Son refused to allow mother to reverse transact to !e a!le to conveye4ually to son and daughter2

7ift 2etters (#repeau)) here a gift is alleged, the law presumes a resulting trust, onus on

donee to re!ut the presumption. could not oral promise to repay fromson to mother

2a' of Resulting 8rust and Presu.ption of Ad"ance.entli.ited)

) 7resumption of resulting trust applies to adult children) 012 here title holder conveys an asset in the name of his child,) 0;2and the asset is purchased with title holderNs funds,) 0@2 the transferee is presumed to hold asset in trust for transferor,

) 0=2unless transferee can esta!lish it was a transfer !y gift() Presu.ption of ad"ance.ent ilson G, should also apply to adultchildren w disa!ilities (ho to +ene)B



P a g e | 12

Page ;Ca"eat E.ptor Doctrine A#sence of arranty) $#ligation to Disclose) *isk of 4uality of condition lies upon 7# a!sent fraud or mistake( >

has no duty to disclose patent 0perceiva!le2 defects readily apparentupon inspection

) (4ntorisa" Ricchio"7ork #ono #orp :;:)Pu#lic policy dictatesthat 7#S seeking protection in relation to 'tness or 4uality of sale pptysould openly negotiate speci,c protections as matter of C( /awwill not intervene to do so. no pre ? 7F duty

EICEP80$1S) (arathon Realty) Silence as to a patent defect, discovera!le upon

proper diligence of other party, not fraudulent in the a!sence of aspecial trust relationship( Kenerally there is no 'duciary duty owed to7# !y &(.

, $olstein disclosure re4uired 6% known patent defect aects property

value or makes it unusa!le for its intended purpose

! > cannot conceal patent defect, lia!le for fraud. ($ronau)

) Duty to Disclose(cgrath) >endor owes a duty to 7# to disclosee3istence of 012latent defects that the 0;2> knows render te saleproperty $R its "icinity (3ev$+al) 0@2dangerous, likely to !edangerous, or uninha!ita!le( 0=2+nus on claimant to esta!lish on a"+7% 0J2 & can use E to re!ut prima facie case

P$SS0B2E DEFEC8S re=uiring disclosure 2a' unclear)> (5inspain)/aw is unclear as to whether a group clai. to sale

property in =uestion for entitlement to fees for use of land, !ut notlegal title, constitutes a latent defect where > had knowledge of itse3istence. +*

! common knowledge of pedo in the area 0Boun+)! mariuana grow-op, due to stigma attached to ppty valueF 0Barb$er$)

Re.edy : %ailure to disclose e3istence of a known latent defect thatrenders the premises, dangerous, likely to !e dangerous or un't for

ha!itation entitles 7# to rescission +* damages must mitigate 0willnot !e awarded damages re e3penses where duty is not met-a%oto%asi 2

E3clusionary, /imitation of /ia!ility, E3emption, lause 0para ;P2) ?o representation, warranty or collateral conditions other than as

e3pressed herein) /imit, 4ualify or e3clude >5s lia!ility for warranties, representations

outside of A7S, attached schedules or S76S ! "! &here IS e=cludes ; +rom tort lia*ilit'< unless +raud misrep. ; thought ppt' &as

cleaned up (Antorisa)



P a g e | 13

) 2i.ited 2ia#ility Clause re: B0 not enforced if inspector did note3plain it to 7# +* !riey e3plained after services provided(!ali/ell)

S76S 0SellerNs 7roperty 6nformation Statement2) >oluntary disclosure statements a!out sale property. possi!le !asis

for claims for rescission for tort of deceit or negligentmisrepresentation

) 7eel ondominium orp( ?o( J<J v( am no pre C good faith duty J=) Ratio : ondo developer vendor has a statutory duty of full disclosure

in in C performance, !ut does not e3tend to the !argaining process.) &iss heeler G I/ 'duciary duty of good faith when circumstances

warrant() Iaority: L7 is re4uired to get legal advice, review purchase material,

make amendments to A7S or donNt !uy( 8is not a purcase of

paper plates, they were making a su!stantial investment inresidential housing units that most intended to !e their homes( 6f theyproceeded without professional advice, that was their decision(L

Representations% arranties Exculpatory Conditions) onsider what does client want. are you a!le to characteriHe and prove

statements that support clients preferred remedyB

*& 0nnocent 6isrepresentation Principle) Clai.ant .ust de.onstrate tat representation is a

*)statement thought to !e true !y parting making representation.

+)independently veri'a!le. )must !e o!ectively of the type thatwould inuence a person to enter into a C.J) a#sence of EC, presence thereof e3cludes > lia!ility, U12ESSRoberts<*eer 6f party does not ascent to prov or not !rought to 7#5sattentionShelanu E is unconsciona!le, . unfair. unreasona!le. otherwisecontrary to pu!lic policy!yrsk<5iani Error 6nsu!stantiali!us:su!stantial di !t$w thing !argained for D thing purchased, so as toconstitute a failure of consideration, relates to =uality of land

&AIAKES(4aman)E4uita!le *escission of *escission "E%+*E closing, unlessES, !ut invoked only in rare circumstances

) claimant must prove representation was) false statement) material - must of a type that would inuence partyNs decision to enter

C) statement must have induced C-ing party to enter into C



P a g e | 14

+& Fraudulent 6isrepresentation- 8ort of Deceit Principlelaimant must demonstrate that

) *2 & or Agent makes a false representation +) knowledge of, orrecklessness as to, its falsity )D or A intended to decei"e P2'it representation J)%alse representation is su!ectively material) %alse rep induced 7/ to act. K) 7/ suered damages

! Silence can !e recklessness that amounts to fraud misrep, for which a T7 can !e lia!le on a non C !asis (56 l$ab$l$ty)(7e+ley"len) (REa%ent l$ab$l$ty)

) /ia!ility - E does not shield > lia!ility, >5s can !e vicariously lia!lefor fraudulent misrep of Agents 03emuley 3choll2

E=uita#le Re.edy of Rescission AF8ER closing , #?/ESSknowledge !efore close, then right to rescission is waived, !ut claimantcan sue for damages (Burro Cubu%$l)

) claimant must prove representation was fraudulent

> 6easure of Da.ages : restore 7/ to position he would have !een#ut for the misrepresentation, not, the position he would have !een inhad rep( !een true (Parna0 :=)

& 1egligent 6isrepresentations



P a g e | 15

> Clai.ant .ust de.onstrate tat *2 &+ !ased on specrelationship !t$w 7/ D & - > D 7#, +) & made a false statement, ) &was negligent in making false statement, therefore !reached &+. J) 7/ reasona!ly relied on false statement ) 7/ suering damages as aconse4uence

, 2ia#ility > or agent, > is vicariously lia!ility for agent> EC e3cludes lia!ility for statements outside of A7S, not e3press C terms

(!ay/ar)(*eer says 9 no)

) "#T E invalidated 6%, incl statements outside of A7S if:) Roberts<*eer 6f party does not ascent to prov or not !rought to 7#5s

attention) Shelanu E is unconsciona!le, . unfair. unreasona!le. otherwise

contrary to pu!lic policy!yrsk<5iani Error 6nsu!stantiali!us:

) 6% representation outside of A7S , consider , (Robert8Beer)

• /ook at where the statements were locatedB hether parties wereconsider to have assented to clause

• hat was the reliance B• ho were the parties B vulnera!le or sopisticatedL ten no

Fraser e'eller)

• hat were the circumstances B

• Agents representing 7#sB

) E=uita#le Re.edy of Rescission BEF$RE close! AF8ER close @da.ages (Chapman)

) claimant must prove representation was fraudulent) 6easure of Da.ages : restore 7/ to position he would have !een

#ut for misrep

E/ect of EC : does not shield > from lia!ility, term collateral to theagreement (

J&Collateral arranties (urv$ve clo$n%, tat $mpoe+ arrant$e by "99e 7ome 4arrant$e :lan Act)

> Statement is not a representation and 0;2 is collateral warranty(>orian) to the main agreement% not go to root of C, e3presses somelesser o!ligation (Fraser0Rei)

> (>orian) 8ES8: arranty or Condition 5 0126s the eect of the eventto depri"e the innocent party, who has further undertakings still toperform, 0;2 of su!stantially the whole !ene't 0that amounts toconsideration for performance of further undertakings, 0@2 which theparties intended innocent party would o!tain according to C(.

) (Fraser)0F not cond% is it a 'arranty: *) 4uestion of fact. +) &oesthe contract disclose a common intention of merger re warrantyB 5express or i.plied ) The C la!el for warranty is a re!utta!lepresumption



P a g e | 16

, (Olsen" $lasner) Frau %isrep of agent? entitle%ent to re%eyof e@uitable rescission

) ontex pre C warranty outside of A7S 0not a great decision2,misrepresentation of soundproo'ng

"E%+*E close : 1oting( 6% 7# !reaches !efore close, > may repudiate C and > is lia!le for failing to

close (>onert)

A%TE* close !Re.edy of Co.pensatory Da.ages% U12ESS 6ER7ER:, 8ES8 :&id parties intend that warranty survive merger (Fraser0Rei)

or insert non merger provision (4lves)" !ut merger is rare(Deichele

, 2oss of En<oy.ent of 2ife Da.ages @ 6% 7/ can recover if a!le toesta!lish mental inury was foreseea!le result of "+ (Deichele)

> 0f you can pro"e FRAUD 60SREP% e=uita#le rescission) $lsen)vicarious fraud misrep of agent - silence2:

& Conditions 0fundamental terms of A7S2no remedies, right torepudiation

) Apply +?&6T6+? test 0a!ove at Gorian2. consider market forces andcredi!ility (;onoo+)

Eect of : does not shield > from lia!ility .*ights for !reach : 0nnocent party as a rigt to treat oter party’s#reac as a repudiation of te ? (5een)

& Uni"ersal Re.edies E invalidated 6%:) Roberts<*eer 6f party does not ascent to prov or not !rought to 7#5s

attention

) Shelanu E is unconsciona!le, . unfair. unreasona!le. otherwisecontrary to pu!lic policy

) !yrsk<5iani Error 6nsu!stantiali!us:) Funa%ental breach repudation, unnecessary to commence action:

Anticipatory Breac• 6organ "& 2uc4y Dog 2td 5 refusal to close on the !asis of 7# not

providing an estoppel certi'cation constitutes an anticipatory !reacha!sent e3press C terms re4uiring 7 to provide > with this

Recti,cation Principle(Glasner) 6n modern commercial relations, where an important unilateralamendment is !eing made it is not unreasona!le to ensure that knowledgeof such amendment comes to the other side -- party must !e given a realopportunity to appreciate the change . &uty from > to 7 can arise when Cconcluded under unilateral mistake

T!T !trategeas "# Llo$d %aris& Holdings Limited ('')



P a g e | 17

courts 'ill apply if i2 Cing parties having reduced into writing the negotiated agreement !ut ,ii2 a mistake was made in the wording of the 'nal written C altering theeect of the agreementRatio E"en if 2 is negligent in not noticing a signi,cant cange tote original agree.ent% te party-la'yer .a4ing te cange asan o#ligation to #ring it to te attention of te oter% or court

.ay apply recti,cation

Perfor%ance -nustries LtA vA Sylvan Lake $olf B Tennis #lub LtA(&;;&)? SA#A#A &&7urpose of recti'cation: to prevent a written document from !eing used asan engine for fraudRecti,cation is an a"aila#le re.edy F$R i) unilateral .ista4e or.utual .ista4e) if P2 so's% 'it con"incing proof sligtlyiger tan B$P)a2 +ral agreement not written down properly,!2 & 0ought2 to know of the error, A?& taking advantage of such error

would amount to Lfraud or e4uivalent c2 7 must show Lprecise formL in which written agreement can !e madeto e3press prior intentiond2 crtNs task is corrective 0to restore !argain2, not speculative.e2 7unitive damages only awarded if 012 compensatory damages areinsuMcient, and 0;2 denunciation is necessary3eld: & 7# lia!le for damages( 09e instructed his / not to raise mistake2ourt ordered recti'cation and compensatory, not punitive damages(orporate veil was pierced to hold the principals of the 7 personally lia!le(

(Stevens ) -t is the S#Cs uty to turn the %in of the opposing

la/yer to an obvious %istake in a (%arriage) 5 ( *ecti'cationprinciple: %ailure to do so may result in court e3ercising e4uita!le urisdiction to relieve a mistake in fraud$circumstances amting tofraud$misrep( 0F

#1$ 5 part' 8no&ing o+ the other@s mista8e as to the terms o+ an o++er remain silent and< #2$

concludes a under the mista8en terms !7S that part' ought to recogniJe mista8e

SC $B207A80$1S PA7E KJ 5Rule + )M2a' is clear& 2 is not a client’s insurer& ust so.etinggoes 'rong doesnNt .ean itNs our fault&O 7unra<)



P a g e | 18

Duty 'en retained after APS is signed

(+ong) *etainer of / #efore A7S is signed triggers o!ligation to negotiatesecurity for warranty. 1o suc duty arises if retained after A7S is signed( The instruction is to conclude transaction

(3nns) Ratio: *) S has duty to e3ercise reasona!le skill and care to

advise client, that includes a duty to warn clients of risks involved in acourse of action contemplated !y the client. +)0F SC fails to warn client,A?& to warn of risk A?& p pro!a!le that client would not take risk had he!een warned, S will !e lia!le

($raha%) hen a / is acting 7# regarding a signed A7S, SC does nota"e duty to negotiate a #etter deal for clients unless A7S disclosesserious de'ciencies$risks

.(Fra%) > has a duty to ensure proper ful'llment of duties pursuant to time

sensitive C provisions , T+E, otherwise lia!le for nelgligence

($unra"=;E&'&) /awyer may have a duty under certain circumstancesto discuss alternati"e options even after a signed A7S, depends on thenature of the sale property( . 6n /atter, / o!tained waiver from client that hehad opted out of following her advice

(Robinson) / has a duty to inform client of the risks of her actions, andshould o!tain written documentation where client chooses not to followyour advice despite risk of legal e3posure of her decision(

BEF$RE APS S071ED3arela") 7u!lic e3pectation re4uires S has a duty to 4no' 'at a

client’s plans are where it is clear that client intends to developvacant land - implications of the Honing !y law are critical andsould #e re"ie'ed with the client

Ad"ise in relation to ris4 (;ur$)Ratio : Scope of duty to advise in relation to risks and conse4uencesmay depend on the level of sophistication of the party : /awyer shouldwrite memo of advice to client and have her sign it3eld: 2 lia#le for negligence( ourt !elieved that / advised client re

proper use of corp name #ut did not advise on risks for improper use orfailure to do so in conte3t of !usiness transactions !y sending out memo

Documents

Real Estate Fall 2014 - Rosenblatt (Short Summary)