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Monthly Archives: December 2014

QFREB launches class action against FSBO firm DuProprio (Comfree)

The Québec Federation of Real Estate Boards (QFREB) has filed an application for authorization to institute class action against for-sale-by-owner company DuProprio for misleading advertising and unfair competition.

In a news release, the QFREB says it “alleges that DuProprio has been systematically engaging in deceptive advertising campaigns for years, misleading Quebec consumers about the so-called savings associated with DuProprio’s services and about the supposed advantages of its real estate services compared to those of brokers. Among other issues, DuProprio presents real estate brokers in a negative manner, systematically denigrates them and questions their competence and integrity.”

The QFREB says “DuProprio emphasizes to potential sellers that they will ‘save them thousands of dollars’ and its website contains many testimonials about these so-called savings compared to the presumed cost of using a real estate broker. The company even offers sellers an explicit guarantee: ‘there will be more money left in your pocket by selling your property with DuProprio as opposed to paying a commission.’ The QFREB alleges that DuProprio’s claims are false and misleading.”

In response, DuProprio says, “This is another attempt orchestrated by the real estate industry to slow the growth of property sales without intermediaries in Quebec and undermine public confidence in this otherwise very popular option for consumers.” In a statement, the company says: “DuProprio regrets that the real estate brokerage industry invests so much effort into a strategy that ultimately aims to deprive consumers of the freedom to choose the service that best suits them to sell their property.” It says the QFREB is just trying to “create a false sense of distrust” of FSBOs.

The QFREB says that to enhance its product, DuProprio “deliberately ignores the variation in real estate brokers’ rates. It uses an arbitrary comparison rate (benefiting DuProprio) that is presented to consumers as an industry standard. The comparative calculator on its website does not allow consumers to change this artificially standardized and inflated rate.”

The QFREB is also alleging “that DuProprio lies to Quebec consumers about several other aspects of the real estate broker profession. For example, it falsely states that brokers do not offer any guarantees against hidden defects. In doing so, DuProprio disregards all of the legal protections provided by the legal insurance programs offered by many real estate agencies. These insurance programs offer a multitude of additional legal protections to clients of real estate brokers.”

DuProprio says that if the QFREB really took consumers’ best interests to heart, it would evaluate their satisfaction with the services of Realtors. It cites a poll by Leger in 2013 that said only 28 per cent of respondents said they trust real estate brokers.

Watch REM for more on this story.

Note:  This story originally stated that DuProprio operates as ComFree elsewhere in the country. In fact they are part of a national network, but Randall Weese, broker of record for ComFree in Ontario, says that “No ComFree entity is implicated in this matter. In Ontario and Alberta, two distinct corporate entities offer brokerage operations under the registered name ComFree Commonsense Network.”

Source: REM

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Posted by on December 10, 2014 in FSBO

 

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Things to know about disclosure and clauses

5 things to know about disclosure and disclaimer clauses

 

The basement floods after closing. Can the buyer sue the seller? The agreement contained wrong information about the property dimensions but also included a disclaimer clause. Can the buyer sue if there is a problem after closing? Do you need to disclose a murder that occurred in a home? These are not simple questions, but if you remember the following principles, you should be able to understand the law.

 


Here are 5 key lessons to remember:

1.    When there is a flood after closing, the buyer will have to prove that the seller knew about this defect and that it was serious or else that the seller actively concealed the defect from the buyer. It will also depend on whether the buyer conducted a home inspection and in the case of basement water, whether the seller actually finished the basement themselves. A buyer will have to prove that the seller must have known about the problem during their ownership. Buyers will have to take pictures of the damage and bring in an experienced contractor who will be able to look at the damage and then give an expert opinion, in court if necessary, that the seller either must have known about the problem or did work behind the walls to conceal the problem. If the buyer cannot prove this, they will likely not be successful.

2.    The defect must make the property uninhabitable or dangerous. This means that the defect must be so serious that the buyer may not be able to continue living in the property. This would include a foundation problem. It is not clear if this would include a disclosure that the property was previously used as a grow op, as it would depend on the extent of the operation and whether it was actually remedied according to accepted industry standards. It would also depend on whether the buyer could obtain insurance for the property. Suffice to say that if the seller does not disclose a minor basement leak, the buyer will not be successful suing about it after closing.

3.    The law is not settled as to whether a seller needs to disclose a property stigma, whether it is a murder, suicide or neighbourhood condition, such as a pedophile who lives next door. Most appraisers will tell you that this will affect a property’s value. However, it will still be hard to prove that this stigma would make the home uninhabitable and this is why many lawyers will tell you that you do not have to disclose property stigmas.

4.    If you advertise the boundaries of a property in a listing, can the buyer get damages or get out of the deal if it turns out the boundaries are incorrect? Will it make a difference if there is a disclaimer clause in the offer itself, saying that the information, while believed to be correct, is not guaranteed and should not be relied upon without independent verification? In most cases, if the disclaimer is there, the buyer will not be able to sue the seller for any damages and will need to make sure that they do their own proper due diligence in advance. The lesson for any buyer is to make sure that if there is a disclaimer present, that you check a survey of the property or make the deal conditional on your own independent verification of all boundary lines.

5.    If you have any concerns about disclosure, ask the sellers point blank if they have had any water in the basement, murders or grow houses on the property in the past, or insert a clause to this effect in your offer. The sellers then have to respond truthfully. Speak to the neighbours and ask if any repairs were done at the property during the past year or whether there are any other issues with the property that you should know about. Also ask the neighbours about anything peculiar going on in the neighbourhood, including asking about the neighbours on either side of the property you are interested in buying. A major reason sellers sell a home is simply to get away from a neighbour.

When you understand the rules about disclosure and properly protect yourself, you should be able to minimize any problems that could arise after closing.

Source: Mark Weisleder LLB

 
 
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