The obligation to verify

On May 4, 2016, the Court of Québec rendered a decision regarding brokers’ liability as part of a contract to lease an immovable.

In the case, the tenants, who had signed a 33-month lease, had left their dwelling after only 12 months, leaving behind them a ransacked apartment. The owners held the broker responsible for unpaid rents and costs for repairing the damage caused to the apartment.

However, during the process prior to the signing of the lease, the tenants had met the broker and completed a form to allow her to check their credit report. They had provided her in particular with the name of their employer and former landlord. The broker had ensured to verify references and took note of some information, such as “excellent worker” and “excellent, sad to see her go.” These notes were tendered in evidence at trial.

There was no indication whether the broker had required or obtained copies of pay stubs. However, the judge stated that if she did not do it, this does not seem to have indisposed the owners, who nevertheless agreed to lease the apartment to the couple.

The owners’ lawsuit was therefore rejected.

The judge ruled that the broker could not be held responsible for the damage suffered by the owners. She made the appropriate verifications and took notes confirming them. There was no indication that could let her predict how the potential tenants would behave and obviously the owners either, since they consented to the lease without asking for more verifications. The judge concluded by saying that a broker cannot guarantee the lifestyle and good manners of tenants.

The important point to remember from this judgment is that the notes taken by the broker had certainly helped prove that she had fulfilled her contract diligently.

Indeed, a significant number of claims results in compensation due to the lack of information in the file and in a financial loss for the broker due to the payment of the deductible.

A good way to protect yourself is to take a lot of notes and keep them in the transaction record.

For questions and comments concerning your professional liability insurance, please contact the FARCIQ at 1-866-956-5959 or visit its website at www.farciq.com.