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  • Quebec boards file motion against FSBO

    In what will surely become a landmark move, the Québec Federation of Real Estate Boards (QFREB) has filed an application for authorization to institute a class action suit against a major for-sale-by-owner player in the province.

One of the greatest differences between for-sale-by-owner companies and agents is the liability that a real estate licence carries, say sales reps arguing industry players need to ensure every deal is solid.

“Making sure the [FSBO] business complies to rules that protect the buyers and sellers, and sometimes you need liability to do that,” says Peter Barbati, an agent in Toronto. “If you’re telling someone what to do, you need to be sure you’re right. I think it makes [agents] more responsible for their actions.”

In Ontario, the Real Estate and Business Brokers Act (REBBA) only applies to licenced real estate agents. Real estate auctions and FSBO companies are inadvertently exempt from the legal implications of misrepresenting a property.

“When is the consumer going to realize this?” asks an anonymous commenter in the REP forum. “Maybe when we make the public aware of the liabilities that sellers have faced and the misrepresentation that the buyer has confronted when working outside of a legitimate full-service brokerage? That can cost much more than the “savings” you get as a FSBO.”

To avoid these complications, Barbati says agents need to make sure they’re not only asking questions, but asking the right questions.

“When we ask questions, we need to be sure the question is complete and be sure to find the right answer,” he says. “I’m on the hook if there’s a lawsuit because I failed to do my due diligence in protecting the seller. But because FSBOs are not a brokerage, the REBBA does not apply to them.”

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