The Toronto Star reported recently on the outcome of an Edmonton couple’s lawsuit regarding the sale of their cottage.
The couple had bought the cottage in 2001 for $59,000.00. They retained a real estate agent in 2006, who suggested a value and it was listed. The cottage was sold to another agent in the same brokerage for $110,000.00. The buyer/agent did some clean-up and flipped it a few months later for a $67,000.00 net profit.
The couple sued the two agents and the brokerage for the buyer/agent’s profit, alleging that they were misled as to its real value at the time that they listed.
They lost.
The sale contract confirmed that another agent was buying it and that it could be sold later for a profit. One owner testified at trial that she did not care what became of the cottage after it was sold (that’s called a “gotcha” moment). They were not pressured to sell.
But what really did them in was the appraisal values given at trial, which ranged from $120-$147,000.00 for the time periods involved. At the time it was flipped, the cottage market had heated up. They had sold for only $10,000.00 below the lowest appraised value.
If they had wanted more, they should have had the property independently appraised and listed accordingly. They could have insisted that it be listed for more even without an appraisal.
They also should have consulted counsel (such as us if they were in Ontario) before signing the agreement of purchase and sale and thus been apprised of their rights (and what they were giving up) before signing. That would have been a lot cheaper than suing and paying everyone’s legal fees for a 6 year legal battle (which likely ate up their entire profit that they had made on the sale).
So they got that for which they had bargained. The lesson to be learned? Place your trust in good legal counsel, not the nanny state.