Representing future events to buyers

Occasionally, a buyer will ask the seller’s agent or their own agent what they “believe, contemplate, anticipate or foresee” will occur in the future regarding ownership of a particular property.

An honest response to such a question is naturally limited to the agent’s knowledge and expertise on the subject. The opinion given in response will always be speculation, based on the observations, knowledge and beliefs of the agent about the likelihood an event or condition will occur in the future.

Thus, statements by the buyer’s agent will be either:

  • couched in words such as “anticipation,” “estimation,” “prediction” or “projection,” denoting their statement is an opinion about an uncertain future event; or
  • worded as an assurance the events and conditions, as presented, will occur, a response reaching the level of a guarantee.

The difference between the wording used by an agent to express an opinion or a guarantee exposes the agent to liability when:

  • the buyer acts in reliance on the information by making an offer or eliminating a contingency to acquire property; and
  • the event or condition fails to occur.

An opinion is a statement by a broker or their agent concerning an event or condition which has not yet occurred. To be classified as an opinion, the statement developed by the agent needs to be based on readily available facts and their knowledge on the subject.

However, it is the nature of an opinion that the event or conditions speculated to come about may not actually occur.

In an opinion, the event or condition expressed is not a factual representation. The event or condition expressed has not occurred and does not exist at the time the opinion is given. Alternatively, a fact is an existing condition, presently known or knowable by the agent, due to the ready availability of data or information.

Facts are the subject of disclosure rules, not the rules of opinion. However, “guesstimates” and wishful assumptions are not opinion.

Special circumstances may impose liability

An opinion is a belief that is honestly held. It is based on a reasonable, although sometimes faulty, analysis by the agent giving the opinion of property information known or readily available. The opinion does not by itself create any liability if the event does not occur.

However, several special circumstances may surround an agent’s giving of an opinion which creates an environment raising their statement to the status of a misrepresentation.

If special circumstances exist, the broker and their agent are exposed to liability for the losses caused by the failure of the predicted event, activity or condition to occur.

Special circumstances which may cause a failed prediction to be an actionable misrepresentation include:

  • an opinion given by an agent to a person they owe a fiduciary duty, such as between the seller’s agent and the seller or the buyer’s agent and the buyer;
  • an opinion given to a buyer by a seller’s agent who holds themselves out as specially qualified or possessing expertise about the subject matter of the transaction;
  • an opinion given by a seller’s agent or seller who has superior knowledge on the subject matter, implying they have inside information not available to the buyer; or
  • an opinion given to a buyer by a seller’s agent who could not honestly hold or reasonably believe the truth of their opinion due to facts known or readily available to them.

Related article:

Material facts and your opinions – liability exposure minimized