Soured Realtor Experiences - How Can Insurance Protect Consumers?

Buying or selling real estate is a significant journey. In the ideal scenario, the experience is easy and everyone walks away happy. What happens when the road is not as smooth?

With the spring real estate season soon upon us, our post discusses insurance coverage that all registered real estate salespersons and brokers are required to cover in Ontario - and how it protects their clients - the buyers and sellers.

No Cost To Consumers

Consumers who work with registered real estate agents benefit from this lesser-known form of insurance. Coverage is a key benefit that comes from working with a professional realtor rather than going the route of private sale. The insurance costs nothing to consumers, but provides protection in two key areas - deposits and realtor errors.

Consumer Deposits

When agreement has been reached on a property deal, the buyer typically pays a deposit as a guarantee to close to the transaction. These funds are kept in trust with the brokerage.

Insurance kicks in if the deposit is lost through fraud, insolvency, theft or misappropriation on the part of the brokerage.

Errors And Omissions

Insurance also protects consumers from certain errors and shortfalls committed by the salesperson or broker. These can include:

  • Key clauses missing from the Agreement of Purchase and Sale
  • Under- or over-pricing of a property
  • Incorrect forms
  • Miscalculated taxation amounts


As with all insurance policies, coverage is subject to limitations and exclusions. One scenario in which a realtor's actions are not covered is when he or she is acting in a special fiduciary role such as an estate executor, trustee or guardian.

In all cases when disputes arise, the course of wisdom is to seek a legal opinion - and to do so expediently.

Buying or selling?

Call us.

Our real estate lawyers can help.

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