Most people assume that when they buy a house, they’re getting exactly what’s advertised. But what happens when a realtor misrepresents the size of a home? In Issa v. Jarrah[1], a negligent real estate agent’s mistake turned a simple home purchase into years of litigation, ending in the Ontario Court of Appeal.
The $50,000 Mistake
Hassan Issa, a first-time homebuyer, was looking for a house to accommodate his parents and three sisters. His real estate agent showed him a home and told him it was 2,100 square feet. The MLS listing, also prepared by the real estate agent because the agent was also acting for the seller, claimed the home was between 2,000-2,500 square feet.
Based on that information, the prospective home buyer agreed to purchase the home and put down a $50,000 deposit. But months later, when the prospective home buyer obtained an appraisal for the mortgage, he made a shocking discovery: The house was actually only 1,450 square feet—about 30-40% smaller than what was advertised on the MLS listing.
Feeling deceived, the prospective home buyer refused to close the real estate transaction and demanded his deposit back. When the seller and agent refused, the prospective home buyer took them to court.
Trial Court Ruling: Rescission of the Contract
At trial, the court found that:
- The real estate agent never measured the house himself.
- The real estate agent only relied on a 12-year-old listing instead of verifying the house measurements himself.
- The home buyer had explicitly told the real estate agent he needed at least 2,000 square feet.
- The misrepresentation was material and induced the prospective home buyer into the contract.
Realtor Appeals, Loses Again
The real estate agent and the real estate agent’s brokerage appealed[2] the decision. They argued that since the prospective home buyer had walked through the house twice, he should have realized the house was smaller than what was listed on the MLS system and; therefore, not relied on the MLS listing.
The Ontario Court of Appeal rejected this argument. The court found that:
- The prospective home buyer was a young, first-time homebuyer who reasonably relied on professional representations.
- The size discrepancy was significant (27-42% off).
- The prospective home buyer only backed out of the real estate transaction after discovering the true size of the home in his mortgage appraisal.
The Takeaways:
This case is a cautionary tale for both realtors and homebuyers.
Realtors: You cannot just copy details from old listings and assume they’re correct. If you put square footage in an MLS listing, you are responsible for verifying it. Otherwise, you could find yourself in court for years, paying back deposits and legal costs.
Home Buyers: Even though this buyer won in court, fighting over a deposit is stressful, time-consuming, and expensive. If square footage is important to you, make sure it’s explicitly written into the agreement—or better yet, get your own measurement before making an offer.
Had the real estate agent simply measured the home himself, he could have avoided four years of legal battles. Instead, one careless MLS listing entry ended up costing him and his brokerage far more than just a commission.
As a real estate lawyer in Toronto, I see this problem far too often. What would have happened if the prospective home buyer was not a first-time buyer? Or perhaps an experienced home buyer planning to build on the property? This case may have gone completely wrong for the prospective home buyer.
The content herein is not, nor is it intended to be, legal advice; it is for information purposes only. In order to receive legal advice from me, I must be retained by you. A consultation does not create a lawyer-client relationship or retainer. The content herein is not meant to be exhaustive. The content herein is intended to be a starting point. Some information herein may not apply in your particular situation. Additionally, some information may be missing that would be crucial in your particular situation.
[1] Issa v. Jarrah, 2019 ONSC 6744
[2] Issa v. Wilson, 2020 ONCA 756
The content herein is not, nor is it intended to be, legal advice; it is for information purposes only. In order to receive legal advice from me, I must be retained by you. A consultation does not create a lawyer-client relationship or retainer. The content herein is not meant to be exhaustive. The content herein is intended to be a starting point. Some information herein may not apply in your particular situation. Additionally, some information may be missing that would be crucial in your particular situation.