Ontario Real Estate Glossary
Misrepresentation
A false statement of material fact that induces a party to enter into a real estate contract. Under Ontario law, misrepresentation can be innocent, negligent, or fraudulent — and each type carries different remedies.
What is misrepresentation in Ontario real estate?
Misrepresentation is a false statement of material fact made by one party to another that induces the second party to enter into a contract. In Ontario real estate, the misrepresented fact must be material — meaning it would have influenced the buyer's or seller's decision had it been known. A statement of opinion, prediction, or sales puffery is generally not actionable.
Under Ontario common law and the Trust in Real Estate Services Act (TRESA), misrepresentation falls into three categories. Each has different proof requirements and remedies.
The three types of misrepresentation
| Type | What it means | Proof required | Typical remedy |
|---|---|---|---|
| Innocent | Statement made honestly believing it true, but objectively false | False, material, induced reliance | Rescission (contract unwound) |
| Negligent | Statement made carelessly without reasonable basis | False, material, induced reliance, no reasonable care taken | Rescission and/or damages |
| Fraudulent | Statement made knowing it false, or recklessly indifferent to truth | All of the above plus intent to deceive | Rescission, damages, and possible RECO discipline |
The classification matters because rescission is generally available for all three types but damages are typically only available for negligent and fraudulent misrepresentation. A buyer who discovers an innocent misrepresentation may be able to walk away from the contract but cannot necessarily collect damages for losses incurred.
Misrepresentation by registrants
A real estate registrant has a positive duty under the RECO Code of Ethics to verify any statement of material fact before passing it to a client or customer. Repeating a seller's claim without verification can constitute negligent misrepresentation by the registrant — even if the seller is the original source of the false information.
Common registrant-side failures the exam tests: - Stating a property is "fully renovated" without verifying permits - Repeating a seller's square-footage claim that turns out to be MPAC-different - Telling a buyer a basement apartment is "legal" without checking for a Two-Unit House Registration - Implying a school district assignment that the school board does not confirm
Where this appears in your Humber program
Misrepresentation is heavily tested in Course 2: Residential Real Estate Transactions in the section on agency duties and the Code of Ethics. It returns in Course 3: Additional Residential Properties for condo-specific disclosure obligations and again in Course 4: Commercial Real Estate for commercial transactions where the buyer is typically more sophisticated and the duty of verification is structured differently.
A scenario the exam likes to test
A seller represents to a buyer that a property has central air conditioning. The buyer accepts the offer in part because of this feature. After closing, the buyer discovers the AC unit was removed before listing and the listing photos were old. If the seller knew the AC was removed → fraudulent misrepresentation. If the seller forgot but the listing salesperson never verified → negligent misrepresentation by the registrant. If both seller and registrant honestly believed AC was still installed → innocent misrepresentation, and the buyer's main remedy is rescission rather than damages.
The exam typically asks which category applies given specific facts. Read carefully for words like "knew," "had reason to know," "made no inquiry," and "honestly believed."
Misrepresentation vs caveat emptor
Ontario follows caveat emptor — buyer beware — for patent defects (defects discoverable on reasonable inspection). But caveat emptor does not protect against active misrepresentation. A seller who actively conceals a latent defect or makes a false statement about a material fact loses the protection of caveat emptor. This is the most-tested distinction in Course 2.
Frequently asked questions
What are the three types of misrepresentation in Ontario real estate?
The three types are innocent misrepresentation (false statement made honestly), negligent misrepresentation (false statement made carelessly without reasonable basis), and fraudulent misrepresentation (false statement made knowing it is false or recklessly indifferent to truth). All three can result in contract rescission, but damages are generally only available for negligent and fraudulent misrepresentation.
Can a real estate agent be liable for misrepresentation in Ontario?
Yes. Under the RECO Code of Ethics, a registrant has a positive duty to verify material facts before passing them to a client. Repeating a seller's false claim without taking reasonable steps to verify can constitute negligent misrepresentation by the registrant, exposing them to damages claims and RECO discipline. Fraudulent misrepresentation by a registrant is a serious ethical breach that can result in registration suspension or revocation.
What is the difference between misrepresentation and puffery?
Puffery is exaggerated or subjective sales language that no reasonable person would treat as a statement of fact ("the best view in the city," "a steal at this price"). Puffery is generally not actionable as misrepresentation. A statement of objective fact ("this house has 2,400 square feet of living space," "the roof was replaced in 2023") that turns out to be false can be misrepresentation if it induced the contract.
How long do you have to sue for misrepresentation in Ontario?
Under Ontario's Limitations Act, the basic limitation period is two years from when the buyer knew or ought to have known about the misrepresentation. The discovery rule matters: if the false fact is hidden, the clock starts when a reasonable person would have discovered it, not when the contract closed.
Practice this topic
ExamAce covers misrepresentation across Course 2 practice questions with scenario questions that test whether to classify a fact pattern as innocent, negligent, or fraudulent — the most common exam framing on this topic.
See it in practice
Walk through a realistic Ontario scenario where Misrepresentation matters — with the decision point, the correct move, and the pitfall.
Authoritative sources
Related terms
Caveat Emptor
Latin for 'let the buyer beware': the common-law principle that a buyer of real estate is responsible for inspecting and confirming the property's condition, subject to the seller's narrow duty to disclose latent defects.
Latent Defects
Hidden defects in a property that are not discoverable on a reasonable inspection but that the seller knows or ought to know about. Sellers have a duty to disclose latent defects that make the property dangerous or unfit for habitation, and the duty overrides the default caveat-emptor rule.
Agreement of Purchase and Sale
The legally binding contract under which a buyer and seller agree to a real estate transaction in Ontario, capturing price, deposit, conditions, irrevocability, and closing terms. The standard residential APS is OREA Form 100.
Patent Defects
Visible flaws in a property that a reasonably prudent buyer would discover on a normal inspection: cracked tiles, peeling paint, broken windows, sagging gutters. Sellers do not have a duty to disclose patent defects under Ontario's caveat emptor rule, though they cannot actively conceal them.
Agency Relationships
The legal and ethical structure governing how a real estate registrant represents a client. Under Ontario's TRESA, agency takes specific forms — seller representation, buyer representation, multiple representation, and designated representation — each with distinct fiduciary duties.