RECO To Shut Down All 17 iPro Brokerage Locations By Tuesday

Risk Management

Explore how risk management works in Canadian real estate — what it involves, who uses it, and why it's essential for protecting investments and safety.

Risk Management

May 22, 2025


What is Risk Management?

Risk management in real estate refers to the process of identifying, assessing, and mitigating potential financial, legal, and physical risks associated with property ownership or transactions.

Why Risk Management Matters in Real Estate

In Canadian real estate, risk management protects homeowners, landlords, investors, and professionals from liabilities, lawsuits, and unexpected costs.


Key risk management strategies include:
  • Purchasing comprehensive home and liability insurance
  • Conducting home inspections before buying
  • Ensuring properties meet safety and building codes
  • Including protective clauses in purchase agreements
  • Maintaining accurate documentation and legal compliance


Real estate professionals also use risk management practices to avoid client disputes and legal claims. Investors use it to reduce exposure when financing, renovating, or renting properties.


Understanding risk management allows all parties to minimize exposure to financial harm and operate more confidently.

Example of Risk Management in Action

A landlord installs handrails and smoke detectors and obtains landlord insurance as part of a broader risk management plan for their rental property.

Key Takeaways

  • Identifies and addresses real estate risks.
  • Reduces chances of liability and loss.
  • Used by buyers, owners, landlords, and agents.
  • Includes safety, insurance, and legal strategies.
  • Promotes responsible and secure ownership.

Related Terms

  • Liability Coverage
  • Property Protection
  • Home Inspection
  • Legal Liability
  • Insurance

Additional Terms

Recourse Loan

A recourse loan is a type of loan where the lender can pursue the borrower’s personal assets, beyond the collateral, in the event of default.. more

Pari Passu

A pari passu clause is a contractual provision ensuring that multiple creditors share equally in repayment priority from the borrower’s assets.. more

Non-Recourse Loan

A non-recourse loan is a type of loan where the lender’s only remedy in case of default is to seize the collateral property; the borrower is not. more

Net Operating Income

Net operating income (NOI) is the total income generated by a property after operating expenses are deducted but before taxes and financing costs.. more

Mechanic's Lien

A mechanic’s lien is a legal claim by a contractor, subcontractor, or supplier for unpaid work or materials provided for a property.. more

Lis Pendens

Lis pendens is a legal notice filed in the land registry indicating that a property is subject to ongoing litigation that may affect its title.. more

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