May 8th - 2016

Legal beat: Get involved and stay involved

This lawsuit hinged on whether the registrant was sufficiently involved to earn a commission. The absence of a buyer representation agreement (BRA) may have sealed his fate.

Legal Beat

This lawsuit hinged on whether the registrant was sufficiently involved to earn a commission. The absence of a buyer representation agreement (BRA) may have sealed his fate.

Legal Beat

by Merv Burgard, Q.C

A couple wanted to sell their home. The REALTOR® met the husband in a coffee shop where he was told that the man wanted to sell his British Columbia house for $1.3 million. The man also said that if any Realtor could sell it for more than that, the selling Realtor could keep the excess.

The Realtor later showed the home to the buyers when only the seller’s wife was present. No discussion of commission took place on that occasion.

A month later, a friend of the sellers and the same buyers introduced both couples and a price of $1.2 million was agreed upon.  No Realtor was involved in that completed transaction.

The Realtor and his brokerage sued for $40,000 commission on the basis that he had introduced the buyers to the sellers or that he should be paid on a quantum meruit basis. [Quantum meruit -- from the Latin for “what one has earned” -- is a term in contract law. It is defined as a reasonable sum of money to be paid for services rendered or work done when the amount due is not stipulated in a legally enforceable contract.]

“[The Realtor] did not advertise a listing for the property at any time, individually or on a multiple listing service, nor did he did place a ‘For Sale’ sign on the property at any time,” the judge stated in the case. “He had no involvement whatsoever in any offers, negotiations or discussions of any kind relating to the sale of this property by the sellers to the [buyers]. 

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“Following his attendance at the property with the [buyers], at a time when there was no listing agreement between the defendants and the plaintiff corporation, [the Realtor] had no contact whatsoever with the defendants until after he learned that the [buyers] had bought the property.”

The judge noted that case law is clear: Unless a real estate salesperson can prove that he is the effective cause of the sale of the property, the Realtor is not entitled to a commission.  It is not sufficient that the representative simply introduces a prospective purchaser to a vendor. The Realtor must be able to demonstrate there was an unbroken continuity between the efforts of the agent and the “ultimate” sale.  No commission was payable to the Realtor or to his brokerage.

Sall v. Braich 2016 BCSC 253 (CanLII)

MERV’S COMMENTS

Mervin Burgard Q.C.

The law is the same in Ontario. To win, you must get involved, and stay involved. This Realtor was one of the plaintiffs. However, his claim was dismissed because the legislation “prevents an individual real estate agent from receiving a commission other than from the brokerage to which the individual agent is licensed.”

Several questions on this same topic have come to me and have been posted on my/OREA Legal Forum website page about this. I’ve received many inquiries about situations when a Realtor wants to sue for commission but the brokerage refuses. The answer to their questions is the same as the one provided by the judge in this case. Another factor is that a listing or Buyer Representation Agreement (BRA) is between clients and the brokerage, and not between clients and an individual Realtor. Should the Realtor in this situation have asked the buyers to sign a Buyer Representation Agreement?

Mervin Burgard, Q.C.

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Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.

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