December 15th - 2003

Merv's column Employment contracts

A commercial REALTOR and his firm went to court to resolve commission disputes about amounts owing to each other after the REALTOR left the firm.

A commercial REALTOR and his firm went to court to resolve commission disputes about amounts owing to each other after the REALTOR left the firm. The REALTOR submitted a Last and Final Activity Report, a list of "active mandates" and "prospective clients." He and his firm also signed a "Termination of Employment" agreement which stated:

"You confirm that the attached "Final Activity" list contains all present and potential activity that you are aware of which could conclude in the next 12 months. You acknowledge that all clients contained on the list are (the firm's) clients, no matter what their date or source of origination, and that, for a period of one year from the date of your resignation, any fees, commissions or income of whatever nature generated by you in relation to the list, will be shared equally with the firm. The firm will undertake to maintain our corporate relationship with certain parties named on your list and in so doing will appoint other agents to handle the accounts. Any commissions so generated will be entirely to our account. Upon completion of any transaction related to the list which are concluded by you, you will immediately inform the firm of the details and all commissions pertaining to the above will be invoiced by the firm to the appropriate party and the firm will process and handle all distributions."

The parties had a dispute concerning a lease and whether or not the REALTOR "generated" the commission of $155,696.63 on that transaction. The judge determined the facts and interpreted the agreement in favour of the firm.

Merv's comments
If you don't have an employment contract, you should have one. The object lesson here is to have a clear understanding of your employment contract particularly the part about what happens to any commissions that may be "earned" after you leave. Make sure it is clearly specified in a written contract. Don't postpone it until you are leaving or it may get signed hastily under unnecessary pressure.

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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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