June 6th - 2003

Amendment

The seller sued her REALTOR for an alleged overpayment of commission.

The seller sued her REALTOR for an alleged overpayment of commission. The Listing Agreement had provided for a 5% commission, unless there was a sale without the participation of other agents in which case it would be 2.5%. That was handwritten on the standard form and initialed by the seller and the REALTOR who was handling the file at that time. The brokerage denied that arrangement, and/or that it was arranged under a misrepresentation by the seller when the listing REALTOR was on vacation.

In any event, the brokerage argued that the seller had agreed to pay 5% in the commission clause in the offer. At the end of the usual language in the commission clause were these added typewritten words, "Total Commission on sale 5%."

The judge had to decide whether the commission clause in the offer could amend the commission rate stipulated in the Listing Agreement. That is not usually allowed. The judge reviewed earlier Listing Agreements, the evidence of the negotiations about price, sign backs, and other significant events. The judge preferred the evidence of the REALTOR.

The main legal argument was that it is the Listing Agreement that must prevail, not any language in the offer. The REALTOR is not a party to the offer and there is no consideration for any amendment. If REALTORS are to establish that, then they must prove that this was agreed upon by the parties. Under the facts in this case the REALTOR had agreed to reduce the selling agent’s commission by $3,750 so that the deal could be put together when the buyer and seller were that far apart in their offers.

The commission was not reduced but the REALTOR paid that amount to the buyer on closing. On these unusual facts the judge held that the REALTOR had discharged the onus of proving that the commission clause in the offer did amend the Listing Agreement.

Merv’s comments Why bury the problem in the offer when you can simply have the client change the listing and initial it? Or use an Amendment to Listing Form, such as OREA’s # 240.

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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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