November 6th - 2005

Merv's Column: No copy, no validity

The seller entered into a listing agreement to sell his house with Sutton for a six per cent commission.

The seller entered into a listing agreement to sell his house with Sutton for a six per cent commission. This house was owned by the seller and another person as tenants-in-common.

 

The seller subsequently decided not to proceed with Sutton, thinking only that he had signed a "letter of intent." He then contacted his co-owner and upon receiving his consent to sell the property, he signed a listing agreement with Re/Max at a five per cent commission. The house sold and the commission was paid into court pending resolution of the action. Section 35 of the Real Estate and Business Business Brokers Act requires that a copy of the listing agreement be left with the person signing as a vendor. The trial judge concluded that the Sutton agent had failed to leave a copy of the listing agreement with the seller and that failure to do so results in the agreement being invalid.

The trial judge also found that real estate agents are required to determine, prior to having a listing agreement signed, whether the person signing the listing is the sole owner or has authority to act. She also suggested that a listing agreement signed by only one of the co-owners was not an enforceable contract. The appeal court said, "This not only is not current practice in Ontario, it is not necessary. ... it is not a requirement that real estate agents perform
searches of title to determine the true nature of the property's ownership."

Sutton Group Bayview Realty Inc v. Dennis, 2005 CanLII 3477

MERV'S COMMENTS
Can you prove that you leave copies of all types of Agency Representation Agreements and Agreements of Purchase and Sale? Even if it may not be a legal requirement to know who the registered owners are, isn't that a good business practice? It is becoming easier to verify who the registered owners are with today's title systems and electronic searching capabilities.

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