October 18th - 2008

LEGALBEAT: Commission paid without a listing

During a 5 per cent listing the buyer made several offers through its agent but no transaction was made.

During a 5 per cent listing the buyer made several offers through its agent but no transaction was made. The listing and the six-month overholding period expired. However, the REALTOR® continued marketing activities without a listing.
 
The seller later met with the buyer's agent who presented a new listing agreement but the seller would not sign it. The seller told his REALTOR® that he wished him to continue efforts to sell the property and that a commission would be paid on an offer by offer basis.
 
One offer showed the REALTOR® in a Confirmation of Representation clause as the listing broker and the co-operating broker representing the buyer. The seller eventually sold the property to the buyer in an offer that was essentially the same although there was a price differential of about 2.5 per cent which would otherwise have been payable to the listing REALTOR®.
 
The REALTOR® sued for commission based on the then section 23(b) of the Real Estate and Business Brokers Act which provides for commission to be paid if the broker "has obtained an offer in writing that is accepted." The REALTOR® won.

Barnicke v 1471422 Ontario Ltd 2007 CanLII 40858

MERV'S COMMENTS
The judge referred to several cases that have been discussed for many years in the OREA Real Property Law course and in several earlier Merv’s MEMOs. The REALTOR® was "more than a mere instrument in the precontractual stage of the negotiations between the parties and that an acceptable offer was eventually executed in a direct sequence of events in which the agent was intimately involved." To repeat some comments from those earlier MEMOS, get involved, and stay involved, and you may get paid even without a signed listing.
 
The message to the seller is simple; you reduced the price by 2.5 per cent, backdoored your agent and still ended up paying them their commission. Why not simply honour your promise to pay the professionals that did all that work for you?
 
NOTE: A new case would have to be based on section 23(1)(b) of Ontario Regulation 5657/05.

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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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