June 16th - 2010

LEGAL BEAT: Standard form saves commission

The brokerage sued their buyer client for $21,774.50 under an Ontario Buyer Representation Agreement (BRA).

The brokerage sued their buyer client for $21,774.50 under an Ontario Buyer Representation Agreement (BRA). The buyer claimed that the salesperson was incompetent or negligent and breached her fiduciary duties. But the brokerage won.

The buyer had told her REALTOR® that she would have about $750,000 to spend on a house after her divorce was completed. They viewed a house with the buyer's boyfriend and obtained reports from an architect, an engineer and a project manager. After several viewings the REALTOR® gave the buyer the OREA Working With A REALTOR® brochure and the BRA and reviewed them with her and explained its exclusive nature and obligation to pay commission if any property was purchased during the period of the BRA or during the holdover period.

Despite the buyer's and her boyfriend's evidence that the REALTOR® appeared inebriated at showings, the evidence of others involved in the negotiations was that she conducted herself in an entirely appropriate manner with no evidence of intoxication. Her broker said that there had never been complaints about the quality of her work.

The deal with the listed property could not be put together because the buyer was not prepared to meet the seller's bottom line despite efforts by the REALTORS® involved to decrease their commission so that it would not be lost over $5,000. The buyer blamed her REALTOR® for the deal not coming together. The boyfriend told the REALTOR® that he was going to use another agent and he was told that he could do so but that the buyer was still bound by the BRA.

The buyer bought the property during the period of time covered by the BRA and therefore owes the REALTOR® the 2.5 per cent commission set out in the BRA.

Homelife/Vision Realty v Clubine 2008 CanLII 14891

The judge simply did not believe much of the evidence of this buyer who is a sophisticated businesswoman. The case is also interesting in that there is no discussion of whether these BRAs are enforceable – since clearly they are. The wise REALTOR®explained the BRA before it was signed.

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Ontario Real Estate Association

Jean-Adrien Delicano

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416-445-9910 ext. 246