March 8th - 2010

LEGAL BEAT: Conduct can create agency relationship

The buyer used REALTOR® “S” to look for a condominium unit but refused to sign a Buyer Representation Agreement (BRA).

The buyer used REALTOR® “S” to look for a condominium unit but refused to sign a Buyer Representation Agreement (BRA).

Offers were made for a unit accompanied by an OREA Confirmation of Co-Operation and Representation Form that indicated that the Listing Agent was representing the seller and that S was representing the buyer and would be paid the 2.5% commission under the MLS®. The offers were not accepted.

The buyer called the Listing Agent directly to put an offer through her. She confirmed with the buyer and S that a BRA had not been signed. The buyer signed one with the Listing Agent. She reduced the total commission and an offer was accepted and the deal closed. The Listing Agent sent S a "finder's fee" of $1,500.

The Small Claims Court judge decided that the buyer ignored S in order to cut him out of his commission without reducing the net to the sellers and thereby increasing the commission to the Listing Agent. The Listing Agent " appropriated to themselves the value earned by the labour of the plaintiff. They cannot retain it." S was entitled to his commission on the basis of "quantum meruit" to avoid an unjust enrichment to the Listing Agent.

The Confirmation Form clearly indicated an agency relationship and an acknowledgement that S would be paid. The buyer and the Listing Agent were ordered to pay S the 2.5% less the $1,500 that had already been paid.

Stoicevski v. Nelson, Carroll, Prudential First Choice

An agency relationship can be created by contract, as is done in most situations and also by conduct, as may happen more frequently in some commercial transactions. Using an OREA Confirmation Form may help prove your relationship for this property even without a signed Buyer Representation Agreement. It is dangerous for a Buyer to ignore his or her REALTORS® and also for another REALTORS® to get caught in the middle of such a situation.

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