November 12th - 2010

Many OREA Standard Forms revised for 2011

A new Seller Commission Agreement form will help protect the commission of co-operating brokers in situations where they are dealing directly with the seller. This new form was created for 2011 and a large number of existing forms have been revised.

A new Seller Commission Agreement form will help protect the commission of co-operating brokers in situations where they are dealing directly with the seller. This new form was created for 2011 and a large number of existing forms have been revised.

One reason so many forms were revised for 2011 is that many of the clauses in the forms are included in multiple forms. For example, a change to a clause in Form 200, the Listing Agreement, requires the same change in all other Listing Agreements. Another reason for so many revised forms is the introduction of the HST. Many forms make reference to both GST and HST and the Committee decided to remove the GST reference now that only HST applies. This revision requires changes to all of our Agreements of Purchase and Sale/Lease.

New Form
Form 202 – Seller Commission Agreement with Co-operating Brokerage for a Listed Property was developed because it is becoming increasingly common for the Listing Brokerage to include on the MLS® listing that all Co-operating Brokerages are required to contact the seller directly to make arrangements for things like showings and payment of commission. This form establishes a commission agreement between seller and Co-operating Brokerage.

Form 202 makes it clear that the Co-operating Brokerage is not representing the seller – even though they may have direct contact with them. The form states: “This is only an agreement to pay commission (Commission Agreement). The Seller acknowledges that the Brokerage is not representing the Seller and not providing services to the Seller. The Brokerage may be representing the interests of the Buyer, or may be providing services to the Buyer for the transaction. The Seller has listed the property with a different Brokerage, therefore this Agreement is not a representation agreement or an agreement to provide services to a customer as contemplated by the Real Estate and Business Brokers Act 2002.”

It is essential for Members to understand they must obtain clear written authority from the Listing Brokerage before having any direct contact with the Listing Brokerage’s client (The Real Estate and Business Brokers Act 2002, Code, Section 7).

Of course, an alternative to using this form would be for the Co-operating Brokerage to arrange for payment directly from their buyer client. However, the buyer client may not be comfortable with such an arrangement and the introduction of this new form may assist the Co-operating Brokerage when dealing with this issue.

Revised forms
Of the many revised forms for 2011 some of the highlights include changes to some of the most commonly used forms such as the Agreement of Purchase and Sale, the Listing Agreement, the Seller Property Information Statement and the Confirmation of Co-operation and Representation. For example, on the Agreement of Purchase and Sale (Form 100) a statement was added to Clause 4, Chattels Included, indicating the chattels will be free and clear of any encumbrances on closing. The section of this form where the Seller accepts the offer and signs the Agreement was also revised because there are situations where the brokerage to be paid the balance of commission by the lawyer may not be a listing brokerage. This change requires the lawyer to pay any brokerage that is owed commission. These changes have also been made to all of OREA’s Agreement of Purchase and Sale forms.

In Clause 4, Representation, on the Listing Agreement the words, “Unless otherwise agreed in writing between the Seller and the Listing Brokerage…” were added to the last sentence in the clause. This change recognizes that the brokerage entitled to commission may not be a Listing Brokerage, for example, a buyer brokerage dealing directly with a seller.

Due to the fact that business practices have changed over the years, a change was made to the Confirmation of Co-operation and Representation (Form 320) to remove the concept of sub-agency. However, a new section was added for “Other” representation and any brokerage involved in a sub-agency situation can use this section to document their relationship with the listing brokerage. In addition, this new “Other” section could be used if the listing brokerage has authorized the Co-operating brokerage in writing to deal directly with the seller and receive payment of commission directly from the seller.

Form 220, Seller Property Information has also been revised. More space has been added for “Additional Comments” to encourage the seller to provide more detailed information on the questions listed on the form.

The new Form 202 as well as a complete listing of the many revised OREA Standard forms and clauses is available on the OREA website. To view them visit www.orea.com, under “Members Only,” “OREA Standard Forms.” For a detailed report of all the changes, contact OREA at 416-445-9910. WEBForms™ and other licensed software programs also have the updated forms available.

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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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