April 1st - 2011

LEGAL BEAT: What’s in a name? Get personal signature on buyer representation agreement

The buyer and the REALTOR® had maintained a casual friendship and occasional business relationship for 15 years before the events that occurred leading to this action.

The buyer and the REALTOR® had maintained a casual friendship and occasional business relationship for 15 years before the events that occurred leading to this action.

In 2006, the buyer said he was looking to buy a building from which to operate his various companies. He and the REALTOR® exchanged phone calls back and forth and then met at the buyer’s office.

At that meeting, the REALTOR® came prepared to present four prospective properties as well as to discuss the terms by which the buyer might sign a Buyer Agency Agreement (BAA) for any ongoing property search. The meeting lasted between 45 and 60 minutes, during which the REALTOR® reviewed with his friend the concept of "agency relationship" in general, the specifics of the brokerage and what it offered, details of the four properties he had identified thus far and, finally, a draft BAA.

The buyer owned several businesses but told the REALTOR® that any property acquisition would be made by a company called Aces Capital Inc. The REALTOR® testified that, in dealing with the principal of a private company, his brokerage’s policy was always to ask for an individual to sign the agreement personally. He advised that the brokerage did not search corporate names, but instead relied on the individual with whom it was dealing. The REALTOR® testified that he specifically discussed this with his friend and accordingly added the latter’s personal name as a "buyer" on the first page of the BAA signed that day. On that document, the "buyers" are identified as "Aces Capital Inc./Daniel Seca".

The judge found that, in essence, the REALTOR® was asking the buyer to be personally responsible for any commission that might become payable. There were negotiations on properties and another BAA was signed by the buyer and another of his companies because he did not want any offer to be in the name of Aces.

Through another brokerage, the buyer later purchased one of the properties initially shown to him by the first REALTOR®. The buyer was found to be "deceitful and dishonest" in his subsequent dealings with the first REALTOR®.

The judge decided that the buyer executed the BAA in a dual capacity -- as both an authorized signing officer of a company and in his personal capacity. The judge felt that the buyer was trying to avoid paying the REALTOR® a commission by choosing one of his corporations to become the actual purchaser of the property. The REALTOR® won $73,350.

Realcor v Seca 2009 CanLII 12325

MERV’S COMMENTS
Is it your policy to have a personal signature on your representation agreements to ensure that you get paid when some folks might play corporate games? Make sure that you as a REALTOR® get an individual to sign his or her own personal name to a buyer representation agreement, even if the property is to be used by a corporation or business.

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For more information contact

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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