May 26th - 2014

Legal Beat: Signed agreement facilitates payment of commission

The sellers in this case initially tried to sell their home in Ancaster, Ontario by themselves. They subsequently listed it with the REALTOR® on May 6. The commission was 5 per cent and there was a 60-day holdover period.

Mervin Burgard Q.C.

The sellers in this case initially tried to sell their home in Ancaster, Ontario by themselves. They subsequently listed it with the REALTOR® on May 6.  The commission was 5 per cent and there was a 60-day holdover period.

The REALTOR® accompanied buyers to the property and advised them to submit an offer of $525,000 on May 17.  The salesperson communicated the offer verbally by phone to the sellers, but they immediately rejected it, saying it was too low.

The property was taken off the market and a listing cancellation was signed on June 21. The sellers said that was due to an argument with Revenue Canada about an HST rebate on a new home purchase.  On June 26, they re-listed the property with a new REALTOR®.  That salesperson received an offer from the same buyers dated July 3 and before any confirmation from Revenue Canada.  The house sold on July 27 for $530,000. The buyers were threatened with litigation by their former REALTOR® and settled for the full commission that they owed. The commission that the sellers agreed to with their new REALTOR® was only $1,500.

The sellers said that they never knew there was ever any offer by the buyers while the listing agreement was in effect and that the buyers never actually saw the home during the listing agreement. The judge ruled that the explanations by the sellers for re-listing the property were contradictory and lacked credibility.  He decided that a full trial was not necessary.  The listing REALTOR® was given judgment for $29,945 plus interest.  

Homelife Professional v Moondi 2013 ONSC 7156


MERV’S  COMMENTS

Mervin Burgard Q.C.

Presumably the buyers had a Buyer Representation Agreement with their REALTOR®. Eventually, they paid, and that REALTOR® won. The sellers also had a binding listing agreement with their REALTOR®.  The judge had no hesitation in making them honour their obligation and ordered them to pay.  That agent won. Ensuring that you have signed agency agreements with buyers and sellers should protect your commissions.

Mervin Burgard, Q.C.

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