February 8th - 2003

Get it signed

A commercial REALTOR acted for seller #1 in a conditional deal and was to get $375,000 commission (later reduced to $210,000).

A commercial REALTOR acted for seller #1 in a conditional deal and was to get $375,000 commission (later reduced to $210,000). The property was 55 Town Centre Court; the price was $10,450,000. There were some concerns that the deal might not go ahead so the REALTOR had meetings with buyer #1 and the ultimate buyer -- buyer #2.

There were letters of intent between buyer 1 and buyer 2 and eventually an Option to Purchase Agreement was signed in which buyer 2 acquired the rights from buyer 1 to the original Agreement of Purchase and Sale. There was no written agreement to pay the REALTOR either by buyer 1 as the seller of the option or by buyer 2. The REALTOR claimed a commission from buyer 2 based on an alleged oral agreement to pay him $100,000 or $150,000 on this 'flip.'

The judge dismissed the claim because he decided that: (a) there never was a commission agreement; (b) The REALTOR was in breach of his fiduciary duties in not disclosing to buyer 2 that he was getting a commission from the seller - and how much. The REALTOR appealed and lost because the Court of Appeal agreed there never was an agreement to pay commission.

MERV'S COMMENTS

There was contradictory evidence as to whom the REALTOR was representing and whether anyone other than the original seller had agreed to pay him commission. In any event, the judge had a great deal to say about the obligations of disclosure of a dual agent and found that the REALTOR had not complied with his fiduciary duty to buyer 2.

Lesson: OREA Disclosure Forms, the rules of dual agency, and the wisdom and necessity of Buyer Agency Agreements in writing also apply to commercial REALTORS.

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Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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