June 8th - 2009

LEGALBEAT: Fax cover sheet muddies commission

The seller listed the property with Re/Max for a year but it did not sell. He then signed a co-listing with LePage and Re/Max for 90 days although the actual listing was in the name of LePage.

The seller listed the property with Re/Max for a year but it did not sell. He then signed a co-listing with LePage and Re/Max for 90 days although the actual listing was in the name of LePage. The associate broker at LePage was Anne; the associate broker at Re/Max was Gary.

The listing provided for a commission of 5% of the sale price followed by this written in by hand, “or 3.5% if Anne/Gary sells. "When Gary sent it to the seller for signing, his fax coversheet said "Royal LePage, Re/Max co listing (5% selling expenses if with another REALTOR® and 3.5% in the case of Dual Agency)."

Another representative from the LePage brokerage found a buyer client and a deal was made and closed. LePage represented both the seller and the buyer so therefore it was dual agency. However, it was not Anne's buyer client. LePage invoiced the seller for 5% but they refused on the basis that they only owed 3.5% according to the listing and the fax.

The judge decided that the language in the listing was a shorthand reference to the brokerages and since LePage did sell, the commission was 3.5%. The fax cover sheet does not clarify that dual agency only means if sold by Anne or Gary. In any event if there is any confusion the judge would apply the contra proferentem rule of construction and apply an interpretation that benefits the party who did not prepare the contract with an ambiguous provision. It might have been different if the fax had referred to the possibility of a sale by another salesperson even if employed by LePage or Re/Max.

Royal LePage Your Community Realty v Duncan Hill Homes

MERV'S COMMENTS
I would have thought that the intention of the parties as noted in the listing was that the commission would be reduced if either Anne or Gary also personally represented the buyer. However, the fax sheet muddied the waters enough for the seller to save $9,000. Some folks might think that the seller would have been grateful for the services provided by LePage in marketing and selling the property.

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