Pay your real estate agent or pay the piper
Bob Aaron of the Toronto Star reports that a seller has been liable to pay his real estate agent’s commission even though an offer on a property was not accepted. Apparently, the contract with the agent provided that upon an offer being made, the agent’s commission would be owing even if the offer was not accepted. In a Small Claims Court decision upheld by the Divisional Court, the court found that the seller acted “in bad faith and attempted to frustrate the efforts” of the agent.
While I have not seen the full decision at the time of this blog post, I wonder what a court would decide in the event there had not been bad faith. Would such a term be upheld? On the one hand, it may seem rather unfair in the normal course of business for an agent to be paid for a deal that isn’t reached. Then again, a contract is a contract, and if the agent works hard even to get an offer, why should he not be paid for his time. Every case will depend on its specific facts of course.
Ultimately, one has to wonder if the Plaintiff ended up ahead of the game. At the end of the day, his commission was under $10,000 + HST. Assuming he had representation for both the Small Claims Court case and subsequent appeal, it’s safe to say that the legal fees probably surpassed his claim, and even if he recovered a portion of his legal fees, it certainly would not be the entire amount. Does that mean he should not have pursued justice? Of course not, but nevertheless it is a shame if the real estate agent walked away with little of his money.
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