FACTS

Pursuant to a standard form listing agreement, the plaintiff realtor listed the defendant landowner’s land. The agreement provided for a commission rate of 4.5% “for any valid offer to purchase the Property from any source whatsoever obtained during the Listing Period....” The realtor obtained an offer at the listing price but the sale was not consummated because the landowner refused to accept the offer. The realtor brought an action for judgment regarding the payment of commission.

DECISION

Justice Searle of the Ontario Superior Court held that the landowner was liable to pay the commission. The Court held that the word “sale price” in the commission term was a reference to “sale price” in the offer and did not require the sale to be consummated. The Court held that although the offer contained conditions that were not part of the listing agreement, they were of little or no importance to the landowner: the offer was valid. The Court rejected the landowner’s argument that the realtor forfeited its right to commission because it breached its fiduciary duty to the landowner by allegedly representing the buyer’s interests instead of the landowner’s. The Court found that the offer was properly presented to the landowner but the landowner became inaccessible once he decided not to sell unless he was able to purchase a farm.

IMPLICATIONS

A commission term may be triggered by a qualifying offer to purchase and may not require acceptance by the seller. In order to avoid this situation, sellers should strike any wording in the OREA standard form listing agreement that suggests that the commission will be paid on any valid offer received and should insert an acknowledgement that the commission will only be paid if the realtor obtains an accepted agreement of purchase and sale for the property.

Stephanie Brown