Originally published on Slaw
A recent decision of the Divisional Court demonstrates that some people will try anything to avoid paying a commission to their real estate agent.
The buyer was under a representation contract with an agent. During that time the buyer and his wife found a house that they liked through an open house on the same street that they currently lived on.
The buyer emailed his agent to tell him that they had found a house that they had liked and that although the list price was $439,900 they were able to get it for only $430,000. The buyer went on to state that the only way he was able to avoid getting into a bidding war was to give the seller's agent the right to sell the buyer's house (and thereby earn a commission on that sale as well).
The buyer said that he felt very bad but that his wife wanted to do the deal right away and that he had no choice.
The buyer refused to pay his agent any commission despite being under a representation agreement that obligated him to do so. At trial the buyer claimed that he:
- thought he was signing with ReMax and not the plaintiff brokerage;
- did not realize the terms of the agreement (although he admitted to signing it and that he had an opportunity to review it); and
- thought the term of the representation agreement had expired.
The trial judge ruled against the buyer, finding that he knew and understood the terms of the representation agreement and that he knowingly breached the agreement.
On appeal to the Divisional Court the buyer tried something new. He argued that only half of the commission ought to be payable because both he and his wife signed the agreement of purchase and sale for the new house and since his wife had not signed a representation agreement then her half of the commission was not payable to the buyer's agent.
The Divisional Court Judge dismissed the appeal noting that this argument was never raised at trial, and because perhaps more importantly there was no evidence before the court that the wife had signed the agreement.
Subject to the buyer trying his hand at the Court of Appeal, the agent is entitled to his full commission.
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