Sep 01, 2003

Amendments in counter-offer—should seller's agent advise buyer's agent of changes to offer? #363


By Gerry Neely
B.A., LL.B.

The first case in Legally Speaking 362 discussed the liability of a buyer's agent who had submitted an offer containing a conditional inspection clause. He failed to notice the seller's counter-offer amended the inspection clause, which led to the buyer's loss of a $50,000 deposit. Although the agent was clearly negligent, he must have thought he had been misled by the seller’s agent because, according to the buyer's testimony, his reaction when he first became aware of the amendment was, "The bitch slipped it past me."

There is nothing in the reasons for judgment to indicate that the seller's agent, either innocently or otherwise, tried to mislead the buyer's agent. However, he may have misled himself since no changes had been made to the inspection clause in a similar offer/counter-offer between the seller and buyer two weeks earlier. The parties could not agree on price, and the buyer's agent might have thought that was the only outstanding issue that needed his direct attention.

Without excusing his failure, the problem would not have arisen if the seller's agent had advised him of all amendments made by the counter-offer. This raises the question of the obligation, if any, of a seller's agent in such a position to give this advice. If everyone agreed that the golden rule, "do unto others as you would have them do unto you," governs, then notice should be given. Since not everyone is likely to agree, what creates an obligation?

A brief survey of a few nominees in Victoria—an obviously representative group—suggests there is no standard practice or industry rule to impose an obligation to give notice of amendments. However, Article 29 of The Canadian Real Estate Association's Standards of Business Practices is broad enough to support giving notice as an accepted procedure. It states that the business of a REALTOR shall be conducted so as to avoid controversies with other REALTORS. Article 2, which requires REALTORS to deal fairly with all parties to a transaction, may also apply if the REALTOR's responsibility includes the parties and their agents.

The problem of the buyer's agent can apply to anyone. This is particularly so in the current busy market, as the potential for mistakes is increased by the number of offers and counter-offers amended on the original offer, which are faxed back and forth so frequently they become difficult to decipher. One board in another province had an addendum in which the amendments of either party were written chronologically, in a conversational way, such as:

1. I accept your offer if you increase the deposit to $10,000 and the price by $20,000 and change the possession date to XXX. (seller's signature)

2. I agree to increase the deposit to $10,000 and the price only by $10,000, to $210,000, but I cannot agree to change the possession date. (buyer's signature)

3. I accept your offer to purchase the property at $210,000, and withdraw my request to change the possession date. (seller's signature)

This might not be practical where there are other addendums in which amendments or additions are to be made. However, it has the clarity required by Article 6, namely that the parties' agreement is to be written in clear and understandable language that expresses the agreement between them.

The contract may be unenforceable if the written words are obscured because of repeated changes or the quality of the faxed contract and, if so, the licensee may be held to be negligent (see Legally Speaking 110 and 111).

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