Conduct of Sales Proceedings #182
CATEGORY: Legally Speaking
TAGS: Collecting Commission Real Estate Act
By Gerry Neely
An exclusive conduct of sale given in court ordered proceedings for the sale of property is normally limited to a stated period of time and usually gives the person with conduct of sale the right to list the property with an agent. If a court ordered sale order authorizes payment of a commission to the agent who arranges the sale, what are the agent's commission rights under an M.L.S. listing contract which extends beyond the date the exclusive conduct of sale ends, and which contains the usual commission clauses found in such contracts?
In a 1985 foreclosure action an order was made giving a judgement creditor conduct of sale with the right to list the property with an agent for a period to expire upon the redemption date, and to pay a commission to the agent, "who may arrange the sale." A written listing expiring on the redemption date was given to an agent who was entitled to a commission only if the agent obtained an offer which was approved by the court and the sale completed.
The redemption date was extended several times and the licensee was assured that the listing agreement also would be extended, but no written extensions were signed. The court approved the sale a few days after the redemption period ended, to a purchaser who discovered the property through his own initiatives.
The judge held that no commission was payable because the agent neither arranged the sale, nor did approval for the sale take place during the redemption period. The agent's claim that the listing had been extended by the oral assurances given to it was denied because of the unmet exclusive listing requirements of Section 46 of the Real Estate Act. The judge went on to say that even if there had been a written listing in place in favour of the agent, its term would have ended on the redemption date.1
Contrast this with the following cases. An order gave a wife who was separated from her husband the exclusive conduct of sale of the jointly owned matrimonial home. Her authority to list the property and to pay a commission to an agent who "may arrange the sale of the said lands", expired July 10th. On June 29th, she signed an M.L.S. contract expiring September 1 st which contained the usual three events upon which commission would be payable, including an introduction to the property during the term of the listing regardless of who made the introduction.
A FSBO sign placed on the property by the husband attracted the attention of a licensee who, with his client, introduced themselves to the property and to the husband on July 9th, which resulted in an offer which the wife and husband accepted on July 11th. The husband argued that the listing contract was invalid because it went beyond the period for which the wife had exclusive conduct of sale. In the alternative, if the contract was valid when signed on June 29th, it ceased to have any validity on July 10th.
The judge rejected both arguments and instead held that the wife and husband were bound by the terms of the listing contract until July 10th. The discussion between the husband and the purchaser on July 9th constituted an introduction to the property which entitled the agent to commission. The judge held however that from July 10th until September 1st, the listing was only valid with respect to the wife's one-half interest.2
The argument was also made that the wife had exceeded her authority in granting a listing which provided for payment of a commission to an agent who hadn't arranged a sale. This was rejected on the basis of another decision in foreclosure proceedings where the order for conduct of sale in favour of the second mortgagee authorized payment of a commission to the agent "who may arrange the sale." The agent was given an exclusive listing containing commission terms similar to the M.L.S. listing in the preceding case. Even though it was the registered owner and not the agent who found a purchaser, the sale was made during the term of the listing which the judge held to be valid, thus entitling the agent to a commission. The difference in these cases is that the agents with written listing contracts were successful.
Licensees may avoid wasting time and the costs of advertising and other expenses by obtaining a copy of the court order to assess the impact the restrictions imposed by it will have upon the actions normally taken by a licensee to sell property. After all, purchasers of an undivided one-half interest in matrimonial property are rare.3
To subscribe to receive BCREA publications such as this one, or to update your email address or current subscriptions, click here.
What we do
Popular tags within Legally Speaking
- Contract of Purchase and Sale
- Standard Forms
- Real Estate Practice
- Statistical Releases
- Strata Properties
Popular posts from BCREA
Housing Market Update – May 2023May 16, 2023
Mortgage Rate ForecastMar 22, 2023