Paragraph 8 of the Multiple Listing Contract—Seller’s Obligation to Refer Inquires and Offers; Commission Lost, Contingent Upon Giving Written Notice #376
By Gerry Neely
Paragraph 8 of the standard Multiple Listing Contract requires the seller to refer and deliver all enquires of offers to purchase the listed property to the listing agent. It can be a lifesaver for a listing agent whose claim for commission would fail because his or her acts didn't fall within the precise wording of the Multiple Listing Contract.
This was the situation of an Ontario agent who was entitled to a commission if the seller accepted an offer to purchase during the term of the listing, or within six months after it expired if the agent introduced the purchaser to the property. One week before the listing expired, the seller decided to independently find a buyer interested in his property. One month later, the seller accepted the buyer's offer and the sale completed two months after the expiration of the listing.
None of these facts supported the agent's claim for commission of $80,250. However, the agent had discovered the timing of the buyer's introduction to the property and was aware that the contract required the seller to give this information to the agent. The seller's breach of obligations similar to those in paragraph 8 led to an order for commission payment.1 Legally Speaking 62 and 162 also address this issue.
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Another Ontario case concerns a listing agent's loss of commission because of his non-compliance with the commission terms of an MLS® listing contract for the sale of land on which the seller had a landscaping business. The contract had a 90-day holdover clause, entitling the listing agent to a five per cent commission on any sale during that period to a buyer introduced to the property during the term of the listing.
A few months later, the seller decided to sell the business as well, and signed an ICI MLS® contract containing a six-month holdover clause with terms similar to the first contract. The major exception was that payment of a five per cent commission upon a sale made during the holdover period was contingent on the seller receiving a written list of the names of parties introduced to the property during the term of the contract by the listing agent or cooperating brokers—prior to the expiration of the ICI contract.
The sale of the land and business occurred during the holdover periods in both contracts. The buyer first found out the business was for sale from a call made by the listing agent. The seller had known the buyer for years and took over the negotiations and documentation. He excluded the listing agent entirely and then declined to pay a commission. The listing agent sued and was held to be the effective cause of sale of the land and business.
However, the listing agent only received a commission on the first contract because he failed to give the written notice required by the ICI contract. The agent's suggestion that the information exchanged between the parties during the term of the contract satisfied the obligation to give written notice was rejected.
The judge interpreted the agreement strictly against the agent. The seller was entitled to actual written notice so he was fully aware of the extent of his potential liability for commission in the overholding period.2 See Legally Speaking 172, 177, 279, 280, 283, and 356 for more on holdover clauses.
|1.||JJ Barnicke Ltd. v. 561040 Ontario Ltd., Ontario Superior Court of Justice, Reasons for Judgment, January 17, 2003.|
|2.||First City Realty Limited v. Hermans, Ontario Superior Court of Justice, Reasons for Judgment, March 23, 2004.|
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