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Listing Agreements and Real Estate Commission

Image by Oleksandr Pidvalnyi from Pixabay


It is common for homeowners to employ the services of a real estate agent during the process of buying or selling a home. It is also common for home owners and agents / brokers to enter into listing agreements that give the real estate company permission to act on the Seller’s behalf when they offer their home for sale in the open market. A written agreement is necessary in order to secure commission and to ensure compliance with the Real Estate Board Code of Ethics. A standard Ontario Real Estate Association listing agreement will contain clauses regarding: sale price, commission, representation, finders fees, referral of enquires, and marketing, among others. Included below is an excerpt from the Commission clause of a standard form Ontario Real Estate Association listing agreement.

COMMISSION: In consideration of the Listing Brokerage listing the Property, the Seller agrees to pay the Listing Brokerage a commission of …………..% of the sale price of the Property or …………………………………………………………………………………………………………. for any valid offer to purchase the Property from any source whatsoever obtained during the Listing Period and on the terms and conditions set out in this Agreement OR such other terms and conditions as the Seller may accept. The Seller further agrees to pay such commission as calculated above if an agreement to purchase is agreed to or accepted by the Seller or anyone on the Seller’s behalf within ……………………….. days after the expiration of the Listing Period (Holdover Period), so long as such agreement is with anyone who was introduced to the Property from any source whatsoever during the Listing Period or shown the Property during the Listing Period.

Until recently, it was less clear as to the obligations that would transpire should an agent or broker present the seller with an offer at full asking price and on the terms provided for in the listing agreement, and for the seller to refuse such an offer.

In the Superior Court decision of T. L. Willaert Realty Ltd. v. Fody, 2013 ONSC 7533, a valid offer was presented to the seller within the listing period. The seller acted in bad faith and attempted to frustrate the efforts of the real estate agent in presenting the offer, through avoidance and poor communication. In that situation, Justice Garson concluded that acceptance of the offer is not required and that the listing agreement clearly contemplated payment of the commission upon presentation of an offer at the full listing price. In that case, the real estate agent was entitled to the full commission on the asking price, regardless of whether the seller accepted the offer, or the property was sold.

In the current real estate climate, a seller may wish to take their property off the market following an offer for full asking price for a variety of reasons. In order for home owners to protect themselves in this situation, it is important to have a listing agreement reviewed by a lawyer prior to signing it.

If you need help with any of the foregoing issues, or require assistance with the purchase or sale of a home, please do not hesitate to contact one of the Real Estate Professionals at Daniel & Partners LLP today.

Blog post written by Matteson DeLuca, student-at-law.