Agent Fails to Pay Referral Fee

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Steve acted for his two buyers, Albert and Jane. He had a loyalty agreement signed, better known as a Buyer Representation Agreement or BRA for short.

The BRA ran from July 25, 2014 and expired on October 25, 2014.  It also contained a 90 day holdover clause.

Albert and Jane put in an Offer on a property but it didn’t work out. Their own lawyer recommended that they deal with Bob, the agent.

Bob should have known better, but since he was recommended by the lawyer he thought that he would have the upper hand. He thought that Steve would just cancel the loyalty agreement, but he didn’t want to, he had put in a lot of time in the file.

Negotiations for a cancellation continued. Bob wanted to pay nothing and Steve wanted 25%. Ultimately, they agreed upon 15%.

Bob closed a deal for Albert and Jane and then when it was time for him to write a cheque for 15% of the commission, he put on his “weasel’s hat” and refused.

Good for him… he went stupid. He also went unethical. And, that’s where the Discipline Committee of the Real Estate Council of Ontario had to come in. They had to tell him, just that, what he did was stupid… unlawful and unethical. But, they were very worried that in Bob’s case, he still wouldn’t get it, so after a $5,000.00, you might think he would get it. No, they still couldn’t trust him so he had to take a two day Ethics Course from REIC.

On October 24, 2016, Bob forwarded payment to Steve comprising 15% of the listing side of the commission paid. It is interesting that the payment was made at that time. The decision was released on November 30, 2016.

The hearing date was not specified, so this is either just before, during or immediately after the hearing by RECO, and about 2 years after it was due.

The transgressions according to the Discipline Committee:

It is agreed that Bob acted unprofessionally when he:

1. Entered into a Buyer Representation Agreement with the Buyers when he knew, or ought to have known, that they were under a valid contract with another brokerage, prior to having a signed referral in place.

This conduct is in violation of section 3 of the Code of Ethics.

2. Entered into a Referral Agreement with another registrant and failed to live up to the terms of that agreement by not paying the agreed referral fee in a timely manner.

This conduct is in violation of section 35 of the Code of Ethics.

3. Failed to treat everyone involved in this particular trade in real estate fairly, with honesty and integrity.

This conduct is in violation of section 3 of the Code of Ethics.

It is agreed that Bob breached the following sections of the REBBA 2002 Code of Ethics:

Fairness, Honesty, Etc.

3…..A registrant shall treat every person the registrant deals with in the course of a trade in real estate fairly, honestly and with integrity.

Financial Responsibility

35 A registrant shall be financially responsible in the conduct of business.

Note: As a rule, I use fictitious names. The actual case is published on RECO’s website and is available to the public. For educational purposes, the names of the parties really don’t have any bearing. If you need to quote the case, you will have to obtain the proper legal citation.

This case was released by RECO on 30 November 2016 and published by RECO on 30 March 2017.


This is pretty straightforward.

But what could possibly be the problem with this type of situation involving a referral fee:

Was the new property covered, type and geographical area?

What time period was covered?

When did it expire?

What was the duration of the referral agreement?

When did it start?

Did it end with the expiration of the first BRA?

Did it end with the expiration of the holdover period in the first BRA (another 90 days)?

Perhaps, had all these matters been clarified, then Bob would have been fine, but who knows!

Brian Madigan LL.B., Broker

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