BRA Holdover – Referral Enforcement

Buyer Representation Agreement

Question:

A Buyer Representation Agreement is signed for three months expiring 31 December, with a 120 day holdover period.

The Buyer buys on 2 January. What happens?

Answer:

You will have to appreciate that there are indeed two “holdover triggers” in the standard Form BRA. The first one is in the commission section, namely Paragraph 2, and the second one is contained in the Referral clause paragraph 4; the period is the same, ie. 120 days in our example.

Have a look at:

REFERRAL OF PROPERTIES: The Buyer agrees that during the currency of this Buyer Representation Agreement the Buyer will act in good faith and work exclusively with the Brokerage for the purchase or lease of a real property of the general description indicated above.

The Buyer agrees that, during the currency of this Agreement, the Buyer shall advise the Brokerage immediately of any property of interest to the Buyer that came to the Buyer’s attention from any source whatsoever, and all offers to purchase or lease submitted by the Buyer shall be submitted through the Brokerage to the seller.

If the Buyer arranges a valid agreement to purchase or lease any property of the general description indicated above that came to the attention of the Buyer during the currency of this Agreement and the Buyer arranges said agreement during the currency of this Agreement or within the Holdover Period after expiration of this Agreement, the Buyer agrees to pay the Brokerage the amount of commission set out above in Paragraph 2 of this Agreement, payable within (5) days following the Brokerage’s written demand therefor.”

This is the relevant clause to be interpreted.

Trigger 1) “introduced”, during the contract term,

Trigger 2) “came to the attention of the Buyer”, during the contract term.

So, technically, the Buyer is still on the hook, unless the Buyer can prove that he first became aware of the property on the 1st of January and then, inspirationally purchased it on the 2nd of January. This particular Buyer would otherwise still need to wait out the 120 days.

However, there could be a number of issues that might affect the enforceability of the BRA in the first place, in which case, no commission would be owing.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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