This is the Indemnification and Insurance paragraph:
“8. INDEMNIFICATION AND INSURANCE: The Seller will not hold the Listing Brokerage and representatives of the Brokerage responsible for any loss or damage to the Property or contents occurring during the term of this Agreement caused by the Listing Brokerage or anyone else by any means, including theft, fire or vandalism, other than by the Listing Brokerage’s gross negligence or wilful act. The Seller agrees to indemnify and save harmless the Listing Brokerage and representatives of the Brokerage and any co-operating brokerage from any liability, claim, loss, cost, damage or injury, including but not limited to loss of the Commission payable under this Agreement, caused or contributed to by the breach of any warranty or representation made by the Seller in this Agreement and, if attached, the accompanying data form. The Seller warrants the Property is insured, including personal liability insurance against any claims or lawsuits resulting from bodily injury or property damage to others caused in any way on or at the Property and the Seller indemnifies the Brokerage and all of its employees, representatives, salespersons and brokers (Listing Brokerage) and any co-operating brokerage and all of its employees, representatives, salespersons and brokers (co-operating brokerage) for and against any claims against the Listing Brokerage or co-operating brokerage made by anyone who attends or visits the Property.”
Review
Set out below and marked in bold and italics are those words that are inserted by me to assist in the review. They are not set out in the clause itself. Let’s look at that paragraph in a little more detail:
8. INDEMNIFICATION AND INSURANCE:
Release from Liability
The Seller will not hold the Listing Brokerage and representatives of the Brokerage responsible for any loss or damage to
- the Property
- or contents
occurring during the term of this Agreement
Causation
caused by the Listing Brokerage or anyone else by any means, including
- theft,
- fire or
- vandalism,
Exception
other than by the Listing Brokerage’s gross negligence or wilful act.
Indemnification
The Seller agrees to indemnify and save harmless the
Whom
Listing Brokerage and representatives of the Brokerage and
any co-operating brokerage
For What
from any liability, claim, loss, cost, damage or injury,
including but not limited to loss of the Commission payable under this Agreement,
Causation in whole or in part
caused or contributed to by the breach of any warranty or representation made by the Seller
Specified Where
in this Agreement and, if attached, the accompanying data form.
Insurance: Property
The Seller warrants the Property is insured,
Insurance: Personal Liability
including personal liability insurance
against any claims or lawsuits
resulting from bodily injury or property damage to others caused in any way on or at the Property and
General Indemnification
the Seller indemnifies the Brokerage and
- all of its employees, representatives, salespersons and brokers (Listing Brokerage)
and any co-operating brokerage and
- all of its employees, representatives, salespersons and brokers (co-operating brokerage)
for and against any claims against the Listing Brokerage or co-operating brokerage made by anyone who attends or visits the Property.
COMMENT
Release
At the outset, the Seller releases liability for both the Listing Brokerage and its representatives. There’s no mention here of the Co-operating Brokerage. If there’s loss or damage to either your property or your contents, you have already released the Listing Brokerage and its representatives. The loss or damage would be due to theft, fire or vandalism. Now, presumably that’s not fire, theft or vandalism at the instance of the Listing Brokerage or one of its representatives? In any event, you have already forgiven them upfront.
There is a no release for theft, fire or vandalism where the Listing Brokerage has actually caused it by gross negligence or wilful act, That’s an exception, however, there’s still a full release where the Listing Brokerage has caused it (or anyone else has caused it) due to negligence.
Indemnification
The indemnification provision obligates the Seller to pay! The Seller makes a representation or gives a warranty and subsequently is in “breach”, then the Seller needs to compensate:
- Listing Brokerage and representatives of the Brokerage and
- any co-operating brokerage
Now, at this point it does seem odd that representatives of the co-operating brokerage are not covered. But, too bad for them!
Also, note that it says “caused by or contributed to”. This means in whole or in part. If we have partial contribution, we don’t have reduced liability, we still have full liability.
At this point, the Seller should request the agent to determine whether the Seller’s liability insurance covers them on this point, and make sure that the failure to provide the correct answer shall constitute “gross negligence”.
You can appreciate that the indemnification provision is somewhat pushing the limits.
Fortunately, there is a restriction and that is:
- The Listing, and
- The Data Form, if attached
Obviously, careful notes should be made to ensure that the Data Form is “attached”. If it’s not attached, then, there’s no liability, so that would be advantageous to any Seller.
Insurance
The Seller needs to confirm that the have insurance, both for property (for their own losses) and liability for damages to others. There is no specific amount noted in terms of any deductible nor any minimum amount of coverage. So, I suppose the $1.00 insurance policy is good enough, or “self-insurance”.
It should be noted that many large corporations and governments are self-insured up to rather high limits.
When it comes to the personal liability coverage, it must protect against any claims or lawsuits
- resulting from bodily injury or property damage to others
- caused in any way on or at the Property
This doesn’t mean that the Seller actually did something, or failed to do something. The simple point here is that there is such a policy in force.
The only connection to the Seller is “at” or “on” the property. The fact that the prospective Buyer fell on account of excessive alcohol consumption is not a factor here.
General Indemnification
This provision seems overly broad in nature. There are two Brokerages that are indemnified AND their respective representatives, the Listing Brokerage and the Co-operating Brokerage. However, there is a further extension here to include “employees” of both.
At this point. we have a claim made against either or both of the Brokerages, but not necessarily the representatives or employees.
The claim can be made by anyone and the only test is that they:
- Attended, or
- Visited
the property.
There is an obligation placed upon the real estate agent to explain this provision carefully. That’s a requirement. So, if you are ever suing for your commission in Court, you had better be able to explain this clause in detail to the Judge, otherwise, there could be issues relating to the other explanations that you made.
Brian Madigan LL.B., Broker