Calling Back the Offer

What exactly do we mean by access revocation?

Ontario

Question:

You show your listing to a buyer customer.  You prepare an offer. Before you meet with the seller to present the offer, the buyer calls you to tell you they have changed their mind and does not want you to present the offer. What do you do?

Answer:

You tell the buyer that you must present the offer and inform the seller of what has taken place.

This is not multiple representation. The Buyer is under a Customer Service contract. The Agent owes fiduciary duties to the Seller and must act in the Seller’s best interests.

Generally, once the Offer is given into the possession of the Seller’s Agent, in fact, it is deemed to have been delivered to the Seller. So, it cannot be taken back.

If the Buyer were a Client, the answer would be different. It would be given into the possession the Buyer’s Agent and until presented to the Seller, it could be revoked by the Buyer. This would be a multiple representation matter.

The problem with multiple representation is precisely this issue. For whom does the agent hold documents? What is the timing? When does a document in the possession of the Agent actually switch over from one party to the other?

It is for this reason (the lack of clarity) that the standard Form APS contains the following:

“Where a Brokerage represents both the Seller and the Buyer (multiple representation), the Brokerage shall not be appointed or authorized to be agent for either the Buyer or the Seller for the purpose of giving and receiving notices.”

That simply dealt with the issue of Notices not the submission and delivery of Offers.

Nevertheless, if John Smith is the “registrant” on both sides, and John Smith receives the Offer from the Buyer at 4:00 pm, and plans to meet with the Seller at 8:00 pm:

John Smith with the Seller as Client and the Buyer as a Customer receives it on behalf of the Seller at 4:00 pm (therefore, it’s too late to revoke),

John Smith with the Seller as Client and the Buyer also as a Client never receives it on behalf of the Seller at anytime  but delivers it at 8:00 pm (anytime prior, it may be revoked), and in this situation holds it “in escrow” on behalf of the Buyer until actual delivery to the Seller at 8:00 pm.

This question is designed to elicit the difference between John Smith’s roles in multiple representation (2 clients) and single agency (client and customer).

Where customer service exists, John Smith cannot be appointed as the giver or receiver of notices.

Our situation is quite simple. If the Buyer is a Client, then the Offer may be revoked in the hands of the dual Agent, anytime prior to presentation.

If the Buyer is a Customer, then it’s already been delivered once it’s in the hands of the Agent, and it may not be revoked.

That’s the technical legal answer which goes with this question. It’s also the “right” answer for examination purposes.

However, in real life, the circumstances may be such that:

John Smith:

  • Held the Offer in escrow,
  • Failed to point out the technical distinction ahead of time,
  • Misled the Buyer,
  • Provided some sort of advice, thereby triggering “dual agency”.

Any of those things could happen and would be argued by the Buyer if they changed their mind and didn’t want their Offer presented.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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