You negotiated and signed a Cancellation with your first agent. Now, you are about to enter into a new listing with your second agent. Might you still owe a commission to your first agent?
Quite possibly. Let’s assume that your first agent charged you 5% and your second agent is now charging you 4.5%. Can you keep the saving?
Have a look at Form 242 Cancellation. You will notice that it does not render the original listing null and void, it just cancels part of it. It also provides a partial release. This Form came out in 2008 from OREA.
Then, have a look at the “holdover continuance clause”. It says, in effect, that you have to “top up” the first agent. That’s in the standard form.
The second agent should tell the seller that he still has to “top up” the first agent under the holdover clause. So, the second agent should obviously have a look at the actual Cancellation Agreement.
Now, let’s consider what you might do if you were a Seller who disliked the first agent, and did not want to be exposed to the “top up” provision in the Listing Agreement, continued in the “holdover continuance clause” in the Cancellation.
You would simply delete it, remove it, and execute a full and complete release with the first Listing Agent. Now, it’s gone, and there’s no exposure to the “top up”. You are quite free to negotiate that if you wish.
It is also important to note that there’s no interference with the first listing by having this discussion between the second agent and the seller. The seller needs to know the total commission. And, if the second agent misses this point then the second agent, is at risk of:
- paying the “top up” out of your commission,
- paying a disciplinary fine.
It always makes good sense to carefully examine any documents before you sign them. Secure a second opinion, if advisable and consult a lawyer for advice, if you are uncertain.
Brian Madigan LL.B., Broker