John Smith is a Buyer and he wants to buy Mary Jones’ house.
He has an agent Bill Brown who works for ABC Brokerage.
Mary also has an agent, Wilma Black who works for XYZ Brokerage.
Prior to 1 December 2023
Form 100, the standard Agreement of Purchase and Sale would be used.
Let’s look at the Notices Provision. John appoints ABC as his agent, and they use Bill Brown’s email address.
Mary Jones appoints XYZ as her agent, and they use Wilma Black’s email address.
They were both successful in delegating the authority to deliver and receive notices.
By the way, notices included “deliver and receive the “acceptance” for the transaction.
After 1 December 2023
Now, we have something of a problem. With the opportunity for Designated Representation both John and Mary went along with this. Never mind the Brokerages, they selected representation by their agents Bill and Wilma. The Brokerages will simply provide “back-up” services. There’s absolutely “no agency” here.
So, what Form do we use?
There’s still only one Form out there. What does it say?
“The Seller hereby appoints the Listing Brokerage as agent for the Seller for the purpose of giving and receiving notices pursuant to this Agreement.”
Well that’s not good.
What about the Buyer, what did the Form say?
Where a Brokerage (Buyer’s Brokerage) has entered into a representation agreement with the Buyer, the Buyer hereby appoints the Buyer’s Brokerage as agent for the purpose of giving and receiving notices pursuant to this Agreement.
Well, that’s not good either.
This paragraph would apply if we have Brokerages as the agents, but we don’t. That’s the problem.
Under the TRESA legislation, the Brokerage CANNOT provide “representation”. They can provide services. Here it just said “agent”. That means we are referring to someone who has fiduciary duties, not someone who bis just helping out.
Let’s look at the legislation:
Contents of Written Agreements (Regulation 567/05)
13.4 (1) A brokerage shall not enter into a written agreement with a buyer or seller for the purpose of trading in real estate unless the following requirements are satisfied:
1. The agreement clearly, comprehensibly and prominently, sets out the following information:
v. The services that the brokerage will provide under the agreement and, in the case of a designated representation agreement, the fact that the brokerage will not provide representation.
In summary,
Brokerage provides services and no representation
Designated Representative provides representation and services.
Nether John nor Mary could appoint the Brokerage under the Notices provision if they both selected Designated Representatives.
What did the Confirmation of Cooperation and Representation say?
It said:
John Smith appoints:
“The Co-operating Brokerage or a Designated Representative of the Co-operating Brokerage represents the interests of the Buyer in this transaction.”
Mary Smith appoints:
‘The Seller Brokerage or a Designated Representative of the Seller Brokerage represents the interests of the Seller in this transaction.”
Then, when it came to filling in the rest of the Form, it really didn’t disclose if this was Brokerage Representation or Designated Representation.
So, all in all, the Confirmation of Cooperation and Representation wasn’t that helpful.
Acceptance of the Offer
The parties are interested in the transaction. Bill Brown on behalf of John Smith submits an Offer which must be accepted by 8:00 pm.
Wilma Black has that Offer and has it is signed by Mary Jones.
Wilma sends a text to Bill Brown at 7:45 pm indicating that Mary accepted the Offer.
At 7:47 pm Wilma sends an email to Bill indicating that Mary accepted the Offer.
At 7:50 pm Wilma sends an email to Bill which includes the Offer as signed By Mary.
At 7:55 pm Wilma sends an email to Bill which includes the Offer and the Confirmation of Acceptance as of 7:50 pm.
Let’s look at the Notices Paragraph
This is when and how to give the Notices:
“Any notice relating hereto or provided for herein shall be in writing. In addition to any provision contained herein and in any Schedule hereto, this offer, any counter-offer, notice of acceptance thereof or any notice to be given or received pursuant to this Agreement or any Schedule hereto (any of them, “Document”) shall be deemed given and received when
- delivered personally or
- hand delivered to the Address for Service provided in the Acknowledgement below, or
- where a facsimile number or email address is provided herein,
- when transmitted electronically to that facsimile number or
- email address,
respectively, in which case, the signature(s) of the party (parties) shall be deemed to be original.”
According to the Notices provision, texts are not allowed. However, neither John nor Mary were authorized to appoint their agents, since the Notices provision only applies to Brokerage representation. So, “yes”, this is a technical issue. It should be fixed. Both parties have their own Designated Representatives, so why not appoint them? Certainly, that would make a great deal of sense.
You could accomplish this by amending the “authorization of delegation”.
Courts have two choices:
- there is no contract, since this technical issue is important,
- there is a contract, just ignore this technicality.
The risk going forward is that someone who chooses to avoid the contract will take it to Court and they have a good argument, which on a point of law also enables them to appeal to the Ontario Court of Appeal. That’s both expensive, and time consuming.
Brian Madigan LL.B., Broker