Comparing the Commission Clauses in 3 Agreements

There are three basic forms of commission agreements with sellers. They are slightly different. The Listing is agency, the Customer Service agreement is non-agency and the second non agency arrangement is for “top up commissions” for listed properties.

For agency, there are three duties, common law, statutory (clients) and statutory (public).

For non-agency, there are statutory (customers) and statutory (public).

For non-agency (listed), there are only statutory (public) duties.

Let’s have a look at the three agreements:

Listing Agreement ~ Authority to Offer for Sale

(Form 200)

2. COMMISSION: In consideration of the Listing Brokerage listing the Property, the Seller agrees to pay the Listing Brokerage a commission

of……………………….% of the sale price of the Property or…………………………………………………………………………………………………………for any valid offer to purchase the Property from any source whatsoever obtained during the Listing Period and on the terms and conditions set out in this Agreement OR such other terms and conditions as the Seller may accept.

The Seller further agrees to pay such commission as calculated above if an agreement to purchase is agreed to or accepted by the Seller or anyone on the Seller’s behalf within……………………….. days after the expiration of the Listing Period (Holdover Period), so long as such agreement is with anyone who was introduced to the Property from any source whatsoever during the Listing Period or shown the Property during the Listing Period.

If, however, the offer for the purchase of the Property is pursuant to a new agreement in writing to pay commission to another registered real estate

brokerage, the Seller’s liability for commission shall be reduced by the amount paid by the Seller under the new agreement.

The Seller further agrees to pay such commission as calculated above even if the transaction contemplated by an agreement to purchase agreed to or accepted by the Seller or anyone on the Seller’s behalf is not completed, if such non-completion is owing or attributable to the Seller’s default or neglect, said commission to be payable on the date set for completion of the purchase of the Property.

Any deposit in respect of any agreement where the transaction has been completed shall first be applied to reduce the commission payable.

Should such amounts paid to the Listing Brokerage from the deposit or by the Seller’s solicitor not be sufficient, the Seller shall be liable to pay to the Listing Brokerage on demand, any deficiency in commission and taxes owing on such commission.

All amounts set out as commission are to be paid plus applicable taxes on such commission.

Review of Commission Terms

Consideration: the listing

Amount: % or specified

Trigger: valid offer, any source

Holdover: obligation continues any source introduced or shown

Deduction: any amount paid to a new brokerage

When Payable: on completion

Non-completion: on date for completion, if seller’s fault

Deposit: first applied to commission

Deficiency: liability for deficiency

HST: in addition

Seller Customer Service Agreement ~ Commission Agreement For Property Not Listed 

(Form 201)

2. COMMISSION: In consideration of the Brokerage showing the Property to the Buyer and/or introducing the Buyer to the Seller for the purpose of

discussing the sale or lease of the Property, the Seller agrees to pay the Brokerage a commission of…………………………% of the sale price of the

Property or…………………………………………………………………………………………………………

for any valid offer to purchase or lease the Property entered into between the Seller and the Buyer during the term of this Agreement.

Seller acknowledges that the commission as described above is payable to the Brokerage even if the Seller enters into an agreement to

pay commission to another registered real estate brokerage during the currency of this Agreement or any extension thereof.

The Seller agrees to pay such commission as calculated above if an agreement with the Buyer to purchase or lease the Property is agreed to or accepted by the Seller or anyone on the Seller’s behalf within…………………………………………………………..days after the expiration of this Agreement.

If, however, the offer from the Buyer for the purchase or lease of the Property is pursuant to a new agreement in writing to pay commission to another registered real estate brokerage, and if the new agreement was entered into after the expiration of this Agreement, the Seller’s liability for commission shall be reduced by the amount paid by the Seller under the new agreement.

The Seller agrees to pay such commission as described above even if the transaction contemplated by an agreement to purchase or lease agreed to

or accepted by the Seller or anyone on the Seller’s behalf is not completed, if such non-completion is owing or attributable to the Seller’s default or

neglect.

The commission as described above shall be payable on the date set for completion of the purchase of the Property or, in the case of a lease

or tenancy, the earlier of the date of occupancy by the tenant or the execution of the lease or the date set for commencement of the lease or tenancy.

Any deposit in respect of any agreement where the transaction has been completed shall first be applied to reduce the commission payable.

Should such amounts paid to the Brokerage from the deposit or by the Seller’s solicitor not be sufficient, the Seller shall be liable to pay to the Brokerage on demand, any deficiency in commission and taxes owing on such commission.

All amounts set out as commission are to be paid plus applicable taxes

on such commission.

Review of Commission Terms

Consideration: showing and/or introducing

Amount: % or specified

Trigger: valid offer, from the buyer

Priority: this commission is in addition to any other agreement

Holdover: obligation continues, this buyer only

Deduction: any amount paid to a new brokerage

When Payable: on completion

Non-completion: on date for completion, if seller’s fault

Deposit: first applied to commission

Deficiency: liability for deficiency

HST: in addition

Seller Commission Agreement with Co-operating Brokerage For A Listed Property

(Form 202)

2. COMMISSION: In consideration of the Brokerage introducing the Buyer to the Property, the Seller agrees to pay the Brokerage a commission

of…………………………% of the sale price of the Property or…………………………………………………………………………………………………………

for any valid offer to purchase or lease the Property entered into between the Seller and the Buyer during the term of this Agreement.

Seller acknowledges that the commission as described above is payable to the Brokerage even if the Seller enters into an agreement to pay commission to another registered real estate brokerage during the currency of this Agreement or any extension thereof.

The Seller further acknowledges that the commission described above is payable to the Brokerage in addition to any commission payable by the Seller to the Seller’s listing brokerage.

The Seller agrees to pay such commission as calculated above if an agreement with the Buyer to purchase or lease the Property is agreed to or accepted by the Seller or anyone on the Seller’s behalf within…………………………………………………………..days after the expiration of this Agreement.

If, however, the offer from the Buyer for the purchase or lease of the Property is pursuant to a new agreement in writing to pay commission to another registered real estate brokerage, and if the new agreement was entered into after the expiration of this Agreement, the Seller’s liability for commission shall be reduced by the amount paid by the Seller under the new agreement.

The Seller agrees to pay such commission as described above even if the transaction contemplated by an agreement to purchase or lease agreed to or

accepted by the Seller or anyone on the Seller’s behalf is not completed, if such non-completion is owing or attributable to the Seller’s default or neglect.

The commission as described above shall be payable on the date set for completion of the purchase of the Property or, in the case of a lease or tenancy, the earlier of the date of occupancy by the tenant or the execution of the lease or the date set for commencement of the lease or tenancy.

Any deposit in respect of any agreement where the transaction has been completed shall first be applied to reduce the commission payable. Should such amounts paid to the Brokerage from the deposit or by the Seller’s solicitor not be sufficient, the Seller shall be liable to pay to the Brokerage on demand, any deficiency in commission and taxes owing on such commission.

All amounts set out as commission are to be paid plus applicable taxes on such commission.

Review of Commission Terms

Consideration: introducing

Amount: % or specified

Trigger: valid offer, from the buyer

Priority: this commission is in addition to any other agreement       

Additional: commission is in addition to any other commission

Holdover: obligation continues, this buyer only

Deduction: any amount paid to a new brokerage

When Payable: on completion

Non-completion: on date for completion, if seller’s fault

Deposit: first applied to commission

Deficiency: liability for deficiency

HST: in addition

COMMENT

You will notice that they are all quite similar. For listings, the consideration is “listing”, for customer service, it’s “showing and introducing” and for third party listings, it’s “introducing”.

This really makes no difference, other than to reinforce the duties and obligations of the agent, and naturally to minimize them in the third party listing situation.

The trigger for payment in respect to listings is a “valid offer from any source”, while for the two non-agency agreements, the offer must be from “that buyer”.

As for commissions and their interaction with other commission agreements, the agreements are different:

  1. 200 ~ no clause
  2. 201 ~ priority clause
  3. 202 ~ priority clause and additional commission clause.

You will also be aware of the fact that no real steps are taken to “guaranteeing” the commission payment. We will look at that later.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

Leave a Reply

Your email address will not be published.