Documenting a Co-operating Commission Increase

Question:

I am a Listing Agent. The Listing is at 4.0% with 2.0% being offered to the Co-operating Brokerage.

The Buyer’s agent wants his side increased from 2.0% to 2.5%. He says that is what was specified in his Buyer’s Representation Agreement.

My Seller and I both agreed. The Confirmation of Co-operation and Representation (CCR) was amended to reflect this. Now, my client’s lawyer says the Seller doesn’t have to pay.

Answer:

The CCR deals with the commission payable to the Buyer’s agent. That was changed and correctly reflects the agreement as between the two Brokerages.

It doesn’t deal with the source of the additional commission. The correct agreement there, is the Listing Agreement. There should have been an amendment by way of a schedule. In fact, you could have even attached a copy of the CCR. What you needed to do was indicate that the “source” of the additional commission was the Seller and not the Listing Agent. That didn’t happen.

The paperwork, reflects the fact that the Listing Agent will pay it. Why? There was no change to the Listing Agreement. It’s not right. And, it doesn’t help you! At best, you can only ask the Seller to pay you.

Call the Seller and explain your error. If the Seller agrees, then everything is fine. But, as you can see, the “source” of the additional commission was never documented, and that’s the “key” to all of this.

In the meantime, you Brokerage is responsible to ensure that the Buyer’s Agent gets 2.5%. That means your commission is being reduced from 2.0% to 1.5%.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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