Brian Madigan LL.B., Broker
BRMadigan@iSourceRealEstate.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300
Toll Free: 1-888-507-0817

 

Search Blog

Search in:  
    
    
       

Sort by:

Buyer Representation Agreement - Brian Madigan - Review and Explanation

April 17, 2015 - Updated: April 22, 2015

 

Buyer Representation Agreement Explained (Ontario)

 

Be careful about printing this, it will run over 70 pages. This is the long version.

 

Buyer Representation Agreement Explained (Ontario) Part 1

 

It is sometimes difficult to understand and appreciate legal contracts, particularly when it comes to the fine print.

 

So, let’s have a look at the standard form Buyer Representation Agreement prepared by the Ontario Real Estate Association (OREA).

 

We will look at each of the particular clauses in detail. This will assist you to understand the document should it be necessary for you to explain it to a client, or if you are a consumer, in the event that you are being requested to sign one.

 

This is an Agency document. By using this document the Buyer appoints the Brokerage as his agent. Consequently, some important fiduciary obligations come into play. There are other relationships which might be provided, but this one is “agency”.

 

The Buyer is the “Principal” and the Brokerage is the “Agent”.

 

At common law, there are important fiduciary obligations which will apply, including:

  • Disclosure
  • Obedience
  • Competence
  • Confidentiality
  • Accounting
  • Loyalty

These common law duties and obligations have been present for hundreds of years.

 

There are five primary sources of new legal developments for real estate agents:

 

  1. Statutory laws,
  2. Regulatory laws,
  3. Changes to the local MLS rules and regulations,
  4. Discipline cases published by RECO, and
  5. Decisions by the Courts.

 

Any agent must keep abreast of continuing significant developments. The current Act, namely the Real Estate and Business Brokers Act, 2002 its and regulations were proclaimed in force 31 March 2006. There are yearly updates to the MLS rules. The decisions by Discipline Committee and Appeals Committee of RECO, the Licence Appeal Tribunal, and various Provincial Courts are published regularly on the RECO website. Practitioners should keep abreast of developments in the law, and one of the best ways would be to enroll in continuing education programs.

 

When we look at a document such as the Buyer Representation Agreement, it is important to bear in mind the context within which it exists. It will be the Ontario document, 2015 Version which is under review. Other jurisdictions have similar but slightly different documents.

 

 

Buyer Representation Agreement Explained (Ontario) Part 2 PARTIES

 

Buyer Representation Agreement Explained (Ontario) Part 2

 

The Parties

 

This is the commencement of the BRA document:

 

This is an Exclusive Buyer Representation Agreement

 

BETWEEN:

 

BROKERAGE..............................................., Tel.No. (.........).................................

 

ADDRESS......................................................., Fax.No.(........)..................................

hereinafter referred to as the Brokerage.

 

AND:

 

BUYER(S):..........................................................................................................., hereinafter referred to as the Buyer,

 

ADDRESS:............................................................................................................       Street Number                                                  Street Name

 

MUNICIPALITY:..........................................POSTAL CODE:........................

 

 

COMMENT

 

This is an identification of the parties to the agreement. There are several items to note:

 

  • It is an EXCLUSIVE agreement
  • There is only one agent, and that is the Brokerage
  • There can be several buyers who have signed this same agreement

 

While it might seem somewhat odd, for this day and age, fax numbers are still noted. That is due to the fact that full negotiations by email for real estate transactions are not yet recognized in Ontario under the Electronic Commerce Act. In due course, this will change, but at the moment there are still serious restrictions. Changes were proposed and the Bill passed Third Reading on 13 June 2013. We are still awaiting the final step, namely proclamation.

 

You will note that there could be an interesting issue here. You like “John Smith of ABC Realty Inc., Brokerage, but selection John Smith is not really an option.

 

Clearly, if you want John Smith and no one else, then you are going to have to amend this provision. And, if you are John Smith and want to transport your new clients to your new Brokerage, you will have to have an amendment here too.

 

Buyer Representation Agreement Explained (Ontario) Part 3 APPOINTMENT

Buyer Representation Agreement Explained (Ontario) Part 3 APPOINTMENT

 

This is the part of the Buyer Representation Agreement dealing with the actual appointment:

 

 

The Buyer hereby gives the Brokerage the exclusive and irrevocable authority to act as the Buyer’s agent

commencing at.........................a.m./p.m. on the..........................................................day of............................................, 20.............,

and expiring at 11:59 p.m. on the...............................................................day of......................................................., 20..............(Expiry Date),

Buyer acknowledges that the time period for this Agreement is negotiable between the Buyer and the Brokerage, however, in accordance with the Real Estate and Business Brokers Act of Ontario (2002), if the time period for this Agreement exceeds six months, the Brokerage must obtain the Buyer’s initials.

for the purpose of locating a real property meeting the following general description:

Property Type (Use):................................................................................................................................................................................................................................................................

Geographic Location:...........................................................................................................................................................................................................................................................

 

 

COMMENT

 

You will notice several matters:

 

It is “exclusive”, this means quite simply that a consumer cannot appoint two agents at the same time, to do the same thing.

 

It is “irrevocable”. That means that it will continue throughout the entire currency of the agreement. No second thoughts and no termination provisions are included in the standard form.

 

There is a start date and an end date. They use the words commencing and expiring. Now, when you look at the commencing part, it is noteworthy that the “time” starts at midnight in most cases. This is not actually part of the form but a function of the software programs commonly in use.

 

If you meet someone for the first time at 9:30 am and then view a property, this agreement should begin no earlier than 9:30 am. In many cases, the software program will insert a 12:01 am start time. This clearly is not the case. Going forward, this start time could present an issue.

 

The expiry date will be a date you select for the conclusion of your arrangement.

 

The duration of the agreement could be for a few hours or a year or two. Make sure you understand and agree to the correct time period.

 

If you are seeing one property, then there’s no need for an excessive period of time. If you have now selected the person with whom you wish to deal, then give them the authority to act on your behalf.

 

Any agreement which extends beyond six months is unusual and will require the buyer’s initials. Sometimes the sales representative will insert a time period just short of this 6 month period.

 

In commercial transactions, it is not uncommon for a client to work with the same sales professional for several years locating a suitable property.

 

In summary, since there is a holdover period and the agent will be paid a commission anyways, consumers should shorten up this time period. There is absolutely nothing wrong with a 24 hour agreement.

 

So, what’s this agreement about? Look at the deal! It is an agreement between the parties to locate a property which is described in terms of its:

 

1)    Type, and

 

2)    Geographical location.

 

Type. This naturally means that you will want to be quite careful when setting the parameters of the deal. Not all agents necessarily are experienced in the same way. If you are looking for a residential property, then that should be specified. If you are looking for a multi-plex in the same area, perhaps you need a different agent.

 

And what about your business? Office leasing or commercial premises probably call for an agent with special expertise.

 

Geographical Location. The next step is the geographical area. Many agents stay within a relative closed geographical area. That is what they know about. That is where they work. They often don’t stray too far.

 

However, consider a buyer wishing to acquire a very upscale property in the west end of Toronto. That same purchaser might be prepared to consider Forest Hill, the Kingsway, Lorne Park, east Oakville or Burlington. There are different agents who work in each of these areas and claim to have special local knowledge and expertise. So, one consideration would be to have five separate contracts with five different agents. Another consideration would be to select one person to facilitate the transaction and co-ordinate matters in all five areas.

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 4 Representation

 

Buyer Representation Agreement Explained (Ontario) Part 4 Representation

 

REPRESENTATION

 

The following representation is the next provision which appears in the agreement. It is in BOLD typeface to indicate its importance:

 

The Buyer hereby warrants that the Buyer is not a party to a buyer representation agreement with any other registered real estate brokerage for the purchase or lease of a real property of the general description indicated above.

 

COMMENT

 

This seems like a simple statement but it’s not. The buyer is confirming that there are no other contracts which will conflict with this one. The statement is expressed as a “warranty”. It is not a condition. It doesn’t not prevent the entry into the agreement in the first place. If there is a breach, there will be damages.

 

The reference is “other real estate brokerage”. Naturally, that leaves out the existing brokerage, meaning naturally, that two sales professionals from one particular brokerage would not be covered by this disclaimer. If you are a real estate sales professional with a large brokerage which dominates your area, then you will probably wish to make further inquiries.

 

The transaction can be one of purchase or lease. There’s a considerable difference there. You may have initially sought the assistance of person to help with a rental but now you may find that you are “locked” into the same person for a purchase. The six month rental may have involved $2,000.00 per month, but a one million dollar purchase is quite something else.

 

When it comes to the description, we are talking both about “type and “geographical location”.

 

 

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 5 DEFINITIONS

 

Buyer Representation Agreement Explained (Ontario) Part 5 DEFINITIONS

There is a section dealing with Definitions and it reads like this:

 

 

1. DEFINITIONS AND INTERPRETATIONS: For the purposes of this Buyer Representation Agreement (“Authority” or “Agreement”), "Buyer" includes purchaser and tenant, a "seller" includes a vendor, a landlord or a prospective seller, vendor or landlord and a “real estate board” includes a real estate association. A purchase shall be deemed to include the entering into of any agreement to exchange, or the obtaining of an option to purchase which is subsequently exercised, and a lease includes any rental agreement, sub-lease or renewal of a lease. This Agreement shall be read with all changes of gender or number required by the context. For purposes of this Agreement, Buyer shall be deemed to include any spouse, heirs, executors, administrators, successors, assigns, related corporations and affiliated corporations. Related corporations or affiliated corporations shall include any corporation where one half or a majority of the shareholders, directors or officers of the related or affiliated corporation are the same person(s) as the shareholders, directors, or officers of the corporation introduced to or shown the property.

 

Now, you probably appreciate that it is rather difficult to read through that statement and properly understand it, with all its implications. So, let’s pull it apart somewhat. My comments are shown in “italics” below the actual specific wording.

 

1.DEFINITIONS AND INTERPRETATIONS:

For the purposes of this Buyer Representation Agreement (“Authority” or “Agreement”),

 

First using the term “authority is somewhat odd here, but nevertheless, this entire agreement is about giving the agent authority to act.

 

"Buyer" includes purchaser and tenant,

 

This is somewhat unusual too. However, it is intended to reinforce the idea that a tenant is acquiring something, appointing someone and paying a commission.

 

a "seller" includes a vendor, a landlord or a prospective seller, vendor or landlord and

 

This is the corollary of the tenant issue. Here, the landlord can be a seller so acquiring something from a landlord is still covered under this agreement.

 

a “real estate board” includes a real estate association.

 

Later in the agreement the concept of a board will be used, and some boards refer to themselves as “associations.”

 

A purchase shall be deemed to include the entering into of any agreement to exchange, or the obtaining of an option to purchase which is subsequently exercised, and

 

This is a reasonable extension of the term purchase. An option should indeed be included, as well as any deal where land is swapped for land. That could easily occur when we are dealing with two commercial land developers.

 

a lease includes any rental agreement, sub-lease or renewal of a lease.

 

Again, this would be a reasonable extension of the term “lease”. But, here, you are probably just thinking of something new. Staying put, is covered too. So, you might be looking around for better and new premises, but you might be surprised to find that just staying where you are could cost you some money too. Is that what you intended?

 

This Agreement shall be read with all changes of gender or number required by the context.

 

This provision is relatively common with contracts. It just patches up errors in grammar relating to number and gender. You may just say “don’t make them in the first place”, but this term renders them “good to go”.

 

For purposes of this Agreement, Buyer shall be deemed to include

any spouse,

heirs, executors, administrators, successors, assigns,

related corporations and affiliated corporations.

 

The interesting part here are the references to spouse and related corporations. You may not have thought that you were signing this agreement on behalf of your spouse, but in a round about way, you are. The spouse is NOT part of the agreement. You cannot bind your spouse without specific authority. But, if your spouse does a deal, you have to pay under this agreement.

 

Related corporations or affiliated corporations shall include any corporation where one half or a majority of the shareholders, directors or officers of the related or affiliated corporation are the same person(s) as the shareholders, directors, or officers of the corporation introduced to or shown the property.

 

The agent shows you the property. Just like a spouse, you might have to pay a commission. That corporation doesn’t, just you. The test of being related would be 2 out of three, or two out of four. Usually, that just deals with ownership. Here, this isn’t the case, it includes directors and officers as well.

 

This is a much different approach than “related parties” and “associated parties” under the Real Estate and Business Brokers Act, 2002.

 

So, you need to be aware of some of the expanded definitions as we go forward with the contract review.

 

 

 

Buyer Representation Agreement Explained (Ontario) 6A COMMISSION

 

 

Buyer Representation Agreement Explained (Ontario) Part 6A COMMISSION

 

We will tackle this paragraph in two steps. The first part runs down to the end of page 1, and the second part starts with “IF” at the top of page 2. Here’s the paragraph in its entirety:

 

2. COMMISSION: In consideration of the Brokerage undertaking to assist the Buyer, the Buyer agrees to pay commission to the Brokerage as follows: If, during the currency of this Agreement, the Buyer enters into an agreement to purchase or lease a real property of the general description indicated above, the Buyer agrees the Brokerage is entitled to receive and retain any commission offered by a listing brokerage or by the seller. The Buyer understands that the amount of commission offered by a listing brokerage or by the seller may be greater or less than the commission stated below. The Buyer understands that the Brokerage will inform the Buyer of the amount of commission to be paid to the Brokerage by the listing brokerage or the seller at the earliest practical opportunity. The Buyer acknowledges that the payment of any commission by the listing brokerage or the seller will not make the Brokerage either the agent or sub-agent of the listing brokerage or the seller.

If, during the currency of this Agreement, the Buyer enters into an agreement to purchase any property of the general description indicated above, the Buyer agrees that the Brokerage is entitled to be paid a commission of.......................% of the sale price of the property or ................................................................................................................................................................................................................ or for a lease, a commission of ........................................................................................................................................................................ The Buyer agrees to pay directly to the Brokerage any deficiency between this amount and the amount, if any, to be paid to the Brokerage by a listing brokerage or by the seller. The Buyer understands that if the Brokerage is not to be paid any commission by a listing brokerage or by the seller, the Buyer will pay the Brokerage the full amount of commission indicated above. The Buyer agrees to pay the Brokerage such commission if the Buyer enters into an agreement within .................................days after the expiration of this Agreement (Holdover Period) to purchase or lease any real property shown or introduced to the Buyer from any source whatsoever during the term of this Agreement, provided, however, that if the Buyer enters into a new buyer representation agreement with another registered real estate brokerage after the expiration of this Agreement, the Buyer’s liability to pay commission to the Brokerage shall be reduced by the amount paid to the other brokerage under the new agreement. The Buyer agrees to pay such commission as described above even if a transaction contemplated by an agreement to purchase or lease agreed to or accepted by the Buyer or anyone on the Buyer’s behalf is not completed, if such non-completion is owing or attributable to the Buyers default or neglect. Said commission, plus any applicable taxes, 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 date set for commencement of the lease or tenancy. All amounts set out as commission are to be paid plus applicable taxes on such commission. This Agreement applies for the purchase or lease of one real property. Notwithstanding the foregoing, in the event that the Buyer leases a property, this agreement remains in force as set out herein for the purchase of the leased property or a property of the general description indicated above. The leasing of a property by the Buyer does not terminate this Agreement with respect to the purchase of a property.

 

Part 6A review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

2. COMMISSION:

 

This reference to commission is just the title.

 

In consideration of the Brokerage undertaking to assist the Buyer, the Buyer agrees to pay commission to the Brokerage as follows:

 

This seems straightforward. The reference to consideration is to ensure that we have a contract. It is noteworthy that the “deal” is for “assistance”. It is not an agreement for a completed transaction, but just assistance. And finally, there is the reference to pay commission.  

 

If, during the currency of this Agreement, the Buyer enters into an agreement to purchase or lease a real property of the general description indicated above,

 

The operative period of time for this particular paragraph is the currency of the agreement; that means start to expiration. There is a CONDITION here and that is the entry into an agreement by the Buyer. A purchase or lease are both covered. The property would have to fit the general description, meaning type and geographical location. You will recall the potential lease problem if a tenant simply decides to stay in his own space.

 

the Buyer agrees the Brokerage is entitled to receive and retain any commission offered by a listing brokerage or by the seller.

 

Off the top is an understanding that if indeed there is a commission offered by either a listing brokerage or a seller then it will be received by the buyer’s agent. Also, it will be retained. That means the buyer’s brokerage will keep it. There’s no cashback or rolling the money around to other people. This says quite simply, the buyer’s brokerage gets the money and keeps the money.

 

This means that if you are a consumer and you think that your part-time agent and fulltime taxi driver, or your cable TV company or your appliance repairman (well connected to someone in real estate) is going to GIVE YOU some MONEY, then this provision will have to change.

 

The Buyer understands that the amount of commission offered by a listing brokerage or by the seller may be greater or less than the commission stated below.

 

The amount of the commission will really be set out later in the agreement. The offered commission payment could be higher or lower. It doesn’t matter. That’s not the agreement. The real agreement on commission is whatever is set out later.

 

The Buyer understands that the Brokerage will inform the Buyer of the amount of commission to be paid to the Brokerage by the listing brokerage or the seller at the earliest practical opportunity.

 

Remember when we talked about the fiduciary duties? Accounting was one of them, and the duty of accounting requires this particular disclosure. The agent is not employed to make a secret profit. There is no such thing a s a secret profit. The obligation to account requires the agent to disclose and remit to the Principal the entire commission, then, the Principal will pay later. Well, that was the principle at common law, if nothing was said otherwise. Here, you will find a slight change later in this agreement.

 

Also, this information is to be provided at the earliest practical opportunity. That doesn’t mean as soon as possible, and it doesn’t mean “now”, nor does it mean “whenever”. At the very least, it means BEFORE an Offer is to be submitted. But, when does it really mean? It would be a reasonable time before the Offer is submitted.  The information is relevant at the time the numbers are being reviewed and under consideration.

 

The Buyer acknowledges that the payment of any commission by the listing brokerage or the seller will not make the Brokerage either the agent or sub-agent of the listing brokerage or the seller.

 

Don’t follow the money! Just because the money flowed directly to the agent, that doesn’t mean that the agent’s integrity is compromised in any way. So, your buyer’s agent is STILL your agent. It used to be commonplace in the 1990’s before Buyer Agency, for all the agents, no matter who they were to be working for the seller. And no one worked for the buyer.

 

This provision reinforces the change. It is the buyer’s agent, EVEN IF the seller pays. Now, you might also conclude quite quickly that the same thing would be true if all the commission money offered were simply paid directly to the buyer and the buyer could pay his own agent. That is quite true! But, that’s not going to happen.

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 6B COMMISSION-PRICE

 

 

Buyer Representation Agreement Explained (Ontario) Part 6B COMMISSION-PRICE

 

We will tackle this paragraph in two steps. The first part runs down to the end of page 1, and the second part starts with “IF” at the top of page 2. Here’s the paragraph commencing with “if”:

 

If, during the currency of this Agreement, the Buyer enters into an agreement to purchase any property of the general description indicated above, the Buyer agrees that the Brokerage is entitled to be paid a commission of.......................% of the sale price of the property or ................................................................................................................................................................................................................ or for a lease, a commission of ........................................................................................................................................................................ The Buyer agrees to pay directly to the Brokerage any deficiency between this amount and the amount, if any, to be paid to the Brokerage by a listing brokerage or by the seller. The Buyer understands that if the Brokerage is not to be paid any commission by a listing brokerage or by the seller, the Buyer will pay the Brokerage the full amount of commission indicated above. The Buyer agrees to pay the Brokerage such commission if the Buyer enters into an agreement within .................................days after the expiration of this Agreement (Holdover Period) to purchase or lease any real property shown or introduced to the Buyer from any source whatsoever during the term of this Agreement, provided, however, that if the Buyer enters into a new buyer representation agreement with another registered real estate brokerage after the expiration of this Agreement, the Buyer’s liability to pay commission to the Brokerage shall be reduced by the amount paid to the other brokerage under the new agreement. The Buyer agrees to pay such commission as described above even if a transaction contemplated by an agreement to purchase or lease agreed to or accepted by the Buyer or anyone on the Buyer’s behalf is not completed, if such non-completion is owing or attributable to the Buyers default or neglect. Said commission, plus any applicable taxes, 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 date set for commencement of the lease or tenancy. All amounts set out as commission are to be paid plus applicable taxes on such commission. This Agreement applies for the purchase or lease of one real property. Notwithstanding the foregoing, in the event that the Buyer leases a property, this agreement remains in force as set out herein for the purchase of the leased property or a property of the general description indicated above. The leasing of a property by the Buyer does not terminate this Agreement with respect to the purchase of a property.

 

Part 6B review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

If, during the currency of this Agreement, the Buyer enters into an agreement to purchase any property of the general description indicated above,

 

We saw this exact wording a little earlier in this agreement.

 

the Buyer agrees that the Brokerage is entitled to be paid a commission of.......................% of the sale price of the property or ....................................................................................................................................

 

This is now the fundamental part of the contract. This is THE price, and without the price we would be missing one of the essential terms of the agreement.

 

The commission is first expressed as a percentage of the sale price. It doesn’t need to be. It could also be a fixed price, or a graduated price or a combination of both. What we cannot have is an increasing percentage of the sale price, We can have a decreasing percentage of the sale price.

 

or for a lease, a commission of ....................................................................................................................................

 

In the case of a lease, there is simply a place left to insert the appropriate commission. It may be based upon a variety of methods, so here, it is simply left blank.

 

The Buyer agrees to pay directly to the Brokerage any deficiency between this amount and the amount, if any, to be paid to the Brokerage by a listing brokerage or by the seller.

 

First, we need to appreciate that there may be a deficiency. And, if there is then the buyer will pay his own agent the “top up” amount. That deficiency should be easy to calculate

 

The Buyer understands that if the Brokerage is not to be paid any commission by a listing brokerage or by the seller,

 

This is the circumstance.

 

the Buyer will pay the Brokerage the full amount of commission indicated above.

 

There is another situation which is contemplated here, and that is, there may be no commission offered or payable by either the listing brokerage or by the seller. So, there’s effectively, no deficiency, there is simply the “entire amount”. In this case, the buyer agrees to pay the entire amount.  

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 6C COMMISSION- HOLDOVER CLAUSE

 

 

Buyer Representation Agreement Explained (Ontario) Part 6C COMMISSION-HOLDOVER CLAUSE

  

Here is the part of the Agreement dealing with the holdover provision:

 

The Buyer agrees to pay the Brokerage such commission if the Buyer enters into an agreement within .................................days after the expiration of this Agreement (Holdover Period) to purchase or lease any real property shown or introduced to the Buyer from any source whatsoever during the term of this Agreement, provided, however, that if the Buyer enters into a new buyer representation agreement with another registered real estate brokerage after the expiration of this Agreement, the Buyer’s liability to pay commission to the Brokerage shall be reduced by the amount paid to the other brokerage under the new agreement. The Buyer agrees to pay such commission as described above even if a transaction contemplated by an agreement to purchase or lease agreed to or accepted by the Buyer or anyone on the Buyer’s behalf is not completed, if such non-completion is owing or attributable to the Buyers default or neglect. Said commission, plus any applicable taxes, 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 date set for commencement of the lease or tenancy. All amounts set out as commission are to be paid plus applicable taxes on such commission. This Agreement applies for the purchase or lease of one real property. Notwithstanding the foregoing, in the event that the Buyer leases a property, this agreement remains in force as set out herein for the purchase of the leased property or a property of the general description indicated above. The leasing of a property by the Buyer does not terminate this Agreement with respect to the purchase of a property.

 

Part 6C review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

The Buyer agrees to pay the Brokerage such commission if the Buyer enters into an agreement within .................................days after the expiration of this Agreement (Holdover Period)

 

This is the introduction to the holdover provision. Remember, this part of the agreement doesn’t even start until the contract is finished. We had a start date and an expiry date. This starts with the moment after the expiry and runs until the completion of the total number of days specified.

 

How long should it be? Well, this particular provision is intended to prevent the “end run”. The agent brings the buyer, and the day later, the seller enters into a contract directly with the buyer leaving out the agent completely. That’s not fair. So how do we prevent this?

 

The approach is to say the commission is payable anyways. This means that the parties might as well continue to have the agent involved and doing some work because the agent is still to be paid.

 

The usual periods would be 90 days in the case of residential property and 180 days in the case of commercial property. Frequently, these periods will be doubled.

 

to purchase or lease any real property

 

This is the event giving rise to the entitlement. There must be a “deal”.

 

shown or introduced to the Buyer from any source whatsoever during the term of this Agreement,

 

The provision does have a condition. There must be a property shown or introduced to the buyer, during the currency of the agreement, that is, the original time period from the start date to expiry.

 

There is one more matter, it says “…from any source whatsoever”. What does that actually mean? It’s very, very broad language. It is intended to mean just what it says: ANY SOURCE! So, if the buyer finds the property himself, on the internet, in a newspaper or on a flyer, then it is COVERED under this holdover provision. The reason is simple, you can never really prove this fact. The time period is relevant, the source is not. The buyer cannot say “….I only came across this property because I saw the for sale sign when I drove down the street”. This is still a source and it is still covered. It is the obligation of the buyer to bring this to the agent’s attention.

 

provided, however, that if the Buyer enters into a new buyer representation agreement with another registered real estate brokerage

 

One small qualifier: if there is a brand new agreement with another brokerage. Note, this cannot be the same brokerage with a different sales representative.

 

after the expiration of this Agreement,

 

Again, we are back to the currency of this agreement. If this second BRA, starts too soon, it will not apply. If this second BRA was in effect dealing with slightly different property, it wouldn’t apply. It MUST start afterwards!

 

the Buyer’s liability to pay commission to the Brokerage shall be reduced by the amount paid to the other brokerage under the new agreement.

 

This slight price break, just works as a set-off. Assuming the second deal is less than the first, there is a top-up. If it is the same, then it’s a break-even. If it’s more, than nothing is payable under the first BRA.

 

The Buyer agrees to pay such commission as described above

 

This is the obligation to make the necessary payment. The buyer pays the second agent whatever they agreed PLUS the “top-up” amount under the first BRA.

 

Why? Once, the first deal is struck, the buyer can always find someone to do it cheaper. This again is designed to prevent the buyer from making a “partial end-run”.

 

even if a transaction contemplated by an agreement to purchase or lease agreed to or accepted by the Buyer or anyone on the Buyer’s behalf is not completed,

 

The deal doesn’t actually have to close.

 

if such non-completion is owing or attributable to the Buyers default or neglect.

 

The qualifier here is something attributable to the buyer. So, the buyer cannot organize and co-ordinate his own default to his own advantage, But, nothing is said here about the seller. The commission is still payable in the event of the seller’s default. Remember, the deal is for “assistance” not a completed real estate deal.

 

Said commission, plus any applicable taxes, shall be payable on the date set for completion

 

The commission and the HST are payable on the date for completion not UPON completion. So, whatever date that was, is the date required for payment.

 

of the purchase of the property or,

 

The purchase date is relatively clear. It’s set out on the first page of the agreement. In the case of a commercial property for development, there can be a number of extensions often covering 24 to 36 months. It must either be clear on its face, or easily capable of being ascertained. If it is not, then the contract would lack one of the essential terms and would not be enforceable.

 

in the case of a lease or tenancy, the earlier of the date of occupancy by the tenant or the date set for commencement of the lease or tenancy.

 

Tenancies are always a little more complicated. So, it’s either the day the tenant moves in, or the day that the tenant starts paying rent, whichever comes first.

 

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

 

There is HST payable in addition to the amount set forth for commission. It’s not a gross amount or HST included arrangement.

 

This Agreement applies for the purchase or lease of one real property.

 

One deal, then move on and sign up another BRA for a second property. So, if a buyer likes a cottage property being offered by a builder, he only pays on the first deal. This can be tricky. Assume the builder has two lots, both vacant and he sells them both with a cottage to be built on the second, the commission is payable only upon the vacant lot which was acquired first.

 

Notwithstanding the foregoing, in the event that the Buyer leases a property, this agreement remains in force as set out herein for the purchase of the leased property

 

Here is another issue. If the buyer rents a property, the BRA will extend to include the purchase, but the time periods naturally will continue to apply. Assume the buyer rents the cottage for the summer just to try it out. If he buys it, then commission is payable either during the currency of the agreement (6 months), or during the holdover period (180 days), or if the deal is not struck until the following summer, then no commission is payable at all.

 

Ok, that was Interpretation #1. It’s also possible and open to interpretation that the lease triggers an event and the commission will be payable anytime whatsoever, provide, of course, that the lease is in effect (that could be 5 years). In this interpretation, the currency of the agreement and the holdover period would not come into play. So, if this is a potential issue, then spell it out clearly one way or the other.

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 7 REPRESENTATION

 

Buyer Representation Agreement Explained (Ontario) Part 7A REPRESENTATION

 

We will review this paragraph in three sections, namely, representation, multiple representation and finally customer service.

 

Here is the paragraph in its entirety:

 

3. REPRESENTATION: The Buyer acknowledges that the Brokerage has provided the Buyer with written information explaining agency relationships, including information on Seller Representation, Sub-Agency, Buyer Representation, Multiple Representation and Customer Service. The Brokerage shall assist the Buyer in locating a real property of the general description indicated above and shall represent the Buyer in an endeavour to procure the acceptance of an agreement to purchase or lease such a property. The Buyer acknowledges that the Buyer may not be shown or offered all properties that may be of interest to the Buyer. The Buyer hereby agrees that the terms of any buyer's offer or agreement to purchase or lease the property will not be disclosed to any other buyer. The Buyer further acknowledges that the Brokerage may be entering into buyer representation agreements with other buyers who may be interested in the same or similar properties that the Buyer may be interested in buying or leasing and the Buyer hereby consents to the Brokerage entering into buyer representation agreements with other buyers who may be interested in the same or similar properties without any claim by the Buyer of conflict of interest. The Buyer hereby appoints the Brokerage as agent for the purpose of giving and receiving notices pursuant to any offer or agreement to purchase or lease a property negotiated by the Brokerage.

 

MULTIPLE REPRESENTATION: The Buyer hereby acknowledges that the Brokerage may be entering into listing agreements with sellers of properties the Buyer may be interested in buying or leasing. In the event that the Brokerage has entered into or enters into a listing agreement with the seller of a property the Buyer may be interested in buying or leasing, the Brokerage will obtain the Buyer’s written consent to represent both the Buyer and the seller for the transaction at the earliest practicable opportunity and in all cases prior to any offer to purchase or lease being submitted or presented. The Buyer understands and acknowledges that the Brokerage must be impartial when representing both the Buyer and the seller and equally protect the interests of the Buyer and the seller in the transaction. The Buyer understands and acknowledges that when representing both the Buyer and the seller, the Brokerage shall have a duty of full disclosure to both the Buyer and the seller, including a requirement to disclose all factual information about the property known to the Brokerage. However, The Buyer further understands and acknowledges that the Brokerage shall not disclose:

• that the seller may or will accept less than the listed price, unless otherwise instructed in writing by the seller;

• that the Buyer may or will pay more than the offered price, unless otherwise instructed in writing by the Buyer;

• the motivation of or personal information about the Buyer or seller, unless otherwise instructed in writing by the party to which the information applies or unless failure to disclose would constitute fraudulent, unlawful or unethical practice;

• the price the Buyer should offer or the price the seller should accept; and

• the Brokerage shall not disclose to the Buyer the terms of any other offer.

However, it is understood that factual market information about comparable properties and information known to the Brokerage concerning potential uses for the property will be disclosed to both Buyer and seller to assist them to come to their own conclusions. Where a Brokerage represents both the Seller and the Buyer (multiple representation), the Brokerage shall not be entitled or authorized to be agent for either the Buyer or the Seller for the purpose of giving and receiving notices.

MULTIPLE REPRESENTATION AND CUSTOMER SERVICE: The Buyer understands and agrees that the Brokerage also provides representation and customer service to other buyers and sellers. If the Brokerage represents or provides customer service to more than one seller or buyer for the same trade, the Brokerage shall, in writing, at the earliest practicable opportunity and before any offer is made, inform all sellers and buyers of the nature of the Brokerage's relationship to each seller and buyer.

 

 

 

Part 7A review

I will break up the paragraph and offer my commentary in “italics” as usual.

 

3. REPRESENTATION:

 

The Buyer acknowledges that the Brokerage has provided the Buyer with written information explaining agency relationships, including information on

 

There are several type of relationships and service arrangements that may be offered or negotiated as between the Brokerage and the buyer. They are referenced in a document entitled “Working with a REALTOR®” or “Working with a Commercial REALTOR®”. Both documents are prepared by OREA. We will also review those documents in detail, so there will just be short references here.

 

Seller Representation,

 

This is an agency appointment, which includes fiduciary duties at common law and statutory duties under the Real Estate and Business Brokers Act, 2002, wherein the Seller known as the Principal is referred to as the CLIENT.

 

Sub-Agency,

 

In a sub-agent arrangement, the Agent has an Agent, who is then referred to as the “sub-agent”.

 

Buyer Representation,

 

This is an agency appointment, which includes fiduciary duties at common law and statutory duties under the Real Estate and Business Brokers Act, 2002, wherein the Buyer known as the Principal is referred to as the CLIENT.

 

Multiple Representation and

 

Formerly, this arrangement was referred to as “dual agency” and still appears as “dual agency” in the CREA Code of Ethics. Here, the Brokerage acts for two consumers in an agency capacity whose interests may conflict with one another. Commonly, this would be the Seller and the Buyer in the same transaction, or it could be two prospective buyers both seeking the same property. Finally, there could be two sellers both in conflict with one another, negotiating with the same buyer.

 

Customer Service.

 

This is a non- agency appointment, which includes statutory duties under the Real Estate and Business Brokers Act, 2002, wherein the Buyer is described as the CUSTOMER. No fiduciary duties are owed in this arrangement. Information and facts may be provided BUT NOT ADVICE. The moment “advice” becomes part of the relationship, that consumer moves from customer status to client status. And then, once a client always a client. It is very, very difficult to re-establish a customer relationship after advice has been given. Difficult, but not impossible!

 

The Brokerage shall assist the Buyer in locating a real property of the general description indicated above and

 

This provision reasserts the deal which is ASSISTANCE.

 

shall represent the Buyer in an endeavour to procure the acceptance of an agreement to purchase or lease such a property.

 

This says REPRESENT. That effectively means AGENCY, together with all the fiduciary responsibilities and obligations. Those obligations arise by implication of agency law.

 

The Buyer acknowledges that the Buyer may not be shown or offered all properties that may be of interest to the Buyer.

 

Seeing absolutely every property would be impossible. There are about 90,000 transactions handled each year through the Toronto Real Estate Board. In addition, there are thousands of new homes and condominiums which never appear on the TREB MLS.

 

So, there could be something which the buyer might like to have seen, but got missed. Here, we need very simple straightforward criteria. These are submitted into a computerized daily search. However, you can appreciate that sometimes mistakes are made. A property might be overlooked or misdescribed in some way. By the time the buyer finds out about it, someone else has bought the property.

 

The Buyer hereby agrees that the terms of any buyer's offer or agreement to purchase or lease the property will not be disclosed to any other buyer.

 

This is the competitive bidding war situation. You would think that the Brokerage would not be telling and this provision drafted as an “acknowledgement, but it’s not. This seeks the buyer’s agreement. So, the buyer won’t tell any other buyer. Why? Well, it might scare them off, if the information were believed to be truthful.

 

So, two buyers, both sitting in adjacent conference rooms at the offices of the Brokerage agree not to disclose the terms of their own Offers.

 

The Buyer further acknowledges that the Brokerage may be entering into buyer representation agreements with other buyers who may be interested in the same or similar properties that the Buyer may be interested in buying or leasing and

 

Here is an acknowledgement. There may be more than one buyer in competition. This can arise with one sales representative of the brokerage or two. If there is one, then that one person knows both Offers. It would be much simpler if there were two different people. Now, it’s easy to keep a secret!

 

This said representation agreements. It does not cover customer service agreements. This means two CLIENTS.

 

the Buyer hereby consents to the Brokerage entering into buyer representation agreements with other buyers who may be interested in the same or similar properties without any claim by the Buyer of conflict of interest.

 

You will appreciate that there is indeed a conflict of interest. There’s no question about that. But this statement says “consent” and further says that there will not be a claim about a conflict of interest.

 

I should point out, that under the Act, specific consent need be obtained at the relevant time. So, this consent is really “no consent” at all. It just says that!

 

The Buyer hereby appoints the Brokerage as agent for the purpose of giving and receiving notices pursuant to any offer or agreement to purchase or lease a property negotiated by the Brokerage.

 

This is a limited authority appointment. If there are notices, then the notices may be lawfully given to and received by the brokerage.

 

 

 

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 7B MULTIPLE REPRESENTATION

 

 

Buyer Representation Agreement Explained (Ontario) Part 7B MULTIPLE REPRESENTATION

 

Here is the portion of the paragraph dealing with multiple representation:

 

MULTIPLE REPRESENTATION: The Buyer hereby acknowledges that the Brokerage may be entering into listing agreements with sellers of properties the Buyer may be interested in buying or leasing. In the event that the Brokerage has entered into or enters into a listing agreement with the seller of a property the Buyer may be interested in buying or leasing, the Brokerage will obtain the Buyer’s written consent to represent both the Buyer and the seller for the transaction at the earliest practicable opportunity and in all cases prior to any offer to purchase or lease being submitted or presented. The Buyer understands and acknowledges that the Brokerage must be impartial when representing both the Buyer and the seller and equally protect the interests of the Buyer and the seller in the transaction. The Buyer understands and acknowledges that when representing both the Buyer and the seller, the Brokerage shall have a duty of full disclosure to both the Buyer and the seller, including a requirement to disclose all factual information about the property known to the Brokerage. However, The Buyer further understands and acknowledges that the Brokerage shall not disclose:

• that the seller may or will accept less than the listed price, unless otherwise instructed in writing by the seller;

• that the Buyer may or will pay more than the offered price, unless otherwise instructed in writing by the Buyer;

• the motivation of or personal information about the Buyer or seller, unless otherwise instructed in writing by the party to which the information applies or unless failure to disclose would constitute fraudulent, unlawful or unethical practice;

• the price the Buyer should offer or the price the seller should accept; and

• the Brokerage shall not disclose to the Buyer the terms of any other offer.

However, it is understood that factual market information about comparable properties and information known to the Brokerage concerning potential uses for the property will be disclosed to both Buyer and seller to assist them to come to their own conclusions. Where a Brokerage represents both the Seller and the Buyer (multiple representation), the Brokerage shall not be entitled or authorized to be agent for either the Buyer or the Seller for the purpose of giving and receiving notices. 

 

Part 7B review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

3. REPRESENTATION:

 

MULTIPLE REPRESENTATION:

 

This is just a capitalized sub-title.

 

The Buyer hereby acknowledges that the Brokerage may be entering into listing agreements with sellers of properties the Buyer may be interested in buying or leasing.

 

Just a quick comment. I have no idea why OREA sometimes capitalizes the word “seller” and sometimes not. OREA always capitalizes Buyer, because this is a Buyer Representation Agreement. The same or similar reasons do not apply to “seller” which sometimes is “Seller”.

 

This really is just a “heads up” that there could be a potential conflict of interest.

 

In the event that the Brokerage has entered into or enters into a listing agreement with the seller of a property the Buyer may be interested in buying or leasing,

 

Assuming that the Brokerage has a listing, and the Buyer is interested.

 

the Brokerage will obtain the Buyer’s written consent to represent both the Buyer and the seller for the transaction

 

This is significant. The Buyer’s consent is necessary, IF the Brokerage is to represent both.

 

at the earliest practicable opportunity and

 

When? Well, as soon as possible.

 

in all cases prior to any offer to purchase or lease being submitted or presented.

 

The last moment for this would be the Offer. Naturally, this matter needs to be resolved prior to any Offer and really, as soon as it reasonably can be dealt with. It should not be left until Offer time. That places undue pressure upon the buyer to make a quick decision about a matter that is very serious.

 

Although it is not mentioned here, the Seller MUST agree as well. Effectively, they both have a VETO.

 

The Buyer understands and acknowledges that the Brokerage must be impartial when representing both the Buyer and the seller and

 

Impartiality! What is that? That sounds crazy! How’s that going to happen? It’s nice in theory, but there is a conflict of interest here. The role of the Brokerage is not like that of an umpire or referee, so, there’s not going to be any impartiality in the sale and purchase of the property. The Brokerage wants the deal to happen. But, you have to appreciate, it does sound “nice”.

 

equally protect the interests of the Buyer and the seller in the transaction.

 

Again, another “motherhood statement”. Both parties are entitled to equal protection. This is not the Human Rights Code. This is an impractical, unobtainable, impossible target. It’s just not going to happen in real life. Naturally, it sounds much better than it really is. Once you think about it, you’ll appreciate that it is an impossibility.

 

The Buyer understands and acknowledges that when representing both the Buyer and the seller, the Brokerage shall have a duty of full disclosure to both the Buyer and the seller,

 

The DUTY of FULL DISCLOSURE. What does that mean? Actually, that’s not agency at all. That’s just the exact opposite of agency. I am about to tell ALL your secrets. You appreciate with this statement that the Principal is giving up some portion of their right to and expectation of confidentiality in the circumstances.

 

including a requirement to disclose all factual information about the property known to the Brokerage.

 

So, now we are going to mention a few things. Some are out and some are in. Facts are in. Ok, it’s just facts about the property. Without getting into Philosophy 101, “what truly is a FACT?”

 

However, The Buyer further understands and acknowledges that the Brokerage shall not disclose:

 

This is the start of the non-disclosure, or still secret list.

 

• that the seller may or will accept less than the listed price, unless otherwise instructed in writing by the seller;

 

The seller’s PRICE. We are not going to talk about that. Now, unless there is a low end listing price intended to generate a bidding war, everyone in society seems to know that there’s always a little give and take in the price. Here, with multiple representation, the Brokerage and its sales representatives can’t even mention a one cent discount in a million dollar deal.

 

• that the Buyer may or will pay more than the offered price, unless otherwise instructed in writing by the Buyer;

 

The buyer’s PRICE. We are not going to talk about that. Now, unless we have run into the one person in society who seems anxious to pay the top end amount without any negotiation or signback, everyone else in society seems to know that there’s always a little give and take in the price. Here, with multiple representation, the Brokerage and its sales representatives can’t even mention a one cent potential increase by the buyer in a million dollar deal.

 

Of course, written instructions to the contrary could be given in both cases.

 

• the motivation of or personal information about the Buyer or seller, unless otherwise instructed in writing by the party to which the information applies or unless failure to disclose would constitute fraudulent, unlawful or unethical practice;

 

The Brokerage is not going to deal with the issue of motivation. But, that’s just exactly the information that the other parties need to WIN in the negotiations. It’s helpful to know. So, the fact that the Bank is about to repossess the property is information which cannot be disclosed to the buyer. Well, at least, without the seller’s authorization. Now, for the next question. If this information is “passed on” in secret, is it even true? The seller may simply be “playing” both the agent and the prospective buyer.

 

• the price the Buyer should offer or the price the seller should accept; and

 

We are again back to the price. If there is one single matter that everyone wants to know, it is the price. So, no guidance on the price for either client, that doesn’t sound quite right. We have really backed off the agency duties with this one. This is the key to the puzzle. Advice is needed, not information. Here, you will notice that both clients are effectively downgraded to customers. That’s the information only and no advice business. Who would agree to this? And more particularly, who would agree to this in advance?

 

• the Brokerage shall not disclose to the Buyer the terms of any other offer.

 

Remember that we still have a conflict of interest and multiple representation situation when we have two buyers. A key difference here is whether both buyers have the same sales person at the Brokerage. That difference is huge. Two different agents is likely just a “technical foul”, one of the little logical glitches that could arise. But, Brokerages demand that they be the agent in law, and never, ever the sales person.

 

This provision simply clarifies that each buyers’ offer will remain secret and will not be disclosed to the other buyer or buyers at the brokerage.

 

However, it is understood that factual market information about comparable properties and

 

This is the start about what can be disclosed. Information is available that would be available if the consumer were simply a customer. No interpretation, just facts. The moment we slide over into advice, that’s agency and that’s not allowed.

 

information known to the Brokerage concerning potential uses for the property will be disclosed

 

Possible new developments. So, here, we are talking about possibilities. These are essentially facts which have not yet come to pass. So they are “maybes”. How good is that?

 

to both Buyer and seller to assist them to come to their own conclusions.

 

Facts and potential facts must be told to both parties, so that they can figure out what is meant. What happened to agency? What happened to competence? What happened to confidentiality and loyalty? All that went by the wayside in this set of circumstances. Each party will be on their own, so I do hope that they are both good at real estate and both good at analyzing information and both good at negotiating or else, one of these parties is going to have the upper hand.

 

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

 

This is a rather limited restriction. Assume that we have a deal. The buyer and the seller are now to send notices directly to one another or possibly their lawyers. The agent is not to be involved. You can imagine a sales professional trying to fax something out to his own fax machine!

 

However, the key element in this situation is the question of time and delivery. If the buyer gives something to the agent at 4;00 pm for delivery to the seller and the actual delivery is 5:30 pm to the seller, when was the true delivery for legal purposes in this situation. The seller’s agent had it at 4:00 pm. This restriction eliminates that potential conflict of interest.

 

 

  

Buyer Representation Agreement Explained (Ontario) Part 7C CUSTOMER SERVICE

 

 

Buyer Representation Agreement Explained (Ontario) Part 7C CUSTOMER SERVICE

 

Here is the portion of the paragraph dealing with multiple representation and Customer Service:

 

MULTIPLE REPRESENTATION AND CUSTOMER SERVICE:

 

The Buyer understands and agrees that the Brokerage also provides representation and customer service to other buyers and sellers. If the Brokerage represents or provides customer service to more than one seller or buyer for the same trade, the Brokerage shall, in writing, at the earliest practicable opportunity and before any offer is made, inform all sellers and buyers of the nature of the Brokerage's relationship to each seller and buyer.

 

Part 7C review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

3. REPRESENTATION:

 

MULTIPLE REPRESENTATION AND CUSTOMER SERVICE:

 

This is just the capitalized sub-title.

 

The Buyer understands and agrees that the Brokerage also provides representation and customer service to other buyers and sellers.

 

This is a statement to the effect that the Brokerage has various service arrangements with others. In some cases, it will be agency and those consumers are called CLIENTS. In other cases, it will not be agency, just short of it, and those consumers will be referred to as CUSTOMERS.

 

Buyers of sellers can both select either service level.

 

If the Brokerage represents or provides customer service to more than one seller or buyer for the same trade,

 

Previously we dealt with agency and the disclosure of two Clients, to one another. Then, we dealt with one agency agreement and one non-agency agreement and this agreement called for that disclosure as well.

 

Here, we are talking about two customers, whether they be buyers (two competing with one another for the same property), sellers (two competing with one another for the same buyers in respect to the sale of their properties), or a buyer and a seller (both of whom have selected the customer service level), ALL of course, in competition concerning the same “trade” in real estate.

 

You will appreciate that if both a seller and a buyer have selected customer service, neither have agency agreement and certainly neither would fall in under this Buyer Representation Agreement. So, why are we talking about that here? I don’t know. It’s a mystery to me.

 

the Brokerage shall, in writing, at the earliest practicable opportunity and before any offer is made,

 

The brokerage must make this disclosure and ensure that everyone knows these relationships before the Offer.

 

inform all sellers and buyers of the nature of the Brokerage's relationship to each seller and buyer.

 

There is a specific FORM for this which is the Confirmation of Representation and Co-operation.

 

You will appreciate that sometime this can be impossible. Consider a large brokerage ABC which employs over 500 agents, and a hot property going to a bidding war. The listing brokerage XYZ, hosts the presentations. There might be over 20 bids. Two sales representatives from the first brokerage could submit bids on the same property and be unknown to one another. There is no requirement that the Offers be first registered or even made known to Brokerage ABC. Who would know? And, further, this is not much of a transgression.

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 8 REFERRAL of PROPERTIES

 

 

Buyer Representation Agreement Explained (Ontario) Part 8 REFERRAL of PROPERTIES

 

Here is the portion of the paragraph dealing with Referral of Properties

 

4. REFERRAL OF PROPERTIES:

 

The Buyer agrees that during the currency of this Buyer Representation Agreement the Buyer will act in good faith and work exclusively with the Brokerage for the purchase or lease of a real property of the general description indicated above. The Buyer agrees that, during the currency of this Agreement, the Buyer shall advise the Brokerage immediately of any property of interest to the Buyer that came to the Buyer’s attention from any source whatsoever, and all offers to purchase or lease submitted by the Buyer shall be submitted through the Brokerage to the seller. If the Buyer arranges a valid agreement to purchase or lease any property of the general description indicated above that came to the attention of the Buyer during the currency of this Agreement and the Buyer arranges said agreement during the currency of this Agreement or within the Holdover Period after expiration of this Agreement, the Buyer agrees to pay the Brokerage the amount of commission set out above in Paragraph 2 of this Agreement, payable within (5) days following the Brokerage’s written demand therefor.

 

Part 8 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

4. REFERRAL OF PROPERTIES:

 

The Buyer agrees that during the currency of this Buyer Representation Agreement the Buyer will act in good faith and

 

This is rather interesting. There is a “good faith” expectation on behalf of the buyer. This is stated in the contract. Since this is an “agency appointment”, there is already a good faith obligation on behalf of the agent.

 

In addition, the Supreme Court of Canada in November 2014, decided that there is a good faith performance expectation on both parties to a contract (Bhasin v. Hrynew).

 

work exclusively with the Brokerage

 

This is an “exclusive” arrangement. A customer service arrangement or another level of real estate services wouldn’t be. This arrangement requires “commitment” from both sides.

 

for the purchase or lease of a real property of the general description indicated above.

 

The goal is the purchase or lease.

 

The Buyer agrees that, during the currency of this Agreement, the Buyer shall advise the Brokerage immediately of any property of interest to the Buyer

 

This obligation is somewhat unexpected. Here, the buyer is under an obligation to tell the agent. Most of the time, this would be the other way around. Usually, the sales professional would come across the property and draw it to the attention of the buyer. This relationship is different. Both parties are working “together”. Both parties are committed to one another. If it happens to be that the buyer comes across a property, then the buyer is to let the agent know.

 

that came to the Buyer’s attention from any source whatsoever, and

 

The expression “any source” is the key to understanding this part of the agreement. The buyer could be driving down the street, spot a “for sale” sign, see it on the internet, see it in a newspaper advertisement or flyer. The actual source doesn’t matter. It could be a phone call from a friend saying, “I just heard that the house across the street will be available in a week or two”. There are no private or confidential sources of information. Everything is “on the table”. The good faith obligation extends to both parties.

 

all offers to purchase or lease submitted by the Buyer shall be submitted through the Brokerage to the seller.

 

This is rather straightforward. If an Offer is to be submitted than it shall be submitted through the Brokerage. No “end runs”. Those are not permitted. Naturally, if the relationship is working well, then that’s actually the expectation of the parties.

 

If the Buyer arranges a valid agreement to purchase or lease any property of the general description indicated above

 

This is the “penalty provision”. What happens if the buyer does an “end run’? The answer seems simple. He pays the commission anyways. You will undoubtedly appreciate that this is probably a second commission if he had another agent involved. Technically, penalty is not quite the correct term. Contracts don’t permit “penalties”. This is the “consequences” and “damages” part of the arrangement.

 

that came to the attention of the Buyer during the currency of this Agreement and

 

This might be difficult to prove, but it’s not impossible. The buyer may not be forthcoming in terms of volunteering much. However, the other parties involved are not going to lie. If the matter proceeds to Court, they will tell the truth. No one is going to commit perjury for a few thousand dollars. Likely, there’s no financial benefit to anyone else.

 

the Buyer arranges said agreement during the currency of this Agreement

 

This means that the deal for the acquisition of the property has to take place within the contract period, that means start time to expiry time.

 

or within the Holdover Period after expiration of this Agreement,

 

Here, we just got the “bump up”. The holdover period is also included. In this case, assume a 3 month contract, and a 6 month holdover period; that really means 9 months from start to finish on this. Remember, the information about the property had to take place in the first 3 months. Thereafter, it would just be like seeing it, since the 6 month holdover period would apply too.

 

So, the buyer can't simply rip up the agreement and pretend that it never existed.

 

the Buyer agrees to pay the Brokerage the amount of commission set out above in Paragraph 2 of this Agreement,

 

The previously agreed upon commission would be payable.

 

payable within (5) days following the Brokerage’s written demand therefor.

 

However, look at this! The terms and conditions have changed. Now, it’s due within 5 days of demand. There’s no need for a closing.

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 9 INDEMNIFICATION

 

Buyer Representation Agreement Explained (Ontario) Part 9 INDEMNIFICATION

 

Here is the portion of the paragraph dealing with Indemnification.

 

5. INDEMNIFICATION: The Brokerage and representatives of the Brokerage are trained in dealing in real estate but are not qualified in determining the physical condition of the land or any improvements thereon. The Buyer agrees that the Brokerage and representatives of the Brokerage will not be liable for any defects, whether latent or patent, to the land or improvements thereon. All information supplied by the seller or landlord or the listing brokerage may not have been verified and is not warranted by the Brokerage as being accurate and will be relied on by the Buyer at the Buyer's own risk. The Buyer acknowledges having been advised to make their own enquiries to confirm the condition of the property.

 

Part 9 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

5. INDEMNIFICATION:

 

The Brokerage and representatives of the Brokerage

 

This is a little broader than what you might imagine. The Brokerage is the agent in law for the buyer. The Brokerage acts through its sales staff, who are also “registrants” under the Real Estate and Business Brokers Act, 2002. There are two categories for sales staff: sales representatives and brokers. In fact, sales representatives can also be broken down into two divisions, being those with a provisional registration and those with a permanent registration.

 

In any event, the use of the term “representatives” probably extends the definition here somewhat to include other staff, as well. There could be office staff, receptionists, advertising assistants, bookkeepers, accountants, town planners, engineers, lawyers, office managers, property managers all working with or employed in various capacities with the Brokerage. The intention in this reference would be that they would be included as well.

 

are trained in dealing in real estate

 

That naturally would be in respect to their own particular activities.

 

but are not qualified in determining the physical condition of the land

 

So, they are not land surveyors, soil technicians, environmental contamination engineers etc. That seems straightforward.

 

or any improvements thereon.

 

This is the extension to any building or improvements. This is quite reasonable too. We know that they are not builders, contractors, electricians, plumbers, carpenters, engineers or architects etc.

 

The Buyer agrees that the Brokerage and representatives of the Brokerage will not be liable

 

This is the limitation affecting both the Brokerage itself and its extended definition of representatives.

 

for any defects, whether latent or patent, to the land or improvements thereon.

 

This is a rather interesting approach in this case. Sellers are obligated to disclose certain latent defects (not all). Sellers are also obligated to disclose certain patent defects (if they are concealed).

 

The test of disclosure when it comes to real estate registrants is “material facts”. This is likely a much higher and broader test than the common law rules which apply to sellers.

 

All information supplied by the seller or landlord or the listing brokerage

 

We are talking about two sources of information: seller (or the landlord) and the listing brokerage.

 

may not have been verified and

 

I suppose it might not have been verified. But, if the information constitutes a material fact, then it should have been.

 

One further step, registrants are under a duty to investigate, determine and verify the material facts. So, that matter may very well, fall under the duties of this Buyer’s Brokerage.

 

is not warranted by the Brokerage as being accurate and

 

So, here we mean the Buyer’s Brokerage. It is quite fair that the information is not being WARRANTED. Who would have thought that? But, if it’s a material fact, the expectation is that the buyer’s representative will have a role here.

 

will be relied on by the Buyer at the Buyer's own risk.

 

This seems obvious. The buyer is “on his own”. However, assuming that there is a listing brokerage and we now have the buyer’s brokerage, both are expected to fulfill their statutory duties and responsibilities, rather than just shift matters over to the buyer.

 

The Buyer acknowledges having been advised to make their own enquiries to confirm the condition of the property.

 

Should this not say “the buyer shall make enquiries to confirm the condition of the property? Then, the next step would be to acknowledge having received that advice.

 

General

 

You will appreciate here that the title is “Indemnification”, but this really is not an indemnification paragraph. It never, ever said “indemnification” nor did it include the magic indemnification words, namely “the Buyer agrees to save and hold harmless the Buyer’s Brokerage etc.”.

 

This provision is a Disclaimer, not an Indemnification.

 

Buyer Representation Agreement Explained (Ontario) Part 10 - FINDERS FEE

 

 

Buyer Representation Agreement Explained (Ontario) Part 10 FINDERS FEE

 

Here is the portion of the paragraph dealing with the Finders Fee.

 

6. FINDERS FEE: The Buyer acknowledges that the Brokerage may be receiving a finder’s fee, reward and/or referral incentive, and the Buyer consents to any such benefit being received and retained by the Brokerage in addition to the commission as described above.

 

Part 10 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

This entire section deals with the fiduciary principle of accounting. There is an obligation to account, and remit in its entirety any additional remuneration that the agent may receive from his position as agent.

 

In other words, we don’t want two masters! The agent may be more loyal to the person who is paying. So, if all the money goes to the Principal and the Principal then decides to keep it, divide it, or return it to the agent, then that’s the Principal’s decision.

 

You see that the matter of accounting and payment crosses over into disclosure, confidentiality, loyalty and conflict of interest.

 

And yes, there is a spelling mistake. It should be Finders with the possessive "s", so that correctly it would read Finder's Fee, singular or Finders' Fee, plural.

 

6. FINDERS FEE:

 

The Buyer acknowledges that the Brokerage may be receiving a

 

Sometimes there are financial incentives available in the real estate business. This statement simply recognizes that fact.

 

Notice that it says “may”. That’s not a specific notice. This is just a general statement that there may be something. If there is, that that particular “finder’s fee” needs to be disclosed. This is not a specific disclosure.

 

 

finder’s fee,

 

“Get me a client and I will pay you some money!” That’s just about as simple as it gets. A bank or mortgage broker might pay for a mortgage referral. A home inspector might pay for a home inspection client. An insurance broker might pay for a referral. Clearly, these amounts are identified and above board.

 

reward and/or

 

In some cases, there are coupon books. Accumulate enough points and you get to turn them in for goods identified in a brochure.

 

referral incentive, and the

 

Sometimes, it is somewhat more subtle. Perhaps, flowers, lunch, tickets to a baseball game etc.

 

The point here being made is that there can be a variety of different forms of payment or incentives to encourage future business.

 

Buyer consents to any such benefit being received and retained by the Brokerage

 

So, it stays with the Brokerage. That’s clear and simple! Nevertheless, there must still be full and complete disclosure. This is just the “heads up” in advance that something may be coming along.

 

in addition to the commission as described above.

 

The Brokerage keeps the full commission PLUS any incentive or Finder’s Fee or Fees.

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 11 CONSUMER REPORTS

 

 

Buyer Representation Agreement Explained (Ontario) Part 11 CONSUMER REPORTS

 

Here is the portion of the paragraph dealing with Consumer Reports.

 

 

7. CONSUMER REPORTS: The Buyer is hereby notified that a Consumer Report containing credit and/or personal information may be referred to in connection with this Agreement and any subsequent transaction.

 

Part 11 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

7. CONSUMER REPORTS:

 

The Buyer is hereby notified that a Consumer Report

 

This is notification in advance that a credit check is part of the process. Often, consumers will be both surprised and annoyed. That may be the reason why this section in its entirety is published in BOLD print.

 

containing credit and/or personal information

 

The two aspects of the consumer report are credit information and personal information.

 

may be referred to in connection with

 

In some cases, the Brokerage and the Sales Professional will undertake a review. If the credit status requires some repair, then perhaps matters should be delayed, or the credit score should be increased, or secondary lenders should be lined up at the outset.

 

this Agreement and

 

Not every Brokerage will take this investigation step at the outset.

 

any subsequent transaction.

 

This is the reference to the deal. If the buyer puts in an Offer subject to financing, then all the issues will surface at that time. So, oftentimes, it is better to have a head-start.

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 12 USE and DISTRIBUTION of INFORMATION

 

 

Buyer Representation Agreement Explained (Ontario) Part 12 USE and DISTRIBUTION of INFORMATION

 

Here is the portion of the paragraph dealing with Use and Distribution of Information.

 

 

8. USE AND DISTRIBUTION OF INFORMATION: The Buyer consents to the collection, use and disclosure of personal information by the Brokerage for such purposes that relate to the real estate services provided by the Brokerage to the Buyer including, but not limited to: locating, assessing and qualifying properties for the Buyer; advertising on behalf of the Buyer; providing information as needed to third parties retained by the Buyer to assist in a transaction (e.g. financial institutions, building inspectors, etc...); and such other use of the Buyer’s information as is consistent with the services provided by the Brokerage in connection with the purchase or prospective purchase of the property.

 

The Buyer agrees that the sale and related information regarding any property purchased by the Buyer through the Brokerage may be retained and disclosed by the Brokerage and/or real estate board(s) (if the property is an MLS® Listing) for reporting, appraisal and statistical purposes and for such other use of the information as the Brokerage and/or board deems appropriate in connection with the listing, marketing and selling of real estate, including conducting comparative market analyses.

 

The Buyer acknowledges that the information, personal or otherwise ("information"), provided to the real estate board or association may be stored on databases located outside of Canada, in which case the information would be subject to the laws of the jurisdiction in which the information is located.

 

 

Part 12 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

8. USE AND DISTRIBUTION OF INFORMATION:

 

The Buyer consents to the collection, use and disclosure of personal information

by the Brokerage

 

At the outset, this doesn’t seem too bad, name address, phone number, email etc.

 

for such purposes that relate to the real estate services

 

This is a very reasonable and expected restriction.

 

provided by the Brokerage to the Buyer including, but not limited to:

 

This is the description of the “real estate services”.

 

locating, assessing and qualifying properties for the Buyer;

 

It is really just the “qualification” which would require “disclosure”.

 

advertising on behalf of the Buyer;

 

There are various “needs and wants” sections on various websites and in written publications. There is also a Buyers’ Registry which would summarize what the buyer is looking for. They are not all anonymous.

 

providing information as needed to third parties retained by the Buyer to assist in a transaction (e.g. financial institutions, building inspectors, etc...);

 

These would be parties who would be perceived to be “on the same side” as the buyer, as opposed to the seller.

 

and such other use of the Buyer’s information as is consistent with the services provided by the Brokerage in connection with the purchase or prospective purchase of the property.

 

So, the agent here is looking for a little discretion associated with the release of information. It could be the seller, or someone associated with the seller who is requesting the information.

 

The Buyer agrees that the sale and related information regarding any property purchased by the Buyer through the Brokerage

 

Here, we are talking upon price and terms of the transaction.

 

may be retained and disclosed by the Brokerage and/or real estate board(s) (if the property is an MLS® Listing)

 

Assuming an MLS listing, then, the record of the deal, price and terms assists in the maintenance of the integrity of the system.

 

for reporting, appraisal and statistical purposes

 

These are all reasonable requirements. The transaction needs to be reported as “sold” and the property withdrawn from the MLS system. The buyer may now think that he has a vested interest and would like to keep the price and terms secret. Appraisers need the information, so that they can come up with values for other properties.

 

Statistics need to be produced as well. How many sales? Are the prices rising or falling? These market numbers are important to everyone.

 

and for such other use of the information as the Brokerage and/or board deems appropriate in connection with the listing, marketing and selling of real estate, including conducting comparative market analyses.

 

In large measure, this seems pretty much the same as the previous statement. I can’t really think of anything that is covered under the second statement that wasn’t, under the first.

 

The Buyer acknowledges that the information, personal or otherwise ("information"), provided to the real estate board or association

 

This is an acknowledgement about information by the buyer.

 

may be stored on databases located outside of Canada,

 

That information may be located outside of Canada. That’s probably reasonable considering the role of Google, Facebook, Apple and Microsoft. Servers somewhere will have the data, and really who knows where that might be?

 

in which case the information would be subject to the laws of the jurisdiction in which the information is located.

 

So, wherever that data happens to be, and no one knows where that is; well, that place would have laws, perhaps, and whatever laws they might happen to have will govern your data. Nobody knows what was just said!

 

Maybe your data is somewhere up on the Moon, or in the clouds, after all, they do call it the CLOUD. Sorry, all that part of the buyer representation agreement is just nonsense. I assume it makes the Brokerage feel better to have that statement in rather than out.

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 12 USE and DISTRIBUTION of INFORMATION

 

 

Buyer Representation Agreement Explained (Ontario) Part 12 USE and DISTRIBUTION of INFORMATION

 

Here is the portion of the paragraph dealing with Use and Distribution of Information.

 

 

8. USE AND DISTRIBUTION OF INFORMATION: The Buyer consents to the collection, use and disclosure of personal information by the Brokerage for such purposes that relate to the real estate services provided by the Brokerage to the Buyer including, but not limited to: locating, assessing and qualifying properties for the Buyer; advertising on behalf of the Buyer; providing information as needed to third parties retained by the Buyer to assist in a transaction (e.g. financial institutions, building inspectors, etc...); and such other use of the Buyer’s information as is consistent with the services provided by the Brokerage in connection with the purchase or prospective purchase of the property.

 

The Buyer agrees that the sale and related information regarding any property purchased by the Buyer through the Brokerage may be retained and disclosed by the Brokerage and/or real estate board(s) (if the property is an MLS® Listing) for reporting, appraisal and statistical purposes and for such other use of the information as the Brokerage and/or board deems appropriate in connection with the listing, marketing and selling of real estate, including conducting comparative market analyses.

 

The Buyer acknowledges that the information, personal or otherwise ("information"), provided to the real estate board or association may be stored on databases located outside of Canada, in which case the information would be subject to the laws of the jurisdiction in which the information is located.

 

 

Part 12 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

8. USE AND DISTRIBUTION OF INFORMATION:

 

The Buyer consents to the collection, use and disclosure of personal information

by the Brokerage

 

At the outset, this doesn’t seem too bad, name address, phone number, email etc.

 

for such purposes that relate to the real estate services

 

This is a very reasonable and expected restriction.

 

provided by the Brokerage to the Buyer including, but not limited to:

 

This is the description of the “real estate services”.

 

locating, assessing and qualifying properties for the Buyer;

 

It is really just the “qualification” which would require “disclosure”.

 

advertising on behalf of the Buyer;

 

There are various “needs and wants” sections on various websites and in written publications. There is also a Buyers’ Registry which would summarize what the buyer is looking for. They are not all anonymous.

 

providing information as needed to third parties retained by the Buyer to assist in a transaction (e.g. financial institutions, building inspectors, etc...);

 

These would be parties who would be perceived to be “on the same side” as the buyer, as opposed to the seller.

 

and such other use of the Buyer’s information as is consistent with the services provided by the Brokerage in connection with the purchase or prospective purchase of the property.

 

So, the agent here is looking for a little discretion associated with the release of information. It could be the seller, or someone associated with the seller who is requesting the information.

 

The Buyer agrees that the sale and related information regarding any property purchased by the Buyer through the Brokerage

 

Here, we are talking upon price and terms of the transaction.

 

may be retained and disclosed by the Brokerage and/or real estate board(s) (if the property is an MLS® Listing)

 

Assuming an MLS listing, then, the record of the deal, price and terms assists in the maintenance of the integrity of the system.

 

for reporting, appraisal and statistical purposes

 

These are all reasonable requirements. The transaction needs to be reported as “sold” and the property withdrawn from the MLS system. The buyer may now think that he has a vested interest and would like to keep the price and terms secret. Appraisers need the information, so that they can come up with values for other properties.

 

Statistics need to be produced as well. How many sales? Are the prices rising or falling? These market numbers are important to everyone.

 

and for such other use of the information as the Brokerage and/or board deems appropriate in connection with the listing, marketing and selling of real estate, including conducting comparative market analyses.

 

In large measure, this seems pretty much the same as the previous statement. I can’t really think of anything that is covered under the second statement that wasn’t, under the first.

 

The Buyer acknowledges that the information, personal or otherwise ("information"), provided to the real estate board or association

 

This is an acknowledgement about information by the buyer.

 

may be stored on databases located outside of Canada,

 

That information may be located outside of Canada. That’s probably reasonable considering the role of Google, Facebook, Apple and Microsoft. Servers somewhere will have the data, and really who knows where that might be?

 

in which case the information would be subject to the laws of the jurisdiction in which the information is located.

 

So, wherever that data happens to be, and no one knows where that is; well, that place would have laws, perhaps, and whatever laws they might happen to have will govern your data. Nobody knows what was just said!

 

Maybe your data is somewhere up on the Moon, or in the clouds, after all, they do call it the CLOUD. Sorry, all that part of the buyer representation agreement is just nonsense. I assume it makes the Brokerage feel better to have that statement in rather than out.

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 13 -CONFLICT or DISCREPANCY

 

 

Buyer Representation Agreement Explained (Ontario) Part 13 CONFLICT or DISCREPANCY

 

Here is the portion of the paragraph dealing with Conflict or Discrepancy.

 

9. CONFLICT OR DISCREPANCY: If there is any conflict or discrepancy between any provision added to this Agreement and any provision in the standard pre-set portion hereof, the added provision shall supersede the standard pre-set provision to the extent of such conflict or discrepancy. This Agreement, including any provisions added to this Agreement, shall constitute the entire Agreement between the Buyer and the Brokerage. There is no representation, warranty, collateral agreement or condition, which affects this Agreement other than as expressed herein.

 

Part 13 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

9. CONFLICT OR DISCREPANCY:

 

If there is any conflict or discrepancy between any provision added to this Agreement and

 

First, we need to have some sort of difficulty arise in the interpretation.

 

any provision in the standard pre-set portion hereof,

 

The actual conflict must be between the ADDED part and the PRINTED part. The reason for this is quite simple. That added portion has been specifically negotiated between the parties and was added to the document for a purpose. Somehow, to simply have it “overruled” by some words contained in the pre-printed form seems unfair.

 

the added provision shall supersede the standard pre-set provision

 

The net result is that the added part governs.

 

to the extent of such conflict or discrepancy.

 

You don’t have to throw everything out. What is expected of a Judge is to give proper weight to the added part, use whatever is leftover in the printed part, as long as it’s reasonable and fair and makes proper economic sense. If it’s creates a bizarre result and would yield a commercially ridiculous result, then, the entire preprinted provision would be struck out. This simply means: if it’s sensible, then keep as much as you can.

 

This Agreement, including any provisions added to this Agreement, shall constitute the entire Agreement

 

Actually, this should be a separate, distinct paragraph with its own title. It almost always is, at least in other agreements. It is referred to as the “entire agreement” clause. It simply means everything is in the one document in writing. There are no side deals.

 

between the Buyer and the Brokerage.

 

So, this IS the ENTIRE DEAL, nothing else!

 

There is no representation, warranty, collateral agreement or condition, which affects this Agreement other than as expressed herein.

 

This is the disclaimer about anything verbal. On that note, there’s obviously nothing “verbal” until AFTER this document gets signed and, then, later we have something VERBAL which alters this agreement. Naturally, anything along those lines should be avoided.

 

 

 

Buyer Representation Agreement Explained Part 14 - ELECTRONIC COMMUNICATION

 

 

Buyer Representation Agreement Explained (Ontario) Part 14 ELECTRONIC COMMUNICATION

 

Here is the portion of the paragraph dealing with Electronic Communication.

 

10. ELECTRONIC COMMUNICATION: This Buyer Representation Agreement and any agreements, notices or other communications contemplated thereby may be transmitted by means of electronic systems, in which case signatures shall be deemed to be original. The transmission of this Agreement by the Buyer by electronic means shall be deemed to confirm the Buyer has retained a true copy of the Agreement.

 

 

Part 14 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

10. ELECTRONIC COMMUNICATION:

 

This Buyer Representation Agreement and

 

This is just the preamble.

 

any agreements, notices or other communications contemplated thereby

 

This reference also includes all communications which may arise.

 

may be transmitted by means of electronic systems,

 

This now just means some kind of electronic means. The addition here is intended to include email, text messages and the communication over the internet by whatever means, like Dropbox, Google Docs, Facebook etc. Telephone communications and fax machines were already contemplated. This is a further expansion of what is allowed.

 

in which case signatures shall be deemed to be original.

 

Changes in technology are taking place every day. There are new software systems and internet providers offering services like DocuSign.

 

If someone signs a document and sends it, they are prevented later from denying that it was their signature, That would not, of course, include fraud.

 

The transmission of this Agreement by the Buyer by electronic means

 

You might think this would say the parties, but it just says the buyer.

 

shall be deemed to confirm the Buyer has retained a true copy of the Agreement.

 

If the buyer sent it, then the buyer has a copy. That seems obvious. But, I suppose that they thought that it needed to be said.

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 15 - SCHEDULES

 

 

Buyer Representation Agreement Explained (Ontario) Part 15 SCHEDULE(S)

 

Here is the portion of the paragraph dealing with Schedules.

 

11. SCHEDULE(S):............................................................................................... attached hereto form(s) part of this Agreement.

 

Part 15 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

11. SCHEDULE(S):

 

...............................................................................................

 

On this line, you should include references, ie. A, B, C etc.

 

Those would represent 3 items that were attached. What might you attach? Consider: Type of Property, Duration of the Arrangement, Fees, Payments, early termination, performance requirements, attendances, showings, numbers of listings, delegation, communication, referral arrangements, recommendations for third party advisors.

 

You will probably appreciate that 99% of the time, no schedules are ever added.

 

So, where there any specific guarantees? If so, write them down.

 

attached hereto form(s) part of this Agreement.

 

If something is added to the agreement in a schedule it will override the printed part of the document. However, be sure to delete the printed part for greater certainty. That makes good sense.

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 16 - EXECUTION by BROKERAGE

 

 

Buyer Representation Agreement Explained (Ontario) Part 16 –EXECUTION by BROKERAGE

 

Here is the portion of the paragraph dealing with the execution by the Brokerage.

 

THE BROKERAGE AGREES TO REPRESENT THE BUYER IN LOCATING A REAL PROPERTY OF THE GENERAL DESCRIPTION INDICATED ABOVE IN AN ENDEAVOUR TO OBTAIN THE ACCEPTANCE OF AN AGREEMENT TO PURCHASE OR LEASE A PROPERTY ON TERMS SATISFACTORY TO THE BUYER.

  

......................................... DATE......................  ..........................................

(Authorized to bind the Brokerage)                     (Name of Person Signing)

 

Part 16 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

This statement is published in BOLD print. Also, every word is capitalized, so this must be very, very important.

 

It is somewhat noteworthy that there is no title to this paragraph. I have just named it myself as “Execution by Brokerage”.

 

THE BROKERAGE AGREES TO REPRESENT THE BUYER

 

This is the fundamental nature of this agreement. It is “agency”, hence the reference to “representation”.

 

IN LOCATING A REAL PROPERTY OF THE GENERAL DESCRIPTION INDICATED ABOVE

 

The first step is the locating of the property as described.

 

IN AN ENDEAVOUR TO OBTAIN THE ACCEPTANCE OF AN AGREEMENT TO PURCHASE OR LEASE A PROPERTY

 

This is the purpose or the goal. It is rather oddly worded. The goal is to get the deal done, but, it’s described as an “endeavour”. But, it is an endeavour to obtain the acceptance of an Agreement of Purchase and Sale. Not to get too technical about this, but should it not read “offer”, so that it would say “…in an endeavour to obtain the acceptance of an Offer resulting in an Agreement to Purchase….”.

 

However, maybe in an agreement like this, we should get technical?

 

ON TERMS SATISFACTORY TO THE BUYER.

 

The deal which is struck, would at least have the objective of being on satisfactory terms. Naturally, the buyer may not be entirely pleased with the price and the closing date, but nevertheless, he would have agreed.

 

......................................... DATE......................  ..........................................

(Authorized to bind the Brokerage)                     (Name of Person Signing)

 

The next line is the signing line by the Brokerage. A signature and printed name should appear, and then the date should be inserted.

 

 

Buyer Representation Agreement Explained (Ontario) Part 17 - EXECUTION by BUYER

 

 

Buyer Representation Agreement Explained (Ontario) Part 17 –EXECUTION by BUYER

 

Here is the portion of the paragraph dealing with the execution by the Buyer.

 

THIS AGREEMENT HAS BEEN READ AND FULLY UNDERSTOOD BY ME AND I ACKNOWLEDGE THIS DATE I HAVE SIGNED UNDER

SEAL. Any representations contained herein are true to the best of my knowledge, information and belief.

 

SIGNED, SEALED AND DELIVERED I have hereunto set my hand and seal:

 

 

.....................................      DATE.....................................    ................................

(Signature of Buyer) (Seal)                                               (Tel. No.)

 

 

.....................................      DATE.....................................    ................................

(Signature of Buyer) (Seal)                                               (Tel. No.)

 

 

Part 17 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

The first part of this statement is published in BOLD print and every word is capitalized, so this must be very important.

 

It is somewhat noteworthy that there is no title to this paragraph. I have just named it myself as “Execution by Buyer”.

 

THIS AGREEMENT HAS BEEN READ AND

 

This is an important statement. It’s a two page document. It takes some time to read it. It takes some time to understand it, and exactly what it says. So, an agent couldn’t just flip it around and say “sign here”. Just exactly how long do you think it would take someone to read this? And, Just exactly how long do you think it would take someone to understand this?

 

Careful and best practices would require more than sufficient time to be devoted to the “reading”.

 

FULLY UNDERSTOOD BY ME AND

 

That’s certainly a leap of faith. Without any explanation whatsoever, most consumers would have some difficulty understanding the document. But, here, they do in fact CONFIRM that they understand it.

 

Careful and best practices would suggest that the agent here ask if there are “any questions”, and ultimately “any further questions”. Once a negative response is offered, that comment should be noted before the agent moves on to the next step.

 

I ACKNOWLEDGE THIS DATE I HAVE SIGNED UNDER SEAL.

 

The agreement is being signed under seal. That means it’s binding and cannot be withdrawn, in most situations. Here the sales professional will sign on behalf of the Brokerage, although they may not be authorized to sign a release or cancellation of the same agreement. So, they don’t need to take it back to get it signed. During that period, if the Buyer had not signed under seal, the Buyer could change his mind. The technical distinction is more imaginary than real.

 

 

Any representations contained herein are true

 

I suppose there should be some representations. Unless they are contained in the schedules, then there aren’t any. There are statements, warranties, agreements, acknowledgements and consents, but “no representations”. But, it’s good to know that they are true.

 

to the best of my knowledge, information and belief.

 

 

This is the usual modification. But this really still requires some effort. This is not just a foolhardy statement. There is an obligation to make some reasonable inquiries here. You can’t just say, “…I don’t know, and I don’t care…”.

 

SIGNED, SEALED AND DELIVERED I have hereunto set my hand and seal:

 

.....................................      DATE.....................................    ................................

(Signature of Buyer) (Seal)                                               (Tel. No.)

 

.....................................      DATE.....................................    ................................

(Signature of Buyer) (Seal)                                               (Tel. No.)

 

So, while the Brokerage was not expected to sign under seal, this is nevertheless a requirement of the Buyer.

 

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 18 - DECLARATION of INSURANCE

 

 

Buyer Representation Agreement Explained (Ontario) Part 18 – DECLARATION of INSURANCE

 

Here is the portion of the paragraph dealing with the Declaration of Insurance.

 

DECLARATION OF INSURANCE

 

The broker/salesperson.....................................................................................

                                               (Name of Broker/Salesperson)

hereby declares that he/she is insured as required by the Real Estate and Business Brokers Act (REBBA) and Regulations.

 

...........................................................................................................................

(Signature(s) of Broker/Salesperson)

 

Part 18 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

 

DECLARATION OF INSURANCE

 

This entire provision is contained within a box, so it is very evident.

 

The broker/salesperson.....................................................................................

                                               (Name of Broker/Salesperson)

 

 

The sales professional who will be registered under the Act as either a Broker or a Sales Representative will have insurance. The name is either typed or printed on the Form so that it is legible.

 

 

hereby declares that he/she is insured as required by the Real Estate and Business Brokers Act (REBBA) and Regulations.

...........................................................................................................................

(Signature(s) of Broker/Salesperson)

 

This portion is the actual declaration. A person cannot be registered without insurance. The premium for insurance is paid directly to RECO, the regulator. If it is not paid, then the person will be suspended, and ultimately terminated.

 

If you check on the RECO website, you will be able to determine whether they have insurance. If they are registered, then they have insurance.

 

So what happens if the sales professional you selected fails to renew? Well, that’s simple. You’re stuck with the Brokerage and it will then appoint someone else to look after you. That’s the case unless you included an amendment to the agreement or dealt with this matter in a Schedule.

 

 

 

 

 

 

Buyer Representation Agreement Explained (Ontario) Part 19 - ACKNOWLEDGEMENT

 

 

Buyer Representation Agreement Explained (Ontario) Part 19 – ACKNOWLEDGEMENT

 

Here is the portion of the paragraph dealing with the Acknowledgement.

 

ACKNOWLEDGEMENT

 

The Buyer(s) hereby acknowledge that the Buyer(s) fully understand the terms of this Agreement and have received a true copy of this

Agreement on the …….......................................................…………. day of …………………......................…………, 20 …...........................………...

 

............................................................... Date:........................

(Signature of Buyer)

............................................................... Date:........................

(Signature of Buyer)

 

Part 19 review

 

I will break up the paragraph and offer my commentary in “italics” as usual.

 

ACKNOWLEDGEMENT

 

The Buyer(s) hereby acknowledge that the Buyer(s) fully understand the terms of this Agreement

 

What we have here is another acknowledgement. But, didn’t the buyer already say that he understood the agreement? So, why say this again? Am I missing something here?

 

The earlier acknowledgement was just above the signature.

 

Let’s have another look at it. Assume two buyers, Bob and Mary, husband and wife. Bob now has to say that he confirms that Mary understands. He already said that he understood the document himself. And, Mary does the same, this time confirming that Bob understands. Otherwise, this statement would be exactly what we saw before.

 

Clearly, the agent must explain the document to both Bob and Mary. It would not be sufficient to explain it to Mary alone and have her take the lead. The next supervised statement is to the effect that Mary confirms that Bob understands. Did he?

 

 

and have received a true copy of this

 

 

Agreement on the …….......................................................…………. day of …………………......................…………, 20 …...........................………...

 

............................................................... Date:........................

(Signature of Buyer)

............................................................... Date:........................

(Signature of Buyer)

 

When the confirmation of receipt statement is completed, we have the same issue. Mary is confirming not only that she got her own copy but that Bob got one as well. Again, the agent would have to oversee the delivery of two copies, one to each of them.

 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com

 


Tagged with: bra ontario full document review brian madigan buyer representation agreement
| | Share

Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

Powered by Lone Wolf Real Estate Technologies (CMS6)