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 Prinicpal’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.
“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.
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.
Brian Madigan LL.B., Broker