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

 

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

April 9, 2015 - Updated: April 10, 2015

 

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.  

 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com


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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

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