Validity of Unsigned Buyer Representation Agreements
From time to time, Buyers’ Agents want to know what they can do if the Buyer Representation Agreement is not signed.
Actually, that’s a very difficult question. However, there are cases when such an arrangement may be enforced. Proof is the challenge!
The fundamental issue is whether an agreement is in existence. First, it should be “in writing”. That’s the gold standard. That is what is required under the Real Estate and Business Brokers Act, 2002 and that is what is expected by the Regulator, the Real Estate Council of Ontario.
On occasion, there may indeed be a “verbal agreement”. Let me give you an example. Bob is interested in viewing some properties and has selected Bill to be his agent. Bill emails a Buyer Representation Agreement (BRA) and a detailed explanation of the Agreement to Bob. They briefly discuss the BRA and Bill says he is agreeable.
They meet the next morning to view 6 properties. At the outset, Bill realizes that he doesn’t have a copy of the BRA with him for Bob to sign. He printed it off at home, but left it there by mistake.
We would need a Court to conclude that Bob intended to sign the BRA. He saw the document in full. He would have signed it had there been a copy for him. He gave his verbal consent. So, we have offer and acceptance and they went about to view the 6 properties.
Here’s the problem. What if Bob denies this afterwards? It could be very difficult to prove!
The preferred or better course of action in the morning would have been for Bill to send a text or email to Bob, in Bob’s presence:
“this will confirm that you agree to the BRA which I sent to you yesterday, accordingly, we will view 6 properties today.”
Or generally, words to that effect.
Followed by a response from Bob: “agreed”.
Everyone carries a cellphone, so they can get on their phones at a coffee shop before they start their day’s showings and enter into an agreement. This time it is “in writing”. It is not a verbal agreement, it is documented and enforceable. It doesn’t have to be a BRA executed with digital signatures in accordance with a software program like DocuSign.
The appropriate exchange of emails would be sufficient. This is now in writing. It complies with the provisions of the Electronic Commerce Act and is binding.
This situation is a little different. There is no verbal consent and there is no actual email consenting to the arrangement.
This becomes a real challenge for the Courts. The Judge would have to accept evidence and conclude that Bob by his conduct acquiesced and thereby agreed to the BRA with all of its terms. In reaching this conclusion, Bill is more likely to be successful if Bob is a sophisticated consumer. If Bob didn’t or wouldn’t be able to appreciate and understand the BRA in the first place, then the Court is unlikely to rule that this agreement was the arrangement between the parties. This would be very difficult and challenging, not impossible, BUT very DIFFICULT.
If faced with a client who has not signed the BRA, the best course of action is to produce it and have them sign it. Naturally, if it’s not going to be signed, it’s better to know ahead of time.
Brian Madigan LL.B., Broker