Just Because You Don’t Sell Doesn’t Mean You Don’t Pay

According to the recent Superior Court decision in T.L. Willaert Realty Ltd. V. Fody, if someone signs a listing agreement, depending on the contents of the agreement and regardless of whether the property sell’s or not, the listing party can still be liable for payment of the commission.

In 2008, Richard Fody executed a listing agreement with T.L. Willaert Realty Ltd., to list his property for sale. Section 2 of the listing agreement described the terms upon which the commission was payable to the listing agent. Most notably the agreement stated the following:

“…The Seller further agrees to pay such commission as calculated above even if the transaction contemplated by an agreement to purchase agreed to or accepted by the Seller or anyone on the Seller’s behalf is not completed, if such non-completion is owing or attributable to the Seller’s default or neglect, said commission to be payable on the date set for completion of the purchase of the Property.”

After several offers were made which were not full asking price, Mr. Willaert found a buyer who was willing to offer the full asking price of $199,900. Once the offer came in to the agent, he faxed it over to Fody’s lawyer as well as dropped a copy off that same evening in Fody’s mailbox. Over the course of the next four days, Fody & Mr. Willaert exchanged text messages.

On the day the offer was set to expire, the agent sent a text message to Fody reminding him of the expiration of the offer as well as stating that the commission would still be due regardless of whether Mr. Fody chose to accept the offer or not.

Fody did not respond to the offer which was presented for full asking price and as such, felt he was within his right to refuse payment of the commission owing to Mr. Willaert as per the listing agreement.

In response to this, Mr. Willaert took Fody to Small Claims Court in order to recover his outstanding commission of $8,995.50. The Judge ruled in favour of Mr. Willaert stating:

“The court has no doubt Fody was avoiding and otherwise frustrating Willaert because he decided not to sell unless he was able to purchase a farm. When the prospect of purchasing a farm evaporated late in April of 2009 he became inaccessible and nasty and refused to act in good faith when Willaert was obtaining and communicating offers that were near, then at, the listing price…”

After Fody had lost his Small Claims Court case for the outstanding commission, he appealed that decision to the Superior Court of Justice where the Judge also ruled in favour of Mr. Willaert. In Superior Court, Justice Marc Garson ruled that the price which was offered was not only full asking price but was also the best price possible at the time. Justice Garson had this to say: “Acceptance of the offer is not required. The listing agreement clearly contemplated payment of the commission upon presentation of an offer at the full asking price.” 

This is an example of a situation when even if a sale transaction does not take place, depending on the wording of the listing agreement, a vendor may still be liable for the commission payable to the real estate agent. Given this case was appealed from a Small Claims Court decision and upheld in the Superior Court of Justice, it now becomes precedent setting and can have an impact on future transactions.

The content of this article is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

Shari D. Elliott

Elliott & Elliott

135 Bayfield Street, Suite 101A

Barrie, Ontario, L4M 3B3

Tel.: 705-797-2672

Fax: 705-797-8445

Email: shari@elliottlawyers.com