Most people enlist the services of a real estate agent or broker when selling their home. The seller then pays a commission based on the listing agreement entered into between himself and the brokerage. But what happens if the seller then enters into a private sale with a purchaser during the listing period to avoid paying commission?
The case of Sutton Group v Kim[1] is an example of what can happen in this instance.
In March 2012, Yevgeniy Kim signed a listing agreement with Peggy Laidlaw, an agent with Sutton Group All Pro Realty for the sale of his home. The Agreement provided that Kim as seller of a residential property must pay a commission of 5% of the sale price plus HST to Sutton Group. The agreement expired on October 31, 2012.
The Listing Agreement also contained a 90 day “Holdover Period” provision which entitled Sutton Group to payment of the commission in the event of Kim selling the property within 90 days of the expiration of the term of the agreement.
During evidence it emerged that Kim had called Laidlaw during mid October 2012 and indicated that he had buyers who were interested in his home. Laidlaw showed the house to the buyers. Kim later told Laidlaw that since he had found the buyers, he would not be paying her commission. Laidlaw advised Kim that the sale was concluded within the listing period and offered to reduce her commission to 3%. Kim sold the house to the buyers and refused to pay commission.
Based on the legal issues and evidence, the court concluded that given the fact that Laidlaw had shown the property to the buyers during the listing period, and the fact that the property was sold to the buyers during the holdover period, a commission became payable by Kim pursuant to the Agreement he had entered into with Sutton Group.
Kim was ordered to pay commission of $50 567.50 with interest, plus costs of $8750.22.
[1] 2014 ONSC 891