You might not be smiling if you don’t read the fine print in the agreement with your real estate agent.
When you sign an agreement with a real estate brokerage to sell your home, you have to pay commission if you make a deal with someone who saw your home during the listing period. If you try and make a private deal to avoid paying commission, you are likely to get burned.
Here’s one example of what can happen:
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 in Fenelon Falls. The asking price was $990,000 and the agreement expired on October 31, 2012, with a commission of 5 per cent plus HST.
Every listing agreement has a clause that says that if the seller signs a deal with someone who was introduced to the property during the listing, even up to 90 days after the listing expires, the seller still owes commission, unless they sign a new listing agreement with another brokerage firm and pay them instead.
According to later court testimony, Kim called his agent in mid-October, saying he had buyers who were interested in his home. Laidlaw showed the house to John and Linda Ramoutsakis on October 17 and Kim later told Laidlaw that since he had found the couple, he would not be paying commission.
Laidlaw said her listing did not expire until October 31, 2012 and she expected to be paid if he sold the house to Ramoutsakis. She agreed to reduce her commission to 3 per cent.
Kim sold the house to the couple on Nov. 1, 2012 for $895,000 and refused to pay commission. Sutton sued.
Kim later said in court that he thought the listing expired at the end of September that Laidlaw did not provide a copy of the listing, and he started advertising the home himself on Kijiji in October, 2012. He pointed out that even though the listing was for more than six months, his agent did not have him initial this term on the listing form, which is a requirement under the agent’s code of ethics. He also said that Laidlaw did not explain the holdover clause to him, so he did not understand that he might have to pay commission.
Ramoutsakis later said in court he learned the home was for sale through Mr. Kim’s ad on Kijiji. He also said in court he first saw the property in 2011 and was shown around by a tenant who lived there, after he saw a for sale sign near the property.
Laidlaw told the court this was the fourth home she had sold for Mr. Kim and he was fully aware of the terms of the listing agreement, including the holdover clause.
On Feb. 26 2014, Ontario Supreme Court Judge Graeme Mew decided that even though the listing agreement may not have been signed and initialed properly, it was binding on Kim, even if he carelessly did not read all of the terms.
He said in his written judgment that he believed Kim knew what the terms of the agreement were and his evidence to the contrary was rejected because it is not consistent with his actions or email traffic between him and Laidlaw.
Kim was ordered to pay the full commission of $44,750 plus HST of $5,817.50 for a total of $50,567.50.