Real Estate Agent Loses $120,000 Commission for Not Sending Simple Email or Letter

The Ontario Court of Appeal has overturned a trial decision costing a commercial real estate agent over $100,000 all because the agent failed to send a simple email or letter.

The facts of the case are relatively straight forward.

The vendor signed a listing agreement with Ariston Realty Corp. (“Ariston”). The listing agreement contained a holdover clause which provided that the vendor would pay Ariston a commission of 5% of the sale price in the event that the property was sold within six months after the expiry of the listing agreement to any party to whom Ariston introduced the property to during the term of the listing agreement. Importantly, the holdover clause also went on to state

“provided you have notified me in writing prior to the expiry of this agreement of the name of such party you or your representatives or cooperating brokers have introduced to the property.”

As you can guess, the property was sold within 6 months after the expiration of the listing agreement to a party whom the trial judge “found as a fact” was introduced to the property by Ariston. The trial judge ordered the vendor to pay Ariston over $120,000 in commission as a result.

The vendor appealed on a number of grounds, including that Ariston failed to provide the written notification as required in the holdover clause. The Court of Appeal agreed with this point, noting that the law requires “strict compliance” with the written notification provision and that “having failed to fulfill this condition precedent, Ariston has no contractual entitlement to commission.”

It would seem then that by sending a simple email or letter Ariston could have satisfied its obligation and would have been entitled to its commission.

That being said, all was not lost for Ariston. In another interesting turn of events, the Court of Appeal awarded Ariston $20,000, not with respect to the commission, but on the basis of quantum meruit with respect to services it provided to the vendor after the expiration of the listing agreement.

 

 

 

 

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