Three years ago, a man who signed a contract to buy Mike Armstrong’s oldest room on Lake Arak in BC abruptly withdrew from the map. The deadline came and went, but the buyer stopped responding to any news from his real estate agent.
The default in the contract of purchase and sale is that the buyer confiscated a total of 000, 70,000 deposits.
Armstrong says he and his wife believe both properties are owned by the same broker. Instead, they were awarded a $ 70,875 commission last spring and a lawsuit seeking interest on the abandoned sale.
He was shocked.
“It’s so weird, you hire a realtor to sell your property – it seems like the purpose of their life – we can’t understand where it comes from,” Armstrong told CBC News.
He did not understand why he would be on the hook for commission when this deal failed due to his own mistakes.
But after lengthy and frustrating searches by every organization and government agency dealing with the real estate industry in BC, Armstrong discovered the standard listing agreement he had just signed, the only brokerage required was a legally enforceable sales contract to pursue a real estate agent.
“Every person listed on the MLS and real estate.com now … has the same form they signed, so they can each be sued by their real estate company,” Armstrong said.
Details of what happened in Armstrong’s case include a civil claim filed by Century 21 Seaside Realty in White Rock, as well as Armstrong’s response to that claim and a third-party notice filed by his real estate agent, Fabian Saul.
These documents show that Armstrong signed a limited dual-enterprise agreement to allow the brokerage to represent both the buyer and the seller in the contract.
In August 2017, Michael Tron, a buyer acting on behalf of Vance Interest Investments, signed a purchase and sale agreement to buy two of Armstrong’s rooms on Quiet Lake east of the mission.
The contract had to be extended once, but eventually the contract had to pay 35 1.35 million with a July 2018 deadline.
But when that date came, court documents say the buyer was nowhere to be found.
‘Generally, we do not sue vendors’
In search of a clear answer to his legal obligations, Armstrong approached Paul Cohen, an experienced real estate agent who was then the professional quality adviser to the Fraser Valley Real Estate Board.
Kohik told him that it is very unusual for a company to pursue a seller for a commission once a contract has been reached.
“In my 40s’ [experience], I do not know if this will ever happen. I know there is a case law … but it is very low, “he said.
“Usually, we do not sue the sellers. We sell the house to someone else.”
Kohik said real estate agents have a professional duty to fully explain to their clients every term in the inventory agreement, but the customer needs to pay attention.
He added that it would be difficult to generalize how or why such a case would end in court without knowing what happened between the parties.
“Real estate is a public relations thing. It’s a kind of relationship. Litigating someone is a good way to burn your bridges,” he said.
Fabian Saul, Armstrong’s real estate agent, told CBC News that they had decided to ask the commission because the listing agreement was with a broker.
Saul said he would never be in a situation where a buyer would withdraw from a contract after all contracts had been signed and the deposit paid, but the listing agreement is clear.
“Once you have a contract fully signed and a deposit is entered, you have a contract that is fully legally binding,” Saul said.
“The real estate company has already earned its commission and the realty company that represents the seller, which has the ability to claim ownership of that money.”
The brokerage representatives did not respond to requests for comment on the case, but their claim notice states that they have satisfied their side of the contract.
“Fortunately, Armstrong has been given a deposit of 000 70,000, which is almost enough to pay the commission. It would be unfair in these circumstances to send the 21st century coast empty-handed, while pocketing the benefit of the labor of Armstrong realtors,” it says.
A date has not yet been set for the case to be heard in court. Armstrong argues that one of the terms of the purchase agreement has not been met, so this is not a legally binding contract, the brokerage claims.
Fixed form ‘can be easily changed’
Kohik points out that not all provinces have the same wording about the commission in their standard listing agreements – for example, Nova Scotia does not, he said.
P.C. Armstrong wants the Real Estate Association (PCREA) to change its standard shapes so other vendors don’t find themselves in their shoes.
“It can be easily changed,” he said.
The PCREA said it was developing its contracts with lawyers, BC’s industry regulator and consumer representatives.
“Anyone entering the contract must fully understand all the terms,” the spokesman said in an email.
Armstrong, meanwhile, relied on one of the cabins with another company after being asked to sign a contract that he would not sue for commission if a buyer failed to sell.
“They were happy to publish it in writing,” he said.