In the real estate industry, relationships between buyers and their real estate agent are often governed by a written Buyers Representation Agreement (BRA). A BRA usually contains a series of standard form terms, including a term that the buyers will not use the services of any other real estate agent during the time period that the BRA is in effect. The specific time period that a BRA is in effect can be negotiated by the parties.

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What happens when a real estate agent spends the time and effort looking for a property but doesn’t enter into a written agreement with the clients to do so?

The case of Homelife Maple Realty et al v. Singh et al, 2021 ONSC 4743 demonstrates that it is possible to obtain payment of a commission based on the principles of unjust enrichment.

The appellants in the case – two brothers and their spouses – bought a property in Caledon, Ont. in February 2015. They had been looking for a property with some acreage that would allow both families to live in the same house. As a result, there were some unique features to the property that they were looking for, such as two kitchens.

One of the brothers worked at a car dealership, where he met the respondent real estate agent. The agent began researching properties that would meet the unique needs of the two families. He found several properties for them to consider, including the property in Caledon.

The parties did not sign a written BRA or other agreement. At one point, a draft BRA had been prepared by the agent with an expiry date of Oct. 1, 2014. However, before the BRA was signed, the agent found a listing for the parties to consider and an offer was made by one of the brothers using the agent. While the offer was not accepted, the parties continued to work together without a written agreement.

In the summer of 2014, a series of offers and counter-offers were made on the Caledon property between the brother and the sellers. These offers and counter-offers did not result in a deal. The search for a property continued.

In October 2014, the families made another offer for the Caledon property, but with the second brother as the purchaser. Again, the same agent made the offer. There was some further back and forth over the purchase price but an agreement was not reached.

At that point, the families told the agent that they were going to stop pursuing the purchase of a new home until the spring. The agent continued to send the families some listings.

The Caledon property came back on the market in early 2015. In February 2015, the first brother signed a BRA with the listing agent and made an offer to purchase the property for $866,500, which was accepted. Title to the property was taken in the name of all four family members. A commission was paid to the sellers’ real estate agent.

In the spring of 2015, the respondent agent contacted the two brothers. While there was some dispute as to what was discussed, the brothers said they told the agent that they no longer wished to work with him. The agent then discovered that the home owned by the first brother had been sold, and that the families had purchased the Caledon property.

As a result, the respondent agent and brokerage sued the families in Small Claims Court. The families denied any liability for payment of commission since the BRA had not been signed.

In May 2020, the Small Claims Court concluded that the agent could advance a claim in either quantum meruit (compensation for services rendered without a contract) or unjust enrichment. Based on the evidence at trial, the court inferred that the families had paid less than full commission to the sellers’ agent. The Small Claims Court inferred that the reason the purchasers went directly to the sellers’ agent was to cut out the agent from the transaction and save on his commission.

Based on that finding, the Small Claims Court then determined that the purchasers had been unjustly enriched. A claim for unjust enrichment requires that the plaintiff show (a) an enrichment of the defendant; (b) a corresponding deprivation of the plaintiff; and (c) an absence of a juristic reason for the enrichment: Garland v. Consumers Gas 2004 SCC 25, [2004] 1 S.C.R. 629.

The Small Claims Court concluded that the amount of the unjust enrichment should be calculated based on the usual commission that the agent would have received had the transaction been completed – in this case $24,478.63, which was 2.5 per cent of the price of the home plus HST.

On appeal, Justice LeMay of the Ontario Superior Court of Justice affirmed that the lack of a written contract does not mean that there was no agreement between the parties. Where there is an oral contract, it is up to the court to infer from all of the facts as to what the terms of that oral contract were.

The families argued that the unsigned BRA ought to inform the terms of the unwritten oral contract. In particular, they argued that since the draft BRA that was prepared by the agent would have expired on Sept. 1, 2014, the oral contract ought to have the same expiry date.

Justice LeMay ruled that the families could not rely upon the unsigned BRA to support their argument about the end of any agreement with the agent for three reasons:

  • Firstly, the families continued to do work with the agent after this alleged termination date of Sept. 1, 2014, passed. In particular, an offer was tendered on the Caledon property in October 2014 using the services of the agent.
  • Secondly, since the families did not want to be bound to the terms of the BRA, it should not then be open to them to claim that the provisions in the BRA that are to their advantage should be applied while avoiding the application of the provisions that are not to their advantage.
  • Lastly, the Small Claims Court judge was entitled to conclude that the families had decided that the way to address the gap between the price that they were willing to pay and the price that the sellers were willing to accept was to cut the agent and his brokerage out of the transaction and use the money that was saved to eliminate the gap.

The families also argued that they did not receive an unjust “enrichment” because there was no evidence that they received any money. However, an enrichment of a defendant can come where there is either a positive or a negative benefit: Garland v. Consumers Gas, para. 30. Here, the enrichment flowed from the fact that the families were able to purchase the property for less than the listing price. Given that the same real estate agent acted for both the purchasers and the sellers, it was not difficult to infer that there was a reduction in the commission payable that made the deal possible.

As a result, the decision of the Small Claims Court awarding the commission was upheld.

While it is always advisable to have a written contract that documents the parties’ agreement and expectations, the case demonstrates that an agent can sue for commission even where no written agreement was finalized. The key factors will be whether the agent had a reasonable expectation of compensation for services provided and whether the clients ought to have expected to compensate the agent for those services. The courts will often approach such disputes with an unstated view as to what the fair result would be in the circumstances.

18 COMMENTS

  1. It’s all about the buyer’s wanted a better deal and the listing agent reduced his commission maybe a bit to make the better deal…… Obviously the sellers, the listing agent and the buyers all 3 of them got a better deal and the agent that introduced the buyers to the property got shafted….. Very unethical, but the motto of the story is, what goes around comes around and eventually be treated somehow somewhere the will get it back I am a firm believer. Sabina

  2. Good article and I agree with the Judges decision 100% ! 👏 Buyers can be so sneaky and that’s why BRA’s exist in the first place. You can’t trust some ppl and the buyer agent worked hard and in good faith for those buyers even tho there wasn’t a written agreement

  3. I once won a judgement for commission in small claims court. Winning is one thing; collecting is another. That was well over twenty years ago and I still haven’t seen any money (in part because I was suing a builder operating as a numbered company — he closed the company shortly afterward). Here’s hoping the agent is able to collect some portion of what he was awarded.

  4. Most interesting outcome which turned on the fact that the buyer couldn’t hide behind the terms of the very BRA they rejected.

    Recognizing the ruling probably considered implied agency and effective cause, I wonder what it would have been if they had signed the BRA and the BRA as well as the holdeover had passed? Would the judge have come to the same conclusion? Would the judge have awarded the same amount or the difference in commission which there obviously was since the listing agent chose to not disclose because it was reduced?

  5. It is my believe that judges rarely side with Realtors. This case made it easy for this judge to do so. Judges know that most humans are most always reduced to acting from a position of self interest. That’s what this buyer did, as did the seller and the seller’s Realtor…and the buyer’s non-BRA-documented Realtor. Money talks. It took one who was not self-interested—in terms of monetary reward—to resolve this dispute, one who did not have money on the line for quick deposit into his own bank account. One thing’s for sure: judges will never be out of work.

    Hmmm…I think I’d make a good judge. Is there a wannabe-judge’s university somewhere out there that I can donate a few thousand bucks to in order to go to classes for a few weeks, pass the exam with only 75% accuracy…and get my judge’s license? If so, I’m in! I hear judges make good money. I think everybody and anybody should qualify for judge’s university, don’t you? A good judge might even make as much as a high-flyin’ Realtor, and all that a civil-case judge has to do is listen to squabbling money-grubbers and thence make a decision. How tough can that be?

    Oh wait, I forgot something: To become a judge one must have earned an honours bachelor degree (three years), passed the LSAT, studied religiously at law school for a couple of more years, passed the bar exam with marks indicating a firm grasp of the curriculum, spent years as a successful, respected lawyer before being accepted as a candidate for appointment to the bench. That kind of journey demands long-term dedication to the profession. Is there an 80% failure rate amongst judges within the first four years of professional practice? Is there a 10% failure rate? Is there such a thing as a “failure rate” at all for judges? The answer would be a resounding “NO”, don’t’cha think? I wonder why.

  6. What is the proceedure when the client retains and agent and the client then ends up having to look for properties and advise the agent that he/she wants to see these properties. Also what is the protocol for Open houses, is it the agents duty to be in attendance or just leave a key for the other agents to access and show it to their clients.

  7. On a different note, but related to agency matters when dealing with listing.

    I know of many cases where a realtor will wait until the listing is expired before showing their clients the property under their own listing agreement.
    The Toronto board is not serving the best interest of their members by allowing the expiry date to be shown.
    On the other hand, the Barrie board is superior to the Toronto board and more member focused, as the Barrie board does not allow the expiry date to be shown on the listing.

    • A follow up to my comment…..

      The only parties that need to know the expiry date are the brokerage and their representative and the clients.
      All boards should follow Barrie boards lead and raise the level of professional service we give our clients.

  8. 2 questions that I have…
    If the List agent double ended the property at 5 % (instead of taking a commission reduction allowing the Buyers to save 2.5%) would the Buyers agent have had a successful suit? I would say no.
    Also if the Buyers bought another property, through a listing agent, would the Buyers agent have had a successful suit? I would say no.

    It seems to me that the Buyers lost the suit because they tried to cut out their real estate agent and save money on the purchase after their agent already did work for them a particular home….. This is a very interesting case study…. The Buyers lost for acting in bad faith and that seems to have trumped contract law.

  9. Fascinating. Great case to choose for REM – I agree w the Judge’s reasons esp re ‘Client picking and choosing provisions to uphold (in an unsigned agreement)’.
    My recollection is that Registrants are required to reduce their standard Agency Agreement to writing and present it for signification – we cannot demand it be signed.
    This case in the opposite implication to well-known status of “Implied Agency” that can befall a registrant who “talks, walks, acts like a client’s ‘agent’, without a written agency agreement”.

    Bravo!

  10. I think the listing agent should also be reprimanded!! The LA knew that there was an agent representing them the entire time. Did they think it was not deserving to even make a call to the agent and ask them what is happening??? This type of behavior needs to be brought to ethics. Not sure how the Listing Agent thought it was ok to just step in after all those months and double end it.

  11. Not sure why they would win. The agent did not get the deal they wanted, land looks like 6 months later they made a deal. As long as no services were used in that time, he had lost control of the purchaser. Typically 90 day would be the max you could claim this. Any more information on whether they used the agent that spring, which would change it?

    • “it was not difficult to infer that there was a reduction in the commission payable that made the deal possible.”

      Without knowing all the details, especially what was said between all parties, the inference drawn satisfied the appellate judge that a deal could have been made earlier with a reduced commission, which could not happen with the buyer agent involved.

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