In last week’s blog, we asked you how much you knew about OREA’s standard forms and invited you to take the quiz (without first referring to the actual forms, of course). The answers are noted below. How many did you answer correctly?
1. Your buyer representation agreement states 2 ½ per cent commission. The property you sell to your buyer is offering 3 per cent commission to the co-operating brokerage. Can you keep the extra ½ per cent?
Yes. According to the Buyer Representation Agreement, “the brokerage is entitled to receive and retain any commission offered by a listing brokerage.” The form goes on to state that “the amount of commission may be greater or less than the commission stated below.” However, the brokerage must inform the buyer of the amount of commission it will receive at the earliest practical opportunity.
2. Your listing sells, but on closing the seller refuses to complete the transaction. Under the terms of the listing agreement, can your brokerage make a claim for the commission?
Yes. The Listing Agreement states that the seller agrees to pay the commission even if the transaction is not completed, but only if such non-completion is owing or attributable to the seller’s default or neglect. If the non-completion is the fault of the buyer, the seller is not liable for commission. A seller cannot be held responsible for the acts of the buyer.
3. What if it’s your buyer/customer who refuses to close? Does your brokerage have a claim for commission?
No. There is no provision for commission in a Buyer Customer Service Agreement. In addition, the seller will not be liable for commission under a Listing Agreement because it was the buyer who refused to close.
4. In a multiple representation situation, what are you required to do for the seller before you present an offer?
You must obtain the seller’s written consent to represent both the buyer and the seller at the earliest practicable opportunity and in all cases prior to any offer being submitted or presented. REBBA 2002, GEN Section 22.
5. What are you required to do for your buyer in a multiple representation situation before you have the buyer sign an offer?
Same requirements as above.
6. Are sales of co-operatives always conditional?
Yes. Clause 10 of the Agreement of Purchase and Sale: Cooperative Building Resale Agreement (Form 102) makes the offer conditional upon the seller obtaining approval from the Board of Directors of the Corporation for the sale and transfer of the seller’s shares in the capital of the Corporation to the buyer, and approval of the buyer as shareholder and occupant of the particular unit.
7. If a buyer’s solicitor searches title and makes an objection to the title to the property, what remedy does the seller have?
The seller has until the closing date to remedy any valid objection to title made by the buyer. If the nature of the objection can be insured against, the seller can obtain title insurance in favour of the buyer and the transaction can close. If the problem goes to the root of title, meaning that the seller does not have the right to transfer title, the transaction will be at an end.
8. What effect does filling in the fax numbers on the front of the offer have on the Agreement of Purchase and Sale?
Filling in the fax numbers in the Notices clause provides a method for delivery of the offer, any counter-offer, notice of acceptance, or any subsequent notices, such as waivers or notices of fulfilment. When transmitted to the fax number, the signatures of the parties are deemed to be original.
9. If you put “included in” in the HST clause on an offer, who would be responsible for paying the HST?
The seller. If the sale is subject to HST, the applicable tax will be deducted from the sale price and submitted to the Canada Revenue Agency by the seller.
10. What are your buyer clients getting when they purchase a co-operative?
When purchasing a unit in a co-operative apartment building, buyers receive a specific amount of shares in the capital of the corporation plus the exclusive right to occupy and use the individual unit and any applicable parking space and locker.