Can a Seller Decline a Full-Price Offer Without Paying Commission?

In T. L. Willaert Realty Ltd. v. Fody the seller wanted to sell his property and signed a standard listing agreement with a real estate agent. Under its terms, commission was payable on the receipt of a “valid offer to purchase”, even if the agreement was not ultimately completed, provided the non-completion was “owing or attributable to the Seller’s default or neglect.”

The seller also signed a separate document titled “Vacant Land Data Input Form” (VLDIF) which, in a box titled “Realtor Remarks,” included some additional minor conditions imposed by the seller, relating to the installation of a hydro box and septic system and requiring possession to take place within 15 days.

The agent presented the seller with several offers within the listing period, one of which was for the full cash asking price.  After sending a copy of it to the seller’s spouse and lawyer, the agent texted the seller to let him know.

A few minutes later the seller replied, asking for clarification on whether the offer was for the full asking price. By reply text, the agent confirmed that it was.  At this point, however, the seller disappeared for the rest of the day and became unresponsive for the following three days.  Subsequent efforts by the agent to get the seller to agree to meet were ignored; the agent texted the seller to remind him that under the terms of the listing agreement, commission was still payable in these circumstances.  The seller responded to this by threatening the agent that he should “not continue to harass or threaten” him.

Ultimately, the seller did not accept the full price offer.  The agent then sued successfully in Small Claims Court for almost $9,000 in commission plus costs; the seller appealed, claiming (among other things) that the full price offer was not presented within the listing period, and that it was nonetheless deficient because it failed to include all of the minor conditions set forth in the VLDIF dealing with the septic installation, hydro box and possession date.

The appeal court rejected all of these arguments. First, it found that the agent’s efforts to present the offer to the seller were entirely reasonable.  In fact, the court put it this way:

…[i]t is difficult to appreciate any other way that [the agent] could have presented this offer. 

The steps taken by the agent included: 1) notifying the seller’s spouse; 2) faxing a copy to the seller’s lawyer; and 3) texting the seller several times.   The agent also dropped off a copy of the offer to the seller’s mailbox the same evening the offer was presented.  The seller was unresponsive to all of these efforts.  Moreover, he was impolite and disrespectful when the agent later tried to follow up.

As for the seller’s claim that certain conditions had not been satisfied, the appeal court remarked that the seller had never previously indicated that they were important to him.  Rather, he raised and objected to these purported issues only during the trial itself and only as an ostensible defence to the agent’s valid commission claim.  Furthermore, even if they had been an issue, the potential buyer had shown some flexibility on those items and was willing to resolve them.

Ultimately, the appeal court agreed with the Small Claims Court’s finding that the seller was simply avoiding the deal and frustrating the agent for improper reasons – namely because he had changed his mind and decided not to sell until he could buy a farm.  Indeed, he became inaccessible and nasty to the agent and had not acted in good faith.

The appeal court also pointed out that listing agreements are legal contracts and, as such, the general law of contract applies to them.  Under the specific terms of this particular one, the seller could be held liable for commission even if the deal did not close through default or neglect of his own.

This was precisely the situation at hand:  the full-price offer had been presented by the agent to the seller within the time specified in the listing agreement and the conditions in the VLDIF had been effectively satisfied as part of it. This triggered the seller’s obligation to pay the commission as agreed; there was no requirement that the offer must be actually accepted.   The terms of the agreement were clear and the seller had simply acted in bad faith.  The seller’s appeal of the Small Claims Court’s earlier damages award to the agent was accordingly dismissed.  See T. L. Willaert Realty Ltd. v. Fody, 2013 (ONSC).