Listings ~ What Lawyers Need to Know About the CREA Consent Agreement

 

Listings ~ What Lawyers Need to Know About the CREA Consent Agreement

By Brian Madigan LL.B.

(Ontario Real Estate Source)

The first new issue that is going to arise in a real estate law office is the new listing agreement. The lawyer is going to be asked to draft something. This will be new. Up until now, there were basic standard forms used in the industry.

The Ontario Real Estate Association (OREA) supplied most of the forms used throughout Ontario.

The new negotiated listing agreement is a "one-off" deal. Each one is different. Hopefully, the discounters will have a draft ready. Then again, each of the discounters will have to go to their own lawyers to prepare an early draft.

So, rather than say these are all "standard forms", the lawyers will be free to negotiate. What terms should stay? What terms should go? What is a fair fee for the services provided? Where is the discounter going to make his money? Without some reasonable business model, the discounter is going out of business. How much does the lawyer know about the market? Is the client relying upon the lawyer to provide market information? What about pricing, timing of the sale and marketing? Is the client looking to the lawyer as a source? These are all new risks!

The key will be the new "discounted deals", the "unbundled services", the "mere posting on MLS".

Certainly, the older full service model is still available. Not everyone wants to market, negotiate and sell their own house. For those, the old standard forms are still available.

In a later series of articles, we will go through the listing contract in detail, but at this stage, it's somewhat premature.

So, here are some issues for lawyers protecting clients:

· Keep the mere poster's contract short in duration

· Ensure there is a proper termination clause

· Be free to move to another brokerage without penalty

· Make sure if there is tied selling, you know exactly what it is

· Know whether the homeowner is a client, customer or mere contractual party

· Look for performance guarantees

· Look for statistical forms of measurement

· Who selected the price

· What are the changes in the market 30 days' out

· When should the price be reduced

· What is the marketing plan

· Freedom is the essence of the negotiated mere posting

The difficulty with a novice client who seeks legal advice at the outset is that there may not be another professional who can accept some of the risks and the responsibilities.

If it's not the agent, then it might be the lawyer. So, protect yourself. There's usually not enough money in a deal, for a real estate lawyer to become too involved. But, those clients will be seeking legal advice soon.

Don't be caught off-guard!

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com