BRA Ontario - REFERRAL of PROPERTIES

Buyer Representation Agreement Explained (Ontario) Part 8 REFERRAL of PROPERTIES

Here is the portion of the paragraph dealing with Referral of Properties

4. REFERRAL OF PROPERTIES:

The Buyer agrees that during the currency of this Buyer Representation Agreement the Buyer will act in good faith and work exclusively with the Brokerage for the purchase or lease of a real property of the general description indicated above. The Buyer agrees that, during the currency of this Agreement, the Buyer shall advise the Brokerage immediately of any property of interest to the Buyer that came to the Buyer’s attention from any source whatsoever, and all offers to purchase or lease submitted by the Buyer shall be submitted through the Brokerage to the seller.If the Buyer arranges a valid agreement to purchase or lease any property of the general description indicated above that came to the attention of the Buyer during the currency of this Agreement and the Buyer arranges said agreement during the currency of this Agreement or within the Holdover Period after expiration of this Agreement, the Buyer agrees to pay the Brokerage the amount of commission set out above in Paragraph 2 of this Agreement, payable within (5) days following the Brokerage’s written demand therefor.

Part 8 review

I will break up the paragraph and offer my commentary in “italics” as usual.

4. REFERRAL OF PROPERTIES:

The Buyer agrees that during the currency of this Buyer Representation Agreement the Buyer will act in good faith and

This is rather interesting. There is a “good faith” expectation on behalf of the buyer. This is stated in the contract. Since this is an “agency appointment”, there is already a good faith obligation on behalf of the agent.

In addition, the Supreme Court of Canada in November 2014, decided that there is a good faith performance expectation on both parties to a contract (Bhasin v. Hrynew).

work exclusively with the Brokerage

This is an “exclusive” arrangement. A customer service arrangement or another level of real estate services wouldn’t be. This arrangement requires “commitment” from both sides.

for the purchase or lease of a real property of the general description indicated above.

The goal is the purchase or lease.

The Buyer agrees that, during the currency of this Agreement, the Buyer shall advise the Brokerage immediately of any property of interest to the Buyer

This obligation is somewhat unexpected. Here, the buyer is under an obligation to tell the agent. Most of the time, this would be the other way around. Usually, the sales professional would come across the property and draw it to the attention of the buyer. This relationship is different. Both parties are working “together”. Both parties are committed to one another. If it happens to be that the buyer comes across a property, then the buyer is to let the agent know.

that came to the Buyer’s attention from any source whatsoever, and

The expression “any source” is the key to understanding this part of the agreement. The buyer could be driving down the street, spot a “for sale” sign, see it on the internet, see it in a newspaper advertisement or flyer. The actual source doesn’t matter. It could be a phone call from a friend saying, “I just heard that the house across the street will be available in a week or two”. There are no private or confidential sources of information. Everything is “on the table”. The good faith obligation extends to both parties.

all offers to purchase or lease submitted by the Buyer shall be submitted through the Brokerage to the seller.

This is rather straightforward. If an Offer is to be submitted than it shall be submitted through the Brokerage. No “end runs”. Those are not permitted. Naturally, if the relationship is working well, then that’s actually the expectation of the parties. 

If the Buyer arranges a valid agreement to purchase or lease any property of the general description indicated above

This is the “penalty provision”. What happens if the buyer does an “end run’? The answer seems simple. He pays the commission anyways. You will undoubtedly appreciate that this is probably a second commission if he had another agent involved. Technically, penalty is not quite the correct term. Contracts don’t permit “penalties”. This is the “consequences” and “damages” part of the arrangement.

that came to the attention of the Buyer during the currency of this Agreement and

This might be difficult to prove, but it’s not impossible. The buyer may not be forthcoming in terms of volunteering much. However, the other parties involved are not going to lie. If the matter proceeds to Court, they will tell the truth. No one is going to commit perjury for a few thousand dollars. Likely, there’s no financial benefit to anyone else.

the Buyer arranges said agreement during the currency of this Agreement

This means that the deal for the acquisition of the property has to take place within the contract period, that means start time to expiry time.

or within the Holdover Period after expiration of this Agreement,

Here, we just got the “bump up”. The holdover period is also included. In this case, assume a 3 month contract, and a 6 month holdover period; that really means 9 months from start to finish on this. Remember, the information about the property had to take place in the first 3 months. Thereafter, it would just be like seeing it, since the 6 month holdover period would apply too.

So, the buyer can't simply rip up the agreement and pretend that it never existed.

the Buyer agrees to pay the Brokerage the amount of commission set out above in Paragraph 2 of this Agreement,

The previously agreed upon commission would be payable.

payable within (5) days following the Brokerage’s written demand therefor.

However, look at this! The terms and conditions have changed. Now, it’s due within 5 days of demand. There’s no need for a closing.

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com