Can I decline to pay my real estate agent’s commission?

Can I decline to pay my real estate agent’s commission?

Can I decline to pay my real estate agent’s commission? Selling a home or property requires the guidance of a variety of highly trained and experienced professionals, including a real estate agent and real estate lawyer. However, even with first-class professional help, sellers are not guaranteed the results they desire. Property is expensive, the real estate market is erratic and complex, and sales can fall apart for a variety of reasons.

With that in mind, is the seller of a property obligated to pay an agent’s commission fee, even if when no sale is completed? According to a 2013 Ontario Superior Court of Justice decision, agents are entitled to compensation so long as they fulfill the obligations laid out in the listing agreement.

Willaert Realty Ltd. v. Fody dealt with a dispute between Teddy Willaert of T. L. Willaert Realty and Richard Fody over Fody’s refusal to pay Willaert’s nearly $9,000 commission on a failed property sale.

In 2008, Fody signed a listing agreement with Willaert Realty for a vacant parcel of land near Tillsonburg in southwestern Ontario. The property was originally listed at $229,000 before being reduced to $199,900. The listing agreement stipulated that Willaert would earn a 5 per cent commission fee to be paid upon the delivery of a valid offer equaling the property’s asking price.

In March 2009, Willaert found a buyer willing to pay $150,000 for the property. When Fody refused to meet with the agent, the buyer raised their price to $170,000, $184,000, and eventually to the full asking price of $199,900. Willaert faxed the offer sheet to Fody’s real estate lawyer, ensured a copy of the offer was delivered to Fody’s mailbox, and communicated with Fody via text message. When Fody failed to respond, Willaert informed him that the offer would expire imminently, and that his commission would be payable whether or not Fody agreed to the sale. Fody declined the offer.

The listing agreement that Fody signed in 2008 specifically stated that Willaert would be owed his five per cent commission fee as long as an offer matching the property’s asking price was submitted. When Fody refused to pay the commission on the grounds that no sale had been made, Willaert sued him in Small Claims Court.

The court sided with Willaert. In his decision, Deputy Judge James Searle wrote: “The court has no doubt Fody was avoiding and otherwise frustrating Willaert because he decided not to sell unless he was able to purchase a farm. When the prospect of purchasing a farm evaporated late in April 2009 he became inaccessible and nasty and refused to act in good faith when Willaert was obtaining and communicating offers that were near, then at, the listing price, something Willaert was obligated and entitled to do.”
In short, the court ruled that Willaert did his job and was thus entitled to his commission fee. Had he failed to live up to his end of the listing agreement, it would have been reasonable for Fody to decline payment.

Fody appealed the ruling to the Superior Court of Ontario, which upheld the lower court’s ruling.

If you are planning to buy or sell a home, or have questions regarding commission fees owed to your
real estate agent, contact a Nanda & Associate real estate lawyer today to learn how our experienced, knowledgeable legal team can help.