A White Rock couple is on the hook for $52,500 in commission on the sale of two properties near Mission – despite the fact the deal fell through.
In a judgment Monday (April 25), B.C. Supreme Court Justice Sheila Tucker found that a sale agreement between Mike and Jessica Armstrong and Century 21 Seaside Realty Ltd. regarding the Lake Errock lots is enforceable, and, that the couple did not establish that the agent had breached his fiduciary duty by failing to advise them that commission could be payable without a completed closing.
However, “The MLS Contracts did not require any notice to be given” regarding the commission, Tucker found.
As well, the Armstrongs “are precluded from seeking rescission” because they affirmed the MLS contracts after the agent advised he could not, as initially thought, list them in the U.S.
According to the judgment, the Armstrongs entered into a purchase and sale agreement for both lots in May 2017, and contend that Fabian Saul, representing the lots would be listed in the U.S., induced them into entering the contracts, which note a five per cent plus GST commission to be paid. The buyer paid deposits, but did not pay the balance on the completion date.
The Armstrongs did not seek to enforce the sale agreement against the buyer, and as of the hearing date last August, continued to own the lots, the judgment notes.
Seaside filed a claim contending the sale agreement was an enforceable contract and sought the commission, however, the Armstrongs disagreed. They also made a third-party claim against Saul, alleging a breach of fiduciary duty.
They attested that Saul “did not confirm nor explain that the MLCs allowed Century 21 Seaside to charge a commission [on] upon the creation of a legally enforceable contract of sale between us and a buyer during the term of the MLCs. He did not explain, highlight, or underline any of the clauses.”
However, Tucker found that evidence “does not establish that Mr. Saul made a representation, let alone a misrepresentation.”
As well, the contract’s clause regarding commission “does not refer to a closing or completion.”
“Further, Term 5B expressly contemplates commission becoming payable in the absence of a closing on the completion date.”
According to the judgment, Mike Armstrong – who once ran for White Rock council – toured the lots with a representative of the prospective buyer, Vans Intrust Investments Ltd., in August 2017, and later that month entered a limited dual agency agreement with Seaside and Vans, followed by a sale agreement with an April 26, 2018 completion date. The latter provided for a $1.3 million purchase price and a deposit of $60,000.
The deposit was paid in September 2017, and approximately two days prior to the completion date, the buyer asked for more time, the judgment continues. In response, the Armstrongs suggested Seaside agree to reduce its commission in order to induce him to grant the extension; Seaside agreed to cap it at $52,500.
An addendum to the sale agreement increased the purchase price by $50,000 and the deposit by $10,000; the parties agreed the total deposit, $70,000, was non-refundable, the judgment states.
In an earlier interview, Mike Armstrong told Peace Arch News that the issue was created by forms that are used in such transactions, which have conflicting information. One does not state that commission is not payable if the buyer defaults, while the other does, he said.
A representative of the Fraser Valley Real Estate Board told Peace Arch News last year that it is rare for realtors to pursue commission when a buyer defaults.
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