Real estate broker still entitled to commission even if buyer fails to complete sale: BC court

Commission clause does not refer to closing or completion, Justice Sheila Tucker said

Real estate broker still entitled to commission even if buyer fails to complete sale: BC court

The Supreme Court of British Columbia has ruled that a real estate broker is still entitled to receive a commission even if a property buyer fails to complete a sale.

In Century 21 Seaside Realty Ltd. v Armstrong, 2022 BCSC 646, the defendants, Michael and Jessica Armstrong, were the owners of two property lots near Mission, BC. They entered into multiple listing agreements with the plaintiff, Century 21 Seaside Realty Ltd. The defendants then entered into a purchase and sale agreement with Vans Intrust Investments Ltd. for both lots. While it paid deposits, Vans did not tender the remainder of the purchase funds on the completion date.

In its summary trial application, the plaintiff alleged that the sale agreement was an enforceable contract of sale under the commission clause and sought commission from the defendants under the listing agreements.

Know if can you sue a real estate agent and find out how in this article.

Denying any commission is owing, the defendants argued that the sale agreement was unenforceable since the “visit clause” − which is to be understood that Vans should visit properties before the completion date with the help of the plaintiff − constitutes a condition and was neither met nor declared fulfilled by written notice.

The BC Supreme Court held that the sale agreement was enforceable even though Vans did not close the deal. Therefore, the plaintiff is entitled to $52,500 in commission.

Based on the evidence, the court found that the defendants’ real estate agent, Fabian Saul, visited the lots with Van’s representative, Michael Tran, on two occasions. An affidavit that Tran submitted supported the finding, attesting that he had visited the lots several times on behalf of Vans before the completion date with the help of Saul.

“Mr. Saul helped Mr. Tran visit the lots after the sale agreement was entered and before the closing date,” Justice Sheila Tucker said. “I am satisfied that he did so at least once before the original completion date, and then at least once again during the extended completion period.”

Moreover, the court noted that while Vans did not provide formal notice that the visit clause had been fulfilled, it was unnecessary to do so, given that Saul had personal knowledge of the relevant facts.  

“Assuming without deciding that the Visit Clause constitutes a condition, it was fulfilled,” Justice Tucker said. “The defendants cannot rely on the Visit Clause to say the sale agreement was unenforceable.”

The court also agreed with the plaintiff’s claim that an enforceable contract of sale triggered the commission clause, and there was no requirement for a closing to complete.

“The commission clause does not refer to a closing or completion,” Justice Tucker said. “Further, Term 5B of the [listing agreements] expressly contemplates commission becoming payable in the absence of a closing on the completion date, (i.e., ‘the earlier of’).”

In particular, the court determined that term 5A(iii) of the listing agreements expressly contemplates commission in the absence of a contract of sale and thus necessarily without a completion at closing.  

“The commission clause read on its own discloses that commission is tied to the existence of an enforceable contract,” Justice Tucker said. “The commission clause read as a part of Term 5 discloses the possibility that commission can be owing under the [listing agreements] without a closing on a completion date.”

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