B.C. couple on the hook for real estate commission after sale of their properties fell through
Standard listing agreement only requires legally enforceable contract of sale, says judge
A judge has ordered a B.C. couple to pay a $52,500 commission to the real estate agency that listed two properties they owned, even though a sale of the properties was never completed.
The judgment this week in the case of Mike and Jessica Armstrong's two lots on Lake Errock confirms that the standard listing contract for homes in B.C. allows for commission to be collected as long as there is a legally enforceable contract of sale. It doesn't require the sale to actually close.
"The commission clause does not refer to a closing or completion," B.C. Supreme Court Justice Sheila Tucker wrote in a judgment on Monday.
"The commission clause … discloses the possibility that commission can be owing under the MLS contracts without a closing on a completion date."
The judge said the Armstrongs were on the hook for the commission to Century 21 Seaside Realty in White Rock, as well as legal costs.
Seaside's lawsuit had asked for a commission of $70,875 to be paid, but a disclosure of remuneration document capped the agency's commission at $52,500, the judge wrote.
Tucker also dismissed a third-party claim filed by the Armstrongs against real estate agent Fabian Saul, and said he was entitled to his costs.
Agency fulfilled conditions of contract, judge says
The Armstrongs signed a standard multiple listing service (MLS) agreement with Seaside in May 2017 for their two rustic cabins on a quiet lake east of Mission, court documents show. They would later sign a limited dual agency agreement as well, allowing the brokerage to represent both the buyer and the seller in the deal.
In August of 2017, a company called Vans Intrust Investments, represented by Michael Tran, entered into an agreement of purchase and sale to buy the two lots.
The contract had to be extended once, but the eventual deal was to pay $1.35 million with a closing date in July 2018.
When the closing date arrived, the buyer was nowhere to be found, and $70,000 in deposits was forfeited to the Armstrongs.
Seaside filed suit against the Armstrongs in 2020, demanding commission plus interest for the aborted sale. The Armstrongs later filed a third-party claim against Saul, alleging he'd breached his fiduciary duty and misled them.
In their response to Seaside's claim, the Armstrongs alleged that the sales agreement was unenforceable because of a clause that stipulated the buyer would visit the properties before completion. They claimed they had failed to ferry Tran across the lake to see the lots after the agreement was signed.
But Saul had taken Tran to visit the lots at least twice, so "if the visit clause was a true condition, it was a fulfilled condition," Tucker wrote.
And while the Armstrongs alleged that Saul had breached his fiduciary duty to them by failing to advise them they would have to pay commission even without a completed closing, the judge said there was no basis for that.
She pointed out that Mike Armstrong is a professional accountant, and the couple has bought and sold property before. There was no evidence suggesting they weren't given enough time to read the listing agreement, she said.
She also said that the Armstrongs had failed to show Saul had fraudulently misrepresented himself by advertising that he can provide services in B.C. and Washington state.
Tucker pointed out that even if Saul had initially misled the Armstrongs about his ability to list the properties in the U.S., they still continued to work with him after learning it wouldn't be possible, even signing the dual agency agreement.
Property records show the Armstrongs are still owners of both properties, now valued at more than $2.23 million in the 2022 assessments.