Article Jan 2003

Listing Agreements and the "Holdover" Clause

DID YOU KNOW?

The TREB form of ICI Multiple Listing Agreement provides that the broker must give written notice to the Vendor of the parties introduced to the property within 7 days after the expiry of the agreement. If it fails to do so, the broker will not be able to recover commission on a subsequent sale (or lease) to such party within the holdover period.

CASE LAW:

In the case of C.B. Richard Ellis Limited v. Swedcan Lumican Plastics Inc.; Ho et al., Third Parties, an Ontario decision this past summer, the Court dealt with this issue.

Facts:

1. The Broker and Vendor entered into the TREB form of ICI listing agreement which included the following holdover clause:
"I agree to pay a commission of 5.00 [sic] (Five Per cent) of the sale price of my property on completion of any sale, exchange, option,..... on any sale, exchange or option Agreement effected within six months after the expiry of this Agreement with any party to whom you or your representatives or Co-operating Brokers have introduced my said property during the term of this Agreement, provided you have notified me in writing prior to the expiry of this Agreement of the name of such party you or your representative or Cooperating Brokers have introduced to this property." (underlined emphasis added).

2. The Agreement ran from August 13, 1998 to November 16, 1998.

3. The Broker did not provide the Vendor with a list of the parties introduced to the property.

4. The property was sold on November 25, 1998 through another agent.

5. The Broker claimed the purchaser was introduced to the property during the listing period and the Broker sued the Vendor for the commission and the Vendor refused to pay.

Issue:

Was the Broker’s failure to provide written notice to the Vendor of the parties introduced to the property prior to the expiry of the Agreement, fatal to the Broker’s claim?