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Class notes REAL ESTATE (LAW703) - WEEK 3 CA$10.84   Add to cart

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Class notes REAL ESTATE (LAW703) - WEEK 3

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Trends in the Real Estate Marketplace Why Study Real Estate Law? Legal System • Common Law = court made law • Statute Law = gov't made law Division of Powers • Federal law effects real estate bc they can indirectly regulate it o Ex. Real estate developers cannot build tall building...

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  • January 4, 2022
  • 14
  • 2021/2022
  • Class notes
  • Nick iannazzo
  • Week 3
All documents for this subject (6)
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sliystephanie
LAW 703 – week 3
5. Legal Framework
 Seller’s Listing Agreement
 Buyer Representation Agreement
Seller’s Listing Agreement  Listing property for sale/lease at certain price & terms
(SLA)  “invitation to treat”
 Generally, S’s A does not have authority to enter into an APS to sell the S’s property.
o But S could expressly give authority to the A (agent)
o No expressed authority in the doc for A’s to make contract on behalf of the S. BUT could give them.
o The S could expressly give it to them
o (Wragg v Lovett (1948) 2 All ER (CA)).
when you have to pay (what  Triggering event for payment of commission
has to happen for you to pay o “sale effected”
them commission) – what  the sale is actually completed (this is how the the court understood it)
triggers the event of earning  but real estate agents don’t like that because they do stuff, but just because it didn’t close,
a commission? they don’t get paid.
o “procuring the offer” – getting an offer
 because of the above, moved to this
 means if the A gets an offer from someone, and inform the principal of it
 that was the event that trigger payment of commission. Doesn’t have to be accepted to be
paid
 but this doesn’t sit well with S’s: if read the contract, would take it out.
o Current Wording in SLA --- “…for any valid offer to purchase…”
 The language of what they agreed to
 “form any source whatsoever during the listing period, on the terms set out here in” – the
contract is for a certain period; but if its from your friend, you still have to pay the agent,
the A doesn’t have to bring it to you
 “any other terms the S accepted”
 See page 11 – Commission - clause 2 of SLA
 Good to change terms to “commission is paid on completed deal”
 Is the A entitled to be paid commission if:
o (a) S refuses to complete the transaction? Or
 seller’s fault it doesn’t close
 no legal valid reason to refuse the close but for some reason don’t accept
 yes they still have to pay commission
o (b) B refuses to complete the transaction?

,  Buyer refuse to close
 not very clear. Doesn’t talk about it.
 But based on the language in the contract; can say should be paid
 Buyer is not in the contract. Buyer is not addressed. So could also ague that they don’t
have to pay
o If agent’s fault:
 From legal principle: if the A is negligence, you’ll have cause of action against the A for
breach of duty.
 What is a “holdover” clause?
o Built into the doc SLA or BRA
o There’s a fixed time period
o Ex: 120 days: you’re listing the property for this period. Has to be a fixed time period
 During that time, they hope to put a deal together
 If that doesn’t happen, it was expire
 There will be a 90 days holdover clause
 holdover clause: if one of the B’s comes the to S and buys the property, should the A get
paid? Original A gets paid 5%: 3 possibilities
 1. S does not get a new A
 S could get a new A (xyz) once the period is over
 B1 approaches the S directly
 Created during the holdover period, should the original A (ABC) get paid?
Yes original A gets 5% commission
 2. S does get a new A and charging 4%
 does the original A get commission?
 Yes 1% (the difference between what they charge and what the new A is
getting)
 Old A commission – New A commission = how much old will get.
 3. S does get a new A and charging 5% or more
 ABC gets 0%
o This is to protect Agents. B1 could just wait until the holdover period is over to do the deal. Then
the holdover would expire.
Buyer Representation  What is triggering event for a B to pay commission?
Agreement (BRA) o Have to look at agreement
o Buyer agrees to pay as follow:
 If during this agreement, buyer enters into an agreement of purchase/lease real ppty
 Has to be an agreement, in writing and signed (for purchase) but lease can be n vocal if less

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