$180K commission spoiled by contamination

by Jordan Maxwell17 Jul 2015
A real estate agent rightfully missed out on more than $180,000 in commissions after the buyer of a $3.2m property learned about site contamination, Supreme Court has decided.

The buyer withdrew its offer once they learned the soil contamination and submitted a new conditional offer on the premise that the seller would take care of remediation. That seller refused to pay the $75,314 it would’ve cost to decontaminate the soil.

“After it was discovered that the (property) might be affected by environmental contamination, the buyer reiterated to the sellers that he intended to buy the (property), but on condition that they decontaminate it at their own expense,” the decision reads. “The sellers refused, and the sale of the (property) never went through.”

According to the court reports, it was determined that the seller had not prevented the sale despite the fact that the brokerage contract acknowledged that the property met all environment protection laws. It also determined that the seller did not act in bad faith because they were not aware of the contamination.

“Although the brokerage contract contained a declaration by the sellers that the (property) was in accordance with environmental protection laws and regulations,” the decision reads.“The declarations set out in the brokerage contract cannot on their own, absent proof of bad faith, serve as a basis for arguing that the sellers voluntarily prevented the free performance of the contract.”

Furthermore, said the court, those declarations are not warranties and the legal warranties could not apply, because no sale had been concluded.

COMMENTS

  • by Andy 7/17/2015 12:08:24 PM

    So, a deal fell apart. Happens every day...

  • by Jackie O'Keefe RLP 7/17/2015 12:22:09 PM

    This was the right decision in my opinion. Was there even a Phase 1? Atleast then there'd be a leg to stand on for the agent as the history of use would've been investigated.

  • by Abbas 7/17/2015 12:23:50 PM

    The way I understand is that commission is payable upon successful completion of the transaction. It appears the decision by the judge is correct as there was no deal closed. Unless tere were other compelling reasons I am surprised the agent sued for the commission. I was an interesting read though.

Poll

Is a Toronto foreign sales tax a good idea?