Over the next couple of weeks, I will be trying to update this blog very regularly with information on clauses, forms and agency relationships....a very important component in the real estate transaction.....know what you are signing! Every Clause should be explained in detail by your real estate professional.
Today information is on the LISTING AGREEMENT...In Ontario the common form is:
FORM 200 LISTING AGREEMENT (Authority to Offer for Sale)
This form is used to list your property for sale in Ontario. It is a very convoluted form that needs careful consideration through each clause as it is very restrictive and binding.
1) Decide whether you want an MLS® or exclusive listing. Exclusive is restrictive in who can show it, and where it is advertised.
2) The next section spells out who the Brokerage is, and whom the Seller is. Be sure names and addresses are correct.
3) The duration is very important. Many boards have a policy of a sixty day listing minimum. If this is the case, be sure that somewhere in the contract you “write in” that you can cancel at anytime for any reason other than to sell it privately. (Out of fairness to the agent for the expense of advertising and working on selling it) But for any other reason you should make it clear that you want to be able to contract out of this contract.
Clauses on this form:
1) Definitions and interpretations: This defines who will be referred to as the Buyer and Seller for the remainder of this document
2) Commission: This declares the total fee that the Seller has agreed to pay to the real estate company if they are successful in the sale of the property. It also indicates a period of time after the contract expires or is cancelled if the seller sells the property to someone introduced to the Seller through the original listing. This is void if re-listed through another company. (hold-over period)
3) Finders Fees: This provides consent that the Salesperson may accept a finders fee from companies such as banks, home inspectors etc as a “referral type of reward”. NOTE: the sales person must get individual consent for each fee received from the Seller before receiving the fee)
4) Representation: This confirms that the agent has explained the agency relationships to you so listen carefully to this section! It also says that the brokerage agrees to cooperate with other real estate companies in the sale of the property and what the fee will be paid to them through the original agreed commission.
5) Referral of Enquiries: This states that the Seller must inform their brokerage of any enquiry on the property that comes through the Seller. And that the holdover clause is enforced for anyone that is introduced to the property through the seller during the listing period.
6) Marketing: This gives the brokerage to right to advertise the property through any medium according to company policy and that a “for sale” and “sold” sign will be placed on the property.
7) Warranty: This confirms that the “Sellers” that are signing this Agreement are all of the individuals necessary to give authority to sell the property. It goes on to warrant that the Seller (YOU) does not have any claims against them on the property such as leins, easements, encroachments which could affect the sale of the property so ANSWER THIS AS BEST AS YOU CAN.
8) Indemnification and insurance: This section states that the Salesperson and brokerage can’t be held liable for the condition of the property or any damage that may occur during inspection with prospective Buyers that are viewing the property.
9) Family Law Act: This section says, in the form of a warranty that if spousal consent is required, then the spouse will sign. This is in the case of a matrimonial home in many cases.
10) Verification of Information: This section is somewhat of a “power of attorney” so be careful on what you sign. It gives the Brokerage the authority to contact anyone with information on your property. Even an office admin can call the bank to get your mortgage information. (in my opinion, cross out the word brokerage, and replace with your agents name)
11) Use and Distribution of Information: This section gives the Salesperson/Brokerage the authority under the Privacy Act to use personal information provided to them by the Seller or banks etc to assist in making the transaction happen. It also informs the seller that stats will be kept by CREA for the transaction. It also confirms with the seller that I won’t be calling all the carpet cleaning companies in the area to sell your information to!
12) Successors and Assigns: This is a tough clause to explain...not because it is convoluted, rather because it states that if you die or become incapacitated that your estate trustees are legally bound to this contract.
13) Conflict or Discrepancy: in summary, anything that is added to this contract supersedes anything pre-printed. For example, above I suggested that you remove the word Brokerage and add the salespersons name (sec. 10)..
14) Electronic Communication: This document can be sent by fax, email, or any other form of electronic communication unless you cross out this clause.
15) Schedules: this is where you would add things such as a further agreement on commission, cancellation agreements etc)
16) The signature section is for when you AGREE TO ALL THE TERMS ON THIS CONTRACT....DO NOT SIGN IF THERE IS SOMETHING YOU DON’T UNDERSTAND!
A listing agreement is enforceable from the time it is signed to the expiry date. It cannot be cancelled just because you have changed your mind. If the Brokerage agrees, then of course, it can be cancelled, but you have no automatic right to cancel prior to expiry, even if your salesperson is leaving the company. If there are to be any special cancellation arrangements, then you should specify those in writing as a schedule on the listing agreement.....at anytime, if you feel you have been wronged then you can approach the Real Estate Council of Ontario http://www.reco.on.ca
PS. Would you feel comfortable introducing me to someone you care about that needs my help? The next time you are in conversation with them, please pull out your cellphone and pass on my information right away!
Thank you so much,
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Coldwell Banker, The Property Shoppe Real Estate, Brokerage
(independently owned and operated)
Not intended to solicit persons/properties currently under contract with any other representative or brokerage.
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