Buyer’s Liability - Foreseeability - Buyer’s Agent Fiduciary Duty - Best Efforts

If, you are a buyer’s agent under a duly executed “Buyer Representation Agreement” you have recourse against your buyer for any short-fall in the agreed compensation payable to the Buyer Brokerage upon acceptance of the buyer(s) offer to purchase.

To Wit. The Buyer agrees that the Brokerage is entitled to be paid a commission of ...........................% of the sale price of the property or ........................... The Buyer agrees to pay directly to the Brokerage any deficiency between this amount and the amount if any, to be paid to the Brokerage by a listing brokerage or by the seller.

This then is a foreseeable liability in the event of a dispute between the listing brokerage and their seller, therefore the Buyer’s Agent has a fiduciary duty to act in the best interest of his buyer/client, and to safeguard and protect his clients interest.

This may be accomplished by the Buyer’s Agent presenting Form 320 “Confirmation of Co-operation and Representation” for execution by all parties, prior to the presentation of the “Agreement of Purchase and Sale” and thereby utilizing his best efforts to ensure that the buyer has some recourse against the seller and the listing brokerage with respect to the agreed compensation specified in Form 320.

Note: MLS Rule 760 has no bearing on the actions of a buyer.

The MLS Rule 760 is as follows:

Effective October 6, 2008 - The following is the revision of MLS Rule-760 which have been approved by the Board of Directors and came into effect Monday October 13, 2008, which is described as follows:

When the full commission is not paid to the Listing Brokerage, in accordance with the amount stated on the MLS Listing Agreement (or as amended , if applicable), the Listing Brokerage and the Co-operating Brokerage shall decide whether to pursue legal or other action against the Seller and/or other in connection with the collection with the balance of the commission unless they otherwise agree in writing.

If the Listing Brokerage does not agree to pursue a claim as provided in the immediately preceding paragraph, the Co-operating Brokerage may, within thirty (30 ) days of the closing of the transaction, by written notice ( the "Notice" ) to the Listing Brokerage requiring the Listing Brokerage to either (a) make immediate payment to the Co-operating brokerage of the full amount of the commission payable to the Co-operating Brokerage indicated on the MLS System ( the Co-operating Brokerage's Commission" ) or (b) takes such steps as are necessary for the Co-operating Brokerage to pursue a claim ( "a claim" ) for the commission provided for in the MLS Listing Agreement ( the "Full Commission" ).

The Listing Brokerage shall, within ten (10 ) days following receipt of the Notice ( "the Notice Period" ) (a) either pay the Co-operating Brokerage's Commission or (b) take the necessary steps in writing in all circumstances for the Co-operating Brokerage to pursue a claim. Such steps may include but shall not necessarily be limited to permitting the Co-operating Brokerage to sue in the name of the Listing Brokerage and/or an assignment for nominal consideration by the Listing Brokerage to the Co-operating Brokerage of the debt represented by the unpaid commission provided for in the MLS Listing Agreement.

If the Listing Brokerage fails to respond to the Notice within the Notice Period or the Listing Brokerage elects to take steps to enable the Co-operating Brokerage to pursue a Claim but thereafter fails to take all steps reasonably necessary to facilitate the Claim, the Listing Brokerage shall be deemed to have elected to pay the Co-operating Brokerage's Commission to the Co-operating Brokerage and shall forthwith make such payment.

If Co-operating Brokerage pursues a Claim, it shall have sole carriage of the Claim, including, without limitation, the right to select and instruct counsel, to accept any settlement and compromise of the Claim and to discontinue the Claim at any time.

All costs incurred by the Co-operating Brokerage in connection with pursuing a Claim shall be solely for the account of the Co-operating Brokerage. Any costs incurred by the Listing Brokerage in facilitating the Claim will be solely for the account of the Listing Brokerage.

All amounts actually received by the Co-operating Brokerage as a result of pursuing a Claim shall be applied to the extent available first to the Co-operating Brokerage's costs or pursuing the Claim, second to the satisfaction of the Co-operating Brokerage's Commission (including any GST thereon) with any amount remaining thereafter to be shared 50 % to the Co-operating Brokerage as compensation for having carriage of the Claim and 50 % to the Listing Brokerage.
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Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information .