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Commission disputes turn on a small number of recurring questions. Whether there was a valid agreement, whether you were the effective cause, and whether a holdover clause reaches the deal that actually closed.
Start My Enquiry →Unpaid Commission | Holdover | Splits | Defence
Through a civil claim, or through arbitration where the dispute is between co-operating brokerages and the board’s rules provide for it. It is not recovered through the Real Estate Council of Ontario, because the Registrar has no authority to resolve financial or contractual disputes or to award compensation. To succeed, a brokerage generally has to establish four things: that there was a valid agreement with the party being sued, that the brokerage and the registrant were registered at the time the services were provided, that the essential terms of the agreement were performed, and that the brokerage was the effective cause of the transaction, unless the agreement contains a term such as a holdover clause that makes effective cause unnecessary. Where the amount is within the Small Claims Court limit, that is usually the proportionate forum. Above it, the claim proceeds in the Superior Court.
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Commission claims are contract claims, and they are won or lost on unglamorous points. First, a valid agreement with the party you are suing. This sounds trivial and frequently is not: a listing agreement that expired, was never signed by all owners, or names a different entity than the one claiming will each cause difficulty.
Second, registration at the relevant time. An unregistered person cannot recover commission for trading in real estate, and this catches people whose registration lapsed briefly during the period when the services were provided.
Third, performance of the essential terms. Fourth, that the brokerage was the effective cause of the transaction, meaning that its efforts set in motion the chain of events that led to the sale. Effective cause is the point most often argued, because a seller who has decided not to pay will usually say the deal came from somewhere else.
A holdover clause entitles the brokerage to commission where the property sells within a defined period after the listing ends, to a person who was introduced during the listing. It exists to prevent the obvious avoidance, which is waiting for the listing to expire and then completing with a buyer the brokerage found.
Whether it bites depends on its wording and on the facts. The usual battlegrounds are whether the buyer was genuinely introduced during the listing period, what introduced means where the buyer had some prior awareness of the property, and whether the holdover period had run.
Because the clause operates against a seller who has often already engaged another brokerage, holdover disputes frequently involve three parties rather than two, and the second brokerage may find itself drawn into a fight about a commission it expected to keep. That possibility is worth considering before taking a listing on a property that recently came off the market.
Not every commission dispute is with a client. A good many are between co-operating brokerages arguing about a split, or about whether a referral arrangement was honoured, or about entitlement where more than one registrant had contact with the buyer.
Where both brokerages are members of the same board, the board’s rules may require the dispute to go to arbitration rather than to court, and the arbitration route is generally faster and cheaper. It is also binding, so it should be entered into with the same preparation as a hearing.
Disputes between brokerages have a feature that client disputes do not: the parties usually have to keep doing business with each other afterwards. That tends to make a negotiated outcome more attractive than the merits alone would suggest, and it is worth weighing before a position hardens.
Sellers and buyers do resist commission claims, and not always without reason. Common defences include that the agreement had expired, that the brokerage was not the effective cause, that the services were not performed, that the transaction that completed was materially different from the one contemplated, or that the agreement itself was defective.
There is also a category of case where the resistance is really about something else, usually service. A seller who felt badly advised will often frame that as a reason not to pay. Whether the service was good is generally not a defence to a contract claim unless it amounts to a failure to perform, though it may support a counterclaim.
Where the conduct is genuinely the issue, a complaint to the regulator is the appropriate route for that part of it, and a civil defence is the route for the money. As above, the two travel separately, and what is said in one can be read in the other.
Whether you are owed commission or facing a claim for it, the early questions are the same: what does the agreement say, and what actually happened. Send us the agreement and we will tell you where you stand.
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