Commissions in Incomplete Real Estate Transactions

Commissions in Incomplete Real Estate Transactions 

Did you know you could be on the hook for a realtor's commissions even if the sale of your home doesn’t complete?

According to a recent case by the BC Supreme Court, if you have contracted a real estate agent to list properties you own, you could potentially still owe the real estate agency commission even though a sale was never completed. 

In Century 21 Seaside Realty Ltd. v Armstrong, The Court wrote that commission is collectable so long as there is a legally enforceable contract of sale. The actual sale doesn’t need to close.  

The Court ruled in the Armstrongs’ case that there was a legally enforceable contract and the real estate agent had not failed in his fiduciary duty to them by failing to advise them that they would have to pay the commission even without closing. 

The outcome depends, amongst other things, on the wording of the contract and the circumstances the agreement was signed in.  


The Armstrongs entered into a sale and purchase agreement for two cabins on the coast of Lake Errock, located east of Mission. The buyer paid deposits but did not show up to pay the outstanding amount on the completion date.

Legally Enforceable Contract of Sale 

The Court ruled that the Armstrongs had entered into a legally enforceable contract of sale, which could not be rescinded due to fraudulent misrepresentation or the Visit Clause. 

The Armstrongs had signed a multiple listing service (MLS) agreement with Seaside Realty. The MLS contained a Commission Clause that stipulated commission is to be paid if a legally enforceable contract of sale is entered into during the course of the contract.

The Armstrongs tried to say that the sale agreement was not a legally enforceable contract, and so didn’t trigger the Commission Clause. They argued that a “Visit Clause” in the contract, which mandated that the seller help the buyer visit the properties before the completion date, was never fulfilled, which rendered the contract legally unenforceable. They claimed that they had failed to ferry the potential buyer across the lake to see the properties after the agreement was signed.

1 Century 21 Seaside Realty Ltd. v Armstrong, 2022 BCSC 464 at para 4 [Armstrong]. 

2 Ibid at para 14. 

3 Ibid at para 41.  

The Court rejected this argument, using contractual interpretation principles such as common sense to rule that the Armstrongs’ interpretation of the Visit Clause to be “onerous and extraordinary”.

Fiduciary Duty

The Armstrongs also argued that their real estate agent breached his fiduciary duty by failing to explain that a commission could become payable even though the sale did not go through. The court rejected this argument. 

The court noted that the Commission Clause did “not refer to a closing or completion.” In fact, the clause after actually refers to the “commission being payable in the absence of a closing on the completion date”. Therefore the real estate agent did not fail his duty to disclose material circumstances. 

The Court  also noted that the Armstrongs had time to review the MLS contract. They did not seek any additional time to review the contract. They were also sophisticated parties; Mr. Armstrong was an accountant and the Armstrongs had bought and sold property on prior occasions. The real estate agent did not owe the Armstrongs a fiduciary duty when the MLS contract was signed. 

If you are concerned about having to pay your realtor a commission without a sale, you should consult with a lawyer. 

*Please note that this information is intended for informational purposes only. there are always other considerations and interpretations of the law.  This does not constitute legal advice. For more information or assistance with a residential tenancy eviction matter, contact our office to speak with a lawyer directly.  

4 Ibid at para 46, citing Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53.

5 Ibid at para 48

6 Ibid at para 72.

7 Ibid at para 73.

8 Ibid at para 71.

9 Ibid at para 77.


Divorce & Separation: 10 Tips

Divorce & Separation: 10 Tips

Divorce and separation can raise some difficult issues and may occur when people are at their most vulnerable. It can be a stressful time for everyone concerned.

If you are thinking of separating from your partner, you may be wondering what first steps you should take to navigate through this process. In this article, we set out some simple and actionable tips to make the process as constructive and cost-effective as possible.

1. Take specialist family law advice and take it early on
Being informed means that you can make decisions which may avoid issues down the line and we can give practical tips to support you to progress matters quickly and sensibly.

2. Always act in the children’s best interests
Focus on your children and don’t speak negatively about your spouse in front of, in ear shot of, or to, your children.

3. Obtain all relevant financial information for your personal and your joint finances
This includes bank statements, tax returns, Kiwisaver, superannuation, financial statements for any businesses. Providing this information to your lawyer means they can give you early informed advice.

4. Keep a record of important details and dates
For example, any agreements you and your partner may reach, any significant financial expenditure post-separation, and time spent with your children so that you can pass this information on to your lawyer.

5. Be organised and take responsibility
This process can be overwhelming and it might be tempting to bury your head in the sand but that is not going to make the process any easier or quicker for you. Don’t be passive; be proactive and prepared to make informed decisions, even if you are not the initiator. The separation is likely to take less time, be less stressful, and cost less money if you take an active role in the process.

6. Get support and be kind to yourself
No matter how isolated you may feel at the moment, you are not alone. There are many sources of support that can help you with the feelings you may be experiencing and to learn how to deal with them in a healthy and constructive way.  Take care of yourself – physically, emotionally and mentally.  When you can control your emotions, you will be in a better place to deal with any financial settlement negotiations.

7. Keep your integrity
No matter how angry or betrayed you may feel, do not let your former spouse get to you. Don’t take to social media and resist venting details of your separation to anyone who will listen. Don’t bad mouth your former spouse to your children or your family, even if he/she is bad-mouthing you to them. Rise above it and be the bigger person.

8. Focus on the bigger picture and don’t sweat the small stuff
The decisions you may need to make during this process are likely to affect your own, and your children’s, future. If you focus on what is most important, like your future, instead of the past, you will stand a much better chance of not only separating amicably but achieving a settlement that you can live with and move forward from.  You are unlikely, in six months’ time, to be grateful that you spent thousands of dollars arguing over who retains a TV.

9. Try to avoid knee jerk reactions or decisions
Separation and divorce can be very stressful and it is okay to take your time to think the situation through and to take advice and to then consider that advice.

10. Choose the process, don’t let the process choose you
There are many process options that can be tailored to your circumstances. The family court is not the only one. Talk to us about the options before you choose one, or your find yourself in a process that you did not want to be in e.g. litigation.

Our family law team deal with all matters of separation and divorce. We can provide you with sound legal advice to help you through this process. We are dedicated to achieving the best possible outcome for our clients and their families.