Listing Contracts Residential Real Estate

1. Listing ContractsResidential Real Estate Barbara Grodaes List2Last

2. Purpose • Complete the listing contract fully and successfully to arrive at a binding agreement • Between brokerage and seller in writing • Meets the definition of a brokerage agreement outlined in the Real Estate Act • Begins the real estate relationship process List2Last

3. Listing Contract • Both a contract and a process • Creates an agency relationship between the seller and the seller’s brokerage • Is the vehicle a seller uses to grant authority to a real estate brokerage to sell, exchange or lease the seller’s property on certain terms and conditions described in the contract • Written agreement is a must for a brokerage to collect commission List2Last

4. 3 Different Listing Contracts • Residential Real Estate, Rural Property and Commercial Real Estate Listing Contracts • Apply knowledge that you know from the Residential contract to the others • Listing process includes all preparation including determining price of property, advising seller about condition, gaining seller’s commitment and determine the brokerage’s marketing strategies List2Last

5. Legal Document Principles • Capacity • Legal object • Legal intention • Genuine consent • Consideration • Mutual agreement Contract Law and Agency Law • Single and Dual Agency List2Last

6. Relevant Legislation • Real Estate Act and Rules • Dower Act • Residential Tenancies Act • Condominium Property Act • Land Titles Act • Municipal Government Act • Mobile Home Sites Tenancies Act • Freedom of Information and Protection of Privacy Act • Competition Act (federal) • GST (federal) List2Last

7. Rule 26(1) • When an agreement to list real estate with a brokerage is in writing, a true copy of that agreement shall be delivered by the brokerage as soon as is practicable to the owner of that real estate or to the person entering into that agreement on behalf of that owner. List2Last

8. Rule 26(2) • An agreement under Rule 26(1) is void if it: • Provides for more than one date on which it expires • Does not specify a date of which it expires • Does not provide for the amount of or the rate of commission payable in respect of the trade • Does not provide for the terms or conditions on which the commission is payable in respect of the trade List2Last

9. Code of Conduct Relating • The parts of the Code of Conduct that relates to listing real estate and to the listing contract itself are: • 2 (b), (c), (d) and (3) • 4 (a) and (b) • 7 (I) and (k) List2Last

10. Dower Act • Realtor must understand Dower Act and rights but does not have to explain it to the seller • Direct seller to lawyer to answer questions relating to Dower and to complete listing if necessary • Dower rights prevent owner for selling, mortgaging or otherwise disposing of the land without written consent of the spouse and also, secure their right to acquire a life estate upon death of owner spouse • To list property, owner must have legal authority to sell (Dower may be an issue) List2Last

11. Residential Tenancies Act • Listing contract must indicate if a listed property contains a rental suite. • Buyers wishing to maintain a rental suite need: • Copy of the tenancy agreement • Information about the trust account holding the tenant’s security deposit • Seller’s Agent must understand this Act and how to deal with tenants for showing, entry, termination, continuation, etc. List2Last

12. Other Acts • Appendix on last page of Listing Contract contains information needed in the specific sales for rental properties, mobile and manufactured homes and condominiums • Freedom of Information and Protection of Privacy Act (FOIP) is in Clause 16.4 of the Listing Contract List2Last

13. Competition Act • Basic Rules • Don’t collude (make independent business decisions without discussion or consultation with competitors • Don’t discriminate against or refuse to do business with competitors or other persons because of their low pricing policies • Don’t mislead the public in your advertising List2Last

14. Reporting Sources of Liability • Agents should be instructed to report to their broker or office manager any incidents which may be interpreted as activity pertaining to commission-fixing or boycotting of a competitor by other agents, associate brokers or brothers. • The agent that participates in such a scheme, should be disciplined List2Last

15. Role of Seller’s Brokerage • Represent the seller • Negotiates purchase contract for seller • Provides information on the property • Advertises the property • Agrees to pay a portion of the commission to a buyer’s brokerage • All members of the brokerage owe fiduciary duties to the seller List2Last

16. Type of Listings • Multiple Listing (MLS service) by local real estate boards to market property • Exclusive Listing is one seller one brokerage and not marketed MLS – usually lesser commission • General Listing is one seller giving several brokerages the right to find a buyer and reserves the right to sell property personally with no obligation to pay commission (usually this is where a Commission Agreement is used) List2Last

17. Listing Contract (contract) • Contract between seller and the seller’s brokerage • All of the registered owners of the property should be named preferably as the appear on Title • Full name of seller’s brokerage and name of the agent should be named completely List2Last

18. Details • Municipal address and legal description must be fully described • If condo, condominium plan and Unit number and take care with parking stall to determine whether common (exclusive use) property or individual titled property • Both municipal and legal must be on contract before the contract is completed and signed List2Last

19. Section 1.3 (a) (b) • Clauses requires the seller to list exceptions to the normal practice – unattached but willing to leave and/or attached but intending to take • The property includes: (a) goods not attached to Land and Buildings (unattached) – provides the opportunity for seller to record unattached goods that s/he is willing to sell with the property • The property includes: (b) goods attached to Land and Buildings (attached) except those goods listed – provides opportunity for seller to list attached goods that s/he is not willing to sell with the property List2Last

20. Notes • Clause 2 alerts of any previous listings • Section 3 must agree to an expiry date and this date must be put in • Asking price is part of Clause 4.1 • GST is applicable to vacant land, vacant lots, newly-built housing and “substantially renovated homes and condominium conversions” List2Last

21. Notes continued • Clause 5.1 is for setting a date for possession. This usually states 30, 60 or 90 days from accepted purchase contract • This possession date will become the “completion date” in the purchase contract • Clause 6.1 identifies the amount the seller will pay to the seller’s brokerage and Clause 6.2 specifies the amount they offer to other brokerages • GST is payable on all commission List2Last

22. Section 7 - Deposits • Deposits indicate the buyer’s serious intent and are seldom more than 10% of the price • Deposits can be forfeited if the buyer refuses to complete the sale • There is directions to use the deposits for commissions, alternate compensation plus GST, etc. List2Last

23. More Notes • Section 8 concerns the authority that the seller gives to the seller’s brokerage concerning: • Permission or forbidding installation and using a key box • Permission or forbidding installation of FOR SALE and/or SOLD sign • Sole right to advertise the property for sale List2Last

24. Important Info • Seller must provide several pieces of information to the seller’s brokerage so it can properly inform prospective buyers of the property • Seller provides property tax and local improvement assessment search; title search, (RPR) Real Property Report and other information as in Appendix • RPR needs to be current and have a certificate of compliance endorsed thereon • Early discovery of problems or potential problems allows time to deal with them List2Last

25. 5 Property Disclosure Forms • Urban Residential Property Disclosure Statement • Rural Residential Property Disclosure Statement • Condominium Seller’s Property Disclosure Statement • Agricultural Land Disclosure Form • Commercial Property Disclosure Statement List2Last

26. Sources for Information • Municipal Tax Office to get tax information • Land Titles Office to get Certificate of Title for information about legal owner, dower, encumbrances • Municipal Planning Department for zoning, land use classification and improvements • Mortgagee/Lender for mortgage detail verification List2Last

27. Section 10 – Seller Duties • Seller pays real estate commission: if sold during term of the contract, and • If, within 90 days of the expiry date of the listing, the property is sold to someone the brokerage introduced to the property during the listing, unless the seller enters a listing contract with another brokerage • Seller will pay alternate compensation if there is a buyer willing and able but the seller refuses to complete or the buyer defaults List2Last

28. Alternate Compensation • If seller refuses to complete transaction despite a willing and able buyer, or if contract is signed but buyer defaults, compensation must be reasonable. • It cannot be greater than real estate commission would have been nor greater than 50% of buyer’s deposit • Limited to the lesser of the 2 amounts • GST payable on commission, on any alternate compensation and on all money owed to seller’s brokerage List2Last

29. Brokerage Duties • Make reasonable efforts to find a buyer for the property • Market the property through the MLS • Do not discourage non-members from trying to sell the property • Pay any real estate commissions or alternate compensation (including GST) owed to another brokerage List2Last

30. Security for Brokerage Fees • Section 12 guarantees the seller will indemnify and remunerate the brokerage • Clause 12.1 grants right to encumber the property by allowing a Caveat to be registered on Title by brokerage • Seller agrees to reimburse the seller’s brokerage for lawyer and client legal fees and costs • Protection for the buyer’s brokerage if the seller’s brokerage does not wish to pursue List2Last

31. Seller’s Warranties • Section 13 lists the information that the seller warrants to the seller’s brokerage • Agent must address each item in this section • Clause 13.1 warrants the right of the seller to sell the property (Dower must be addressed here) • Brokerage need to determine seller has right to sell unattached goods listed here • Clause 13.2 warrants use and location and zoning all comply List2Last

32. Ending Contract • Section 14 states the circumstances which contract may be ended. It will automatically end if the seller’s brokerage: • Has had its license to trade in real estate suspended or cancelled • Ceases to be a member in good standing of a real estate board • Is bankrupt, insolvent or in receivership • May also end if one party breaches a portion of the contract and the party in breach receives notice in writing that the contract is to be terminated (portions can be enforced) List2Last

33. More Sections! • Section 15 is additional terms • Section 16 Advice to the Seller stating the seller has the right to obtain legal advice and alerts some facts. • Section 17 is the Agency Disclosure/ Acknowledgement where the seller acknowledges understanding of same List2Last

34. Section 18 - Signatures • Rule 28 of the Real Estate Act specifies a true copy be delivered • Signatures from all of the sellers is required as well as their witnesses • Signature from seller’s brokerage or person authorized to represent • Complete and attach any forms required by The Dower Act List2Last

35. Important Stuff • The Appendix section provides a checklist for important information needed • Rural residential property has special requirements and an agent should get assistance with this and/or take further education List2Last

36. Listing Process • 3 purposes for listing process • Give the necessary authority to a brokerage • Provide information about the property to the brokerage • First step in effecting a sale • Agents assess property, help determine its price, find buyers, etc. to form a successful transaction List2Last

37. Providing Information • Property Evaluation, the comparative or competitive market analysis (cma) is the most widely used technique for establishing the value • CMAs outline details of the property, help sellers and buyers make informed decisions on the sale and purchase • Code of Conduct 4(e) states member must not misrepresent the potential market value, revenue potential or mortgage benefits List2Last

38. AREA’s Property Disclosures • Questions included in these statements prompt seller to indicate the condition of property and information that could be important to buyers • All information could affect value of property and be considered before list price established • Statement is filled out with no participation of seller’s agent • Not a warranty form nor does it relieve brokerage from responsibility of investigating any concern they have about property List2Last

39. Measuring Properties • Both exterior and interior measurements are involved when listing property • Outside dimensions of the house including additions and improvements made to the building • Total above-grade living space • Interior measurements taken for each room to be included in listing information data for information sheet • Never rely on someone else’s measurements! List2Last

40. AREIX Suggestions • Personally measure and/or double-check • Double-check conversions • If using blueprints, determine changes made to plan that affect measurement • Do not assume 2nd floor is same as ground floor • Ensure acreage property measurements correspond with the title • Verify all estimates of cultivated acres, broken land for cultivation and/or pasture, in an acreage List2Last

41. Gathering Information • Be prepared when you make listing presentation • Be informed about the area including average buyers, mortgage business and lot size, taxes, etc. • Know and explain your stuff • Emphasize the selling features of the property and point out detractions • Advise seller how to make property show better and how much to spend to do so • Get a commitment from the seller List2Last

42. Saleable Listings • Win the attention of property owners by: • Personal contact • Advertising techniques • List properties realistically and attract serious buyers • Be competent • Know the neighbourhoods • Stay current List2Last